Fiscal treatment of emission allowances
European Union Carbon Market Glossary


Report on the functioning of the European carbon market, accompanying the document Report from the Commission to the European Parliament and to the Council, Climate action progress report, including the report on the functioning of the European carbon market and the report on the review of Directive 2009/31/EC on the geological storage of carbon dioxide of 18 November 2015 (COM(2015) 576 final), p. 25 invokes following circumstances as regards the fiscal treatment of emission allowances issued and traded under rules of the European Union Emission Trading Scheme (EU ETS):


- a low number of the EU Member States reported that value added tax (VAT) applies to the issuance of emission allowances;


- emission allowances are subject to VAT as they are a taxable supply of services;


- VAT is being due on transaction of emission allowances on the secondary market in 24 Member States;


- a majority of the EU Member States reported on the application of the reverse-charge mechanism on transactions involving emission allowances (the reverse charge moves the responsibility for the payment of the VAT transaction from the seller to the buyer of a good or service);


- emission allowances for corporations can additionally be taxed;


- sxteen EU Member States reported that there was no taxation on emissions allowances or corporate emission allowances.



Last Updated on Friday, 08 April 2016 23:19


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