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EU considers boost to circular economy with reduced VAT rates

Lower VAT rate for recyclates / recycled products

The Czech delegation to the EU has proposed permitting extended use of the reduced VAT rates on recycled products. The Czechs believe that the introduction of a reduced VAT rate for products with recycled content would stimulate recycling and the use of secondary raw materials and increase the demand for recycled products.

At present, the range of goods and services permitted for reduced rates is strictly controlled by Annex III of the EU VAT Directive. Although new EU reduced VAT rate freedoms will loosen this up to lower rates on more supplies.

The Czech Republic therefore invites the European Commission and Member States to initiate a discussion on:

  • the possibility to include certain products with recycled content in a lower VAT rate; and
  • the percentage of recycled content in these products.

Proposals include:

  • all plastic products made from recycled materials, including toys, hygiene tools, daily necessities, snow rakes, flower pots, and even building materials.
  • materials that today end up either in landfills or incinerators that we can recycle for use in the municipal sector, such as benches or urban furniture
  • products made from secondary raw materials at a lower rate would encourage the development of a circular economy.


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