The Commission is seeking proposals to change VAT rules for second-hand goods and the destruction of products that are still usable

The consultation includes deductions for cars used in economic activity and remains open until 4 November 2026. The review starts from a system that already taxes, under certain conditions, the margin of second-hand goods dealers and in which the destruction of goods may affect VAT deduction.

The European Commission is seeking proposals to adapt value added tax to the circular economy through a consultation covering the resale of goods, the destruction of products that are still usable, and cars used in economic activity. The initiative prepares a possible amendment to the VAT Directive, with the stated objective of supporting circular business models and the low-emission economy.

In brief

1.The Commission is examining three distinct areas, from the treatment of second-hand goods and destroyed products to VAT deduction for cars used in economic activity. The stated objective is to adapt taxation to the circular and low-emission economy.

2.Eligible dealers can already apply the margin scheme for certain second-hand goods. The choice also affects the invoice and the professional buyer’s ability to deduct VAT.

3.For destroyed goods, retaining the VAT deduction depends on the applicable conditions. In the case examined in 2023, the Court of Justice required proof of destruction and the objective loss of any utility of the goods for the economic activity.

4.The deadline for contributions is 4 November 2026. The evaluation and impact assessment are expected at the beginning of 2027 and will prepare a legislative proposal, without this stage changing existing tax obligations.

For second-hand goods dealers, one of the rules already in place concerns the amount on which VAT is calculated. The special margin scheme allows, when the conditions for its application are met, the dealer’s margin to be taxed instead of the entire resale price. The system is mandatory for Member States, while its use is optional for eligible dealers.

The difference also has consequences for the buyer. The Dutch tax administration explains the mechanism using goods such as used cars, clothes and books purchased without VAT. Under the margin scheme, VAT is not shown separately on the invoice, and a company that buys the goods in this way cannot deduct the tax relating to the purchase. For a sale, the dealer may opt for the normal scheme, in which case it applies VAT to the sale price and records it on the invoice.

For destroyed goods, the tax issue may concern VAT that the company deducted when it purchased them. Adjusting the deduction means recalculating that entitlement, which may require the company to repay part of the deducted tax. Such an obligation was challenged by the Bulgarian telecommunications operator BTK after certain equipment and goods that had become unsuitable for use or sale were removed from the records. Some were sold as scrap, while others were destroyed or disposed of. The case was examined by the Court of Justice.

In its judgment of 4 May 2023, the Court of Justice of the EU held that the voluntary destruction of goods removed from the records does not require adjustment of the deduction if the destruction is properly proven or confirmed and the goods have objectively lost any utility for the company’s economic activity. These conditions delimit the Court’s solution. However, the current consultation also concerns the destruction of products that are still usable, meaning that their situation cannot automatically be treated as identical to that in the judgment. The Court’s judgment.

In the case of cars used in economic activity, the Commission is examining the VAT deduction rules. These establish the conditions under which tax incurred on purchases may be recovered, in relation to the use of the goods for taxable transactions. This is different from determining the VAT rate on the sale of a car; the consultation does not grant companies a new deduction percentage.

Contributions may be submitted until 4 November 2026, including by SMEs, business organisations, tax authorities, researchers and citizens. The evaluation of the existing rules and the impact assessment are being carried out in parallel and are expected to be completed at the beginning of 2027. The results are intended to underpin a legislative proposal, meaning that this timetable concerns the preparation of amendments, not the application of new taxes.

The Commission places the initiative within the preparation of the future European act on the circular economy. The common VAT framework continues to be applied through national legislation, with Member States responsible for transposing and applying the directive within their territories.

https://2eu.brussels/ro/news/comisia-cere-propuneri-de-schimbare-a-tva-pentru-bunurile-second-hand-si-distrugerea-produselor-inca-utilizabile