Current VAT rules put circular social enterprises at a disadvantage, particularly those relying on donated second-hand goods. The existing VAT framework fails to account for their specific operating models and the costs associated with collection, sorting, repair, and social inclusion activities.
In our answer to the public consultation opened by the European Commission, we call for better rules to support reuse and repair activities while recognising the role and specificities of social enterprises. This includes introducing a zero-rated VAT regime with full input VAT deductibility and protecting existing favourable national provisions.
In addition, RREUSE supports a combined approach to bring VAT rules in line with circular economy goals. The European Commission should end VAT deductions for viable goods that companies deliberately destroy, making destruction the least attractive option. At the same time, tax benefits for corporate donations should apply only to goods that can reasonably be reused. This would prevent social enterprises from being overwhelmed with low-value waste and having to cover the cost of managing it, as experiences in Wallonia and Spain have shown.
Public consultation
Manifesto/Strategy
