The European Commission is reviewing how tax rules can help businesses reduce waste and protect the environment. On 10 September 2026, it launched a public consultation on Value Added Tax (VAT) as part of preparations for the upcoming Circular Economy Act.
While VAT is a tax added to many goods and services, the circular economy focuses on keeping products and materials in use for as long as possible through reuse, repair and recycling rather than throwing them away. To explore how VAT rules can better support this approach, the European Commission’s consultation focuses on three areas: the sale of second-hand goods, the destruction of products that are still usable, and VAT deductions for passenger cars used for business purposes.
For example, destroying unsold clothes that are still in good condition wastes both the products and the resources used to make them. The Commission wants to explore whether VAT rules could better encourage businesses to reuse, resell or donate usable goods. It is also examining how tax rules could support second-hand businesses and encourage lower-emission choices. According to the European Commission, the consultation will gather views from businesses, tax experts, researchers and the public to inform a possible proposal to amend EU VAT rules. The broader assessment is expected to conclude in early 2027.
