Municipality’s Waste Collection Services Deemed Taxable Economic Activity by The Hague Court

• The Hague Court ruling on VAT.
• The municipality provides a taxable service to the packaging industry by collecting glass, paper, and household waste, including PMD (Plastic, Metal, and Drink cartons).
• The reverse charge mechanism does not apply.
• The municipality owes VAT on the compensation received.
• From April 1, 2020, the municipality switched from a chain regime model to a post-separation model for PMD.
• The municipality now only collects waste, including PMD, and delivers it to a post-separator.
• The court examines if the municipality acts as a taxable entity by collecting household packaging waste and provides taxable services to Foundation A.
• According to Article 9 of Directive 2006/112/EC, an “economic activity” includes all activities of a manufacturer, trader, or service provider.
• An economic activity exists if it results in a taxable event as per Article 2 of the VAT Directive.
• The court must determine if the collection of household packaging waste by the municipality constitutes a service under Article 2 of the VAT Directive.
• Collecting household waste, including packaging waste, is considered a service.
• The collection is essential for the intake and recycling of packaging waste by the packaging industry.
• The municipality receives compensation from the packaging industry for collecting glass, paper, and from 2021, for efficiently collecting the weight share of post-separable plastic, metal packaging waste, and drink cartons.
• The compensation received is directly related to the collection of household packaging waste.
• There is a legal relationship between the municipality and the packaging industry, involving mutual exchange of services and compensation.
• The municipality provides a service to the packaging industry for consideration as per Article 2 of the VAT Directive.

Source: uitspraken.rechtspraak.nl

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.