VAT and the Circular Economy – EU “Have Your Say” Initiative

• What it is: A DG TAXUD initiative examining how VAT rules can be made “greener” to support the circular economy — notably the tax treatment of second-hand goods, business donations of surplus stock versus destruction, and repair/reuse activities — as part of the broader “VAT beyond ViDA” reform reflection. It builds on the 2022 reduced-rate reform that already gave Member States more freedom to apply reduced VAT rates to sustainable goods and services. [ifcreview.com], [vatupdate.com]
• Policy context: The idea was advanced in the joint Group on the Future of VAT (GFV) / VAT Expert Group (VEG) meeting of 25 June 2026, where the Commission’s Study on the Challenges of VAT Beyond ViDA mapped out a “greener” VAT system covering second-hand goods, donations vs. destruction and passenger-car deductions. Some delegates, however, questioned using VAT as an environmental steering tool (e.g., for corporate fleets). It also aligns with the forthcoming Circular Economy Act, due for adoption in 2026. [vatupdate.com], [environmen….europa.eu]
• Why it matters for business: A concrete example of the direction is the harmonisation of VAT relief on business donations of goods to charities (rather than paying VAT or sending goods to landfill) — a change several Member States and the UK are already implementing to reduce waste and support reuse. Aligning such reliefs across the EU would reduce the “VAT cost disincentive” for donating surplus stock. [ifcreview.com], [uhy-uk.com], [taxscape.d…loitte.com]

External links

• Have Your Say – VAT and circular economy initiative (Ref. 18833)
• GFV/VEG Joint Meeting Minutes (25 June 2026) – VATupdate [vatupdate.com]
• DG TAXUD – Public consultations (Have Your Say portal) [taxation-c….europa.eu]
• EU uses VAT to push green policies – IFC Review / vatcalc [ifcreview.com]