European Commission proposes VAT reforms to support circular economy

The European Commission has launched a consultation to reform VAT rules to better support the circular economy. The initiative aims to move away from the traditional ‘make-use-dispose’ linear model by addressing regulatory hurdles faced by businesses involved in repairing, refurbishing, and reselling products.

The proposed changes focus on three key areas: the second-hand goods market, the management of unsold stock, and company vehicles. Currently, complex VAT systems can make it more difficult for businesses to reintegrate used goods—such as electronics, furniture, and clothing—into the economy compared to disposing of them. By simplifying these rules, the EU aims to reduce raw material dependency and enhance European economic security and competitiveness.