On September 10, 2026, the European Commission launched a public consultation on VAT and the circular economy. The main question of the public consultation is how EU VAT rules could better support the circular and low-emission economy. The initiative is part of the planned Circular Economy Act, which aims to make the EU economy more sustainable while maintaining competitiveness.

Key Areas of Public Consultation

The consultation will examine whether current VAT rules create obstacles for businesses using circular business models, such as reusing, repairing, or reselling products. It will focus particularly on three key areas: the VAT treatment of second-hand goods, the destruction of otherwise usable goods, and VAT deduction rules for passenger cars used for business purposes.

This consultation is part of a wider evaluation and impact assessment that will run until early 2027. Once the assessment period ends, the European Commission will use the findings to prepare a possible legislative proposal to amend the EU VAT Directive. Moreover, the initiative could eventually lead to VAT rules providing stronger support for reuse, resource efficiency, waste reduction, and lower-emission business activities.

The public consultation will be open for eight weeks. This allows key stakeholders, such as businesses, tax professionals, trade associations, SMEs, national tax authorities, academics, and members of the public, to provide feedback through the Commission’s “Have Your Say” portal.

Conclusion

By addressing existing regulatory obstacles surrounding second-hand goods, product destruction, and business transport deductions, the European Commission aims to align tax policy with the EU's broader climate and sustainability targets.

Interested parties have until November 4, 2026, to submit their views and practical experiences on how VAT rules could better support sustainable business models. The outcomes of this public consultation will play a critical role in shaping the upcoming Circular Economy Act and informing potential legislative amendments to the EU VAT Directive.