On Saturday 26 October, the National Assembly voted in favour of an amendment introducing a 5.5% circular VAT on certain repair services. This decision marks a significant step forward for the sectors concerned and for the local economy.
The development of the circular economy depends, among other things, on the support of the repair trades and the preservation of the associated skills. While theRepair bonusThe main aim is to encourage consumers to repair their goods, and this reduction in VAT targets traders and artisans directly. It will enable them to:
- strengthen the sustainability of their economic model,
- improve their margins,
- structure their supply and meet demand.
This measure comes at a crucial time, as the repair sector has been declining for several decades. For example, the number of shoemakers in France rose from 45,000 in the 1950s to only 3,500 today. This decline is partly explained by the difficulty in generating sufficient income for these occupations. The new tax therefore proposes to reinvigorate the sectors concerned.
However, it should be noted that not all products in the circular economy benefit from this new measure. Only repair services for household appliances, cycles, clothing, household linen and footwear can benefit from this reduced rate. This restriction is linked to theEuropean Directive 2022/542, which strictly regulates the application of reduced VAT rates by limiting them to a precise list of goods and services listed in Annex III thereto.
An extension to other sectors, such as repackaged or eco-designed products, would require a prior revision of this European framework. It was also an initial request from the National Institute of Circular Economy (INEC), which in its proposal wanted to extend the application of this tax to all activities promoting the circular economy.
However, this legislative progress is an important step towards improving the repair industry and contributing to more sustainable consumption. It also highlights the need to continue national and European efforts to support an ambitious ecological transition.
Editor(s):Emilie ROSAS
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Source(s): INEC | National Assembly