Towards a circular economy: VAT and the “resell model”

How does the VAT influence the circular business models and what does this mean for businesses and consumers?

The KPMG Luxembourg Expert Blog has published an article about this subject which is long overdue ( -> LINK to the blog).

“In the future it is of critical importance to look in detail at the role of tax and how current rules incentivize companies to favor the linear model over a more circular business approach,” says Dr Jeannot Schroeder.

This first article, out of a series of 3 articles, focuses on the resell model which consists of reselling used goods again and again. The way that this business model is affected by the VAT is studied and analysed on the basis of the tangible example of a bookseller’s.

As Jeannot Schroeder states further, “this example shows that a detailed analysis of the tax impacts on a case by case situation is necessary in order to get a complete understanding of what needs to be changed to promote different circular business models.”

Stay tuned for the next articles to come on the fiscal impacts on circular business models.