The pan-European federation representing the private waste and resource management industry across has backed proposals from the European Commission’s to give member states more flexibility on the way VAT is implemented.
If approved, FEAD said the Commission’s plan will open the door for countries to allow products with recycled content to be include amongst those benefiting from reduced VAT rates.
The European Commission proposed new rules to give Member States more flexibility to set VAT rates last month
Last month, the European Commission proposed new rules to give Member States more flexibility to set VAT rates, describing the current rules as “outdated”. The new proposals will enable Member States to put in place, upon national choice, reduced or zero VAT rates for their selected categories of products.
Choice
FEAD – which has the UK’s Environmental Services Association as a member – advocates that such a choice to be left to individual states, which will allow products with recycled content to be selected amongst those benefiting from reduced VAT rates.
The European Council still has to give the green light to the Commission’s proposals, which is expected later this year. FEAD said that it hopes the perspective that reduced VAT on targeted products or services can be an excellent supportive measure to help realising a circular economy’s goals and benefits.
New rules
At the moment, VAT rules agreed by all Member States allow for two distinct categories of products to benefit from a reduced VAT rate of as low as 5% in each country. A number of countries also apply specific derogations for further reduced rates.
The new rules proposed will enable all member states, in addition to the two reduced rates of a minimum of 5% and one 0% rate, to apply a third reduced rate of between 0% and 5%. FEAD hope this will be put in place for products made from recycled materials.
However, member states must ensure that the weighted average of all VAT rates applied is at least 12%.
Debate
Calls for a lower VAT rate on products made from recycled material have long been made by many industry figures and MPs, including Zac Goldsmith, Mary Creagh and several others. However, nothing has so far been introduced by any government. However with Brexit looming, this may change in the future.
In the Autumn 2017 budget, section 4.14 referenced environmental taxes including an aggregates levy, ensuring operators of illegal waste sites will become liable for landfill tax and the aforementioned call for evidence. However, there was no reference to such a measure there or in the VAT section.
FEAD, under former chair David Palmer-Jones of Suez UK, has also previously called for a lower VAT rate. The federation had argued that landfill diversion targets and ‘pull’ measures to encourage recycling should be the main focus of the circular economy package if the EU is to drive demand for secondary raw materials (see letsrecycle.com story).
FEAD’s members are national waste management associations covering 19 Member States, Norway and Serbia. It has an approximate 60% share in the household waste market and handle more than 75% of industrial and commercial waste in Europe.
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Source: letsrecycle.com Waste Managment
