On 21 November, Emmanuelle Ledoux, Director General of the Institut National de l’Économie Circulaire (INEC), and Emery Jacquillat, Chairman of Camif, presented an innovative report on circular VAT to the French Minister for Ecological Transition, Christophe Béchu. This report, the result of two months of in-depth studies and consultations in key sectors of the economy, proposes crucial measures to speed up the transition to a circular economy. This article explores in detail the issues raised by the report and highlights the importance of circular VAT in creating a more sustainable economic model.
Context: The urgent need for ecological transition
The current context calls for a profound re-evaluation of our production and consumption patterns. The increasing scarcity of natural resources, the growing problems associated with waste and pollution, and the devastating impact on the climate all call for immediate action. In this context, the INEC and Camif report proposes circular VAT as a potentially powerful lever for stimulating repair, reuse and, therefore, the circular economy.
Why circular VAT?
1.Reducing VAT on repairs
The report’s main proposal is to introduce a reduced VAT rate of 5.5% on repairs to household appliances, footwear, leather goods, clothing and household linen from the 2024 Finance Act. The aim of this measure is to encourage consumers to choose repair rather than the purchase of new products, by making this option more economical.
2.Measuring the impact of reduced VAT rates
Another key measure is the proposal to measure the economic, social and environmental impact of reduced VAT rates. This would make it possible to assess the effectiveness of tax incentives in promoting more sustainable practices.
3.Clarifying the Notions of Reconditioning and Remanufacturing
The report also proposes to clearly define the concepts of reconditioning and remanufacturing, including them in the circular VAT framework. A precise definition is essential to avoid misunderstandings and ensure consistent application of tax policy.
4.Extending the sectors eligible for reduced VAT rates
Extending reduced VAT rates to other repair sectors is a significant recommendation, offering a wider scope to stimulate the circular economy.
5.Deploying Circular VAT for the Functional Economy
The proposal to extend circular VAT to the functionality economy highlights the need to support business models based on the sustainability and longevity of products.
6.Include Ecodesigned Manufactured Products in Reduced VAT Rates
Promoting eco-designed manufactured products by applying reduced VAT rates aims to encourage the design of environmentally-friendly products from the outset.
7.Complete the System: Circular VAT on Reconditioned Products
Finally, the inclusion of reconditioned products in the circular VAT scheme completes the cycle by encouraging a second life for existing products.
The Challenges of Circular VAT
1.Ecological and Fiscal Transition
Christophe Béchu rightly points out that the ecological transition cannot take place without a fiscal transition. Circular VAT therefore represents an opportunity to link these two crucial aspects for a complete transformation of our economic system.
2.Support for Repair: Jobs and Economic Sovereignty
According to the Minister, reduced VAT on repairs could support a veritable French repair industry, already made up of 144,000 businesses, generating 255,000 jobs and sales of €33 billion nationwide. This measure is part of a broader vision of the circular economy, aimed at preserving the planet while strengthening economic sovereignty and developing jobs that cannot be relocated to France.
3. Creation of a Repair Model
Emmanuelle Ledoux insists on the need to create a model of repair, stressing that all the actions taken to date will be in vain without a significant transformation in our approach to repair.
4.Current inequalities in taxation
Emery Jacquillat highlights a flagrant injustice in current taxation: taxing in the same way a product manufactured on the other side of the world, which does not respect any social or environmental standards, and a product resulting from repair which has already been taxed. This disparity contributes to making repairs more expensive than buying new products, discouraging consumers from making the ecological choice.
Conclusion: Towards a Circular Future
In conclusion, circular VAT is emerging as a powerful tool for promoting the transition to a circular economy. The proposals in the INEC and Camif report provide a comprehensive roadmap, addressing current challenges and offering concrete solutions. By adopting these measures, France could not only stimulate repair and re-use, but also position its economy as a pioneer in creating a sustainable model for future generations. Circular VAT, far from being a simple tax measure, could well be the catalyst for an ecological and economic revolution.
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You can also opt for a white label solution that will allow your company to circularize your equipment internally and to engage your employees around ecological themes.
Don’t throw away any more, opt for the second hand!
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