- Law 7/2022 introduces new environmental taxes and regulates zero VAT for donations to non-profit entities.
- Various social and business sectors are promoting the creation of a "Green VAT" and tax exemptions to encourage the reuse of products.
- The European Union is seeking to modernize VAT regulations to eliminate barriers that hinder sustainable business models.
When we talk about taking care of the planet, we usually think about recycling more or polluting less, but there's a piece of the puzzle we sometimes forget: taxes . Taxation isn't just a tool for raising money; it can be the driving force that either propels or hinders the transition to a sustainable development model where nothing is wasted and everything is used to its fullest potential.
In Spain, the debate surrounding VAT on the circular economy is gaining momentum. It's not just about applying the law, but about questioning whether the current system is fair to those trying to do things right. While some companies outsource their environmental costs, others strive to be sustainable, often facing a competitive disadvantage because tax regulations don't always keep pace with current environmental needs.
The Waste Law and the new environmental taxes
A key turning point was the publication of Law 7/2022, of April 8 , focused on waste and contaminated soils. This law went beyond mere recommendations, establishing two specific taxes that came into effect on January 1, 2023. These are: a tax on non-reusable plastic packaging and a tax on landfill disposal, as well as incineration or co-incineration of waste.
Beyond these new taxes, the law addresses a key point regarding VAT. A special regime has been established for product donations intended for non-profit organizations. To prevent self-consumption from becoming a tax issue, donated goods are presumed to have suffered total deterioration , allowing a zero percent rate to be applied , provided that the receiving organizations use these goods for purposes of general interest.
The debate on Green VAT and fair competition
Despite the progress, some voices are calling for it to be insufficient. Sectors such as textiles and the social economy are proposing the implementation of a Green VAT . The idea is simple yet powerful: reduce VAT to 10% for products and services that demonstrate genuine sustainability, based on the company's strategic sustainability drivers . This would prevent companies with an eco-conscious DNA from competing unfairly against models that don't invest in environmental regeneration.
To ensure this doesn't remain mere rhetoric or simply greenwashing , the creation of an independent body and the implementation of certification labels, similar to ENISA's but focused on circularity and endorsed by scientific and expert committees, are suggested. The goal is to enable end consumers to access more affordable, responsibly produced products, thereby encouraging more conscious and responsible consumption.
The fight against waste and reuse
Another open front is the sale of second-hand goods. Initiatives like #UnImpulsoRedondo argue that zero VAT should be applied to goods that come from processes prepared for reuse and managed by the Social Economy. It is surprising to see that the revenue from these sales is minuscule, barely 0,02% of the total , while the benefits in terms of CO2 savings and the creation of green jobs for excluded groups are massive.
Along the same lines, associations like AECOC and other organizations have presented the document "Donating to Care for the Planet." In it, they denounce the current VAT system as a barrier to large-scale donations . They argue that it is absurd to tax donating food or products that are outside the commercial circuit, when the objective should be to prevent them from ending up in the trash. Countries like France and Belgium have already eliminated this obstacle, demonstrating that a coherent tax system significantly increases the number of donations and drastically reduces waste generation.
European perspective and regulatory modernization
This movement isn't just Spanish. The European Commission is aware that some VAT rules are outdated and hinder circular business models. Therefore, they have launched calls for proposals to gather data and modernize the VAT directive , aiming to ensure that sustainable options are not penalized fiscally. The goal is to harmonize the criteria so that the value of products nearing their expiration date is considered minimal or zero, facilitating their redistribution.
Integrating these measures would allow companies to view sustainability not as an additional cost, but as an opportunity. By aligning environmental regulations with fiscal policy , the business sector can be encouraged to move towards a circular economy not only for ethical reasons, but also for economic viability, ensuring that polluters pay and those who protect the environment are rewarded.
The transition to a greener tax system requires that the Waste Act be complemented by VAT exemptions on donations and genuine support for reuse. By reducing tax barriers for sustainable and second-hand goods, inclusive job creation is encouraged and the carbon footprint is reduced, transforming the tax system into an active tool for achieving the Sustainable Development Goals.
