The Coordination Committee of the General Financial Directorate (GFD) and the Chamber of Tax Advisors has concluded that the current practice of applying the standard VAT rate to the take-back of electrical equipment and related services shall remain unchanged. The discussion paper responded to an article whose author mentioned the application of the reduced VAT rate to the take-back of electrical equipment on the assumption that it can be classified as municipal waste.
At issue therefore was whether discarded electrical equipment can be considered municipal waste. Referring to the GFD's information from 2021, the paper submitter states that the term 'municipal waste' should be interpreted based on EU legislation and that the deﬁnition under the Waste Act cannot be used. Under EU law, municipal waste is only and exclusively waste produced by a household through ordinary non-business activities. Furthermore, the collection and disposal of electrical equipment is very different from municipal waste treatment. First of all, it is not possible to determine where the waste electrical equipment originated, as not only citizens but also businesses can dispose of it in the collection containers. Also, for municipal waste, the municipality becomes the owner of the waste dumped on its territory. On the other hand, for waste electrical equipment, municipalities themselves can neither handle such waste nor collect it from citizens; hence they cannot own it. Municipalities can only collect electrical waste if they conclude a contract with the relevant ﬁrm (a collective system operator).
Another difference consists in the recycling fee included in the purchase price the buyer pays for the equipment and used under the collective scheme to cover the costs of taking back and disposing of appliances. The recycling fee is usually subject to a 21% VAT rate, the same rate as for the appliance. According to the GFD, the purpose of including municipal waste in the reduced VAT rate is to reduce the costs of municipal waste management for citizens and municipalities. However, this cannot be achieved for the take-back of electrical and electronic equipment, as citizens already pay 21% VAT on the recycling fee when they purchase an appliance.
For waste electrical equipment, the waste is not generated by the citizen but by the person who processes the waste electrical equipment, because electrical equipment becomes waste only when the appliance reaches the final processor who disassembles it and sorts the output components of the electrical equipment into different types of waste. At this point, the owner of the waste is the final processor and not the person who disposed of the electrical equipment.
In line with the paper submitter, the GFD confirmed that the 21% VAT rate shall continue to apply in this case.