Could Commission VAT plans provide a boost for secondary material markets?

Products with high recycled content could be given lower VAT rates to stimulate demand in secondary markets, following a new proposal by the European Commission. Last month, the European Commission proposed that member states should have more flexibility in changing the VAT rates they apply to different products, and FEAD, the European federation that represents the private waste management industry across the continent, says that this gives nations an opportunity to pursue the EU’s environmental objectives.

The body, which has a membership of around 3,000 companies, says that while the Commission is exploring several routes to boost the demand of recyclates, it believes that fiscal incentives, like lower or zero VAT rates on products with recycled content, should be considered, and could be enabled by this proposal.

In a statement, the organisation said: ‘The new proposals on VAT will enable Member States to put in place, upon national choice, reduced or zero VAT rates for their selected categories of products. FEAD advocates such a choice to be left to member states, allowing products with recycled content to be possibly selected amongst those benefiting from reduced VAT rates.’