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(2004/C 88 E/0656)

WRITTEN QUESTION E-3257/03

by Margrietus van den Berg (PSE) to the Commission

(3 November 2003)

Subject:   VAT — recycling firms

One of the main tasks of recycling firms is to identify recycling possibilities and put them into practice. They do this by collecting, selecting, repairing and remarketing end-of-life products. In Belgium the recycling industry is allowed some leeway with the 6 % VAT rate on the basis of social arguments. Repeated attempts have been made to enable the recycling industry in the Netherlands to apply a VAT rate of less than 6 % on the basis of social and environmental arguments, but so far without success. In the meantime the Commission has presented communication (1) on integrated product policy to Parliament and the Council. This makes many references to granting tax concessions to environmentally friendly projects. However, the recycling industry is not specifically mentioned.

Answer given by Mr Bolkestein on behalf of the Commission

(19 December 2003)

The Commission is currently concluding its stakeholder consultation regarding the Thematic Strategy on the Prevention and Recycling of Waste. In this context it has established contacts with, among many other stakeholders, Rreuse, mainly on the issues of repair and reuse of products and equipment.

The consultation period on the Thematic Strategy on the Prevention and Recycling of Waste (2) has just ended, on 30 November 2003. Economic instruments are among the topics addressed in the Communication. However, no concrete conclusions on the contributions of individual stakeholders have been reached yet.

As stated in its Communication, the Commission appreciates the valuable contribution which the recycling industry makes to sustainable development. In fact the Communication addresses a large number of recycling issues which potentially play key roles in the overall concept for the sustainable management of resources.

Integrated Product Policy (IPP) addresses the environmental performance of products over their entire life cycle. Recycling and reuse are therefore genuine concerns of IPP. Technologies and procedures used in recycling operations can help to avoid a negative environmental impact at the end of a product's life, save energy and resources, and may contribute to a more ecologically friendly product design.

As announced in its Communication on VAT strategy adopted in 2000 (3), on 23 July 2003 the Commission adopted a proposal for a directive on reviewing and rationalising the rules and derogations applying to reduced rates of VAT (4). Its main objective was to improve the internal market, in particular by simplifying VAT and applying it in a more uniform manner.

The proposal does not include any specific provision relating to the recycling industry: there are already measures favourable to this sector in the sixth VAT Directive (5).

Firstly, the recycling industry is in most cases covered by the special arrangements applicable to second-hand goods, works of art, collectors' items and antiques introduced by Article 26a of the sixth Directive. This means that sales of second-hand goods by recyclers, who are classified as taxable dealers, are taxed only on the profit margin made. The profit margin is equal to the difference between the selling price charged by the taxable dealer for the goods and the purchase price.

Secondly, under Annex H, category 14, of the sixth Directive, Member States may apply a reduced rate of VAT (minimum 5 % ) to the ‘supply of goods and services by organisations recognised as charities by Member States and engaged in welfare or social security work, insofar as these supplies are not exempt under Article 13’. This means, for example, that a Member State could apply a reduced rate of VAT to the resale of recovered goods by organisations recognised as charities.

The general rule in relation to rates of VAT, however, is that the standard rate applies. Member States have the option of applying a reduced rate which may explain why some have a reduced rate in this respect and others do not.

To conclude, there appears to be no need for further special measures to reduce the rate of VAT in this sector.

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(1)  COM(2003) 302.

(2)  COM(2003) 301 final.

(3)  COM(2000) 348 final.

(4)  COM(2003) 397 final.

(5)  Sixth Council Directive 77/388/CEE of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes, OJ L 145, 13.6.1977.

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