The idea of a lower VAT rate on products made from recycled materials, which could be applied at the EU level, will be presented by Czech Environment Minister Petr Hladík at the meeting of EU environment ministers on Tuesday.
Currently, EU law does not allow member states to reduce VAT on products made from recycled materials. However, the Czech Republic wants to introduce a reduced 12% VAT on these products as a part of a tax package aiming to consolidate public finances.
The lower rate must be allowed at the EU level for such a move.
According to the minister, the reduced VAT should be applied to all plastic products made from recycled materials, including toys, hygiene tools, daily necessities, snow rakes, flower pots, and even building materials.
“These are also 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,” Hladík told Czech media on Monday.
The minister said possibly including products made from secondary raw materials at a lower rate would encourage the development of a circular economy.
At the same time, it would increase the motivation of end customers to use recycled materials, thus expanding the production of secondary raw materials.
Formally, VAT rates fall under the competence of finance ministers, but Hladík said it was logical for environment ministers to agree on the proposal.
“We would like the Spanish Presidency to deal with it intensively,” he said.
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