- The European Commission has opened a consultation on “Circular VAT” reforms to align VAT with circular economy goals, with possible EU VAT Directive changes expected in Q2 2027.
- For second-hand, refurbished and remanufactured goods, Brussels is considering harmonising and possibly mandating the margin scheme, updating outdated definitions, improving digital record-keeping/reporting, and removing VAT distortions that disadvantage reuse.
- On unsold goods, the Commission wants to stop VAT rules from favoring destruction over donation; options include denying input VAT deduction for deliberately destroyed viable goods and creating clearer VAT relief for donations to recognised charities.
- For company cars, it is considering full VAT deduction for non-polluting passenger cars used in taxable business activities, while limiting deductions for other vehicles.
- The initiative would use VAT more directly as an environmental policy tool, potentially reshaping core input VAT deduction and margin scheme rules to support the circular economy.
Source: vatcalc.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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