When donations leave reuse organisations with the bill

REUSE & TAX

Tax breaks can encourage companies to donate surplus goods. But European reuse network RREUSE warns that recipients can end up paying to handle what cannot be reused — leaving fewer resources for their social and environmental work.

The company gets a tax benefit. The organisation receiving its donation gets goods it cannot reuse and a bill for dealing with them.

That is the problem described by RREUSE in its response to the European Commission’s consultation on VAT and the circular economy, published on 30 October. The network says experiences in Spain and Wallonia show that corporate donation tax relief has shifted handling and disposal costs onto social enterprises already under financial pressure. Its submission does not detail individual cases.

The warning raises a question for the EU’s tax review: how can governments encourage useful donations without rewarding companies for passing their waste costs to someone else?

Who gets the benefit?

Spain provides a concrete example of the tax incentive. Since April 2022, qualifying donations to eligible non-profit organisations have attracted zero VAT, provided the goods are used for the recipients’ general-interest purposes.

Tax adviser Ángel Pérez of Baker Tilly explained in an analysis of the reform that qualifying donors also retain the right to deduct VAT paid when acquiring the donated goods. This removes a tax obstacle to giving useful products away.

But making a donation financially attractive does not ensure that its contents are useful to the recipient. Goods that cannot be reused still require handling and waste treatment. If those costs fall on the receiving organisation, the donation can consume resources intended to support affordable second-hand goods, employment and social inclusion.

Who pays for the rest?

RREUSE wants corporate donation incentives tied to a reasonable prospect of reuse. It also calls for an explicit right to refuse donations and for donors to cover handling and waste-treatment costs.

The distinction matters for the wider debate over textile taxation. Reuse News has previously reported calls for lower VAT on second-hand clothing to help businesses cover the costs of keeping garments in use. Donation incentives address a different transaction: the transfer of goods into those organisations.

Both can support reuse. But RREUSE’s warning is that encouraging goods to enter the system is insufficient if the organisations receiving them cannot afford to deal with what arrives.

The Commission’s consultation opened on 10 September and closes on 4 November. It will inform proposed changes to the EU’s VAT framework; no reform has yet been agreed through this process.

Sources:

• RREUSE Answer to the Call for Evidence on VAT in the Circular Economy (published 30 October 2026). Submission describing members’ experiences in Spain and Wallonia and proposing safeguards for corporate donations; individual cases are not detailed.

• European Commission Public consultation on VAT and the Circular Economy (10 September 2026). Explains the review’s scope and the consultation deadline of 4 November 2026.

• Spanish Tax Agency VAT tax regime for product donations to non-profit entities. Official guidance on the zero VAT rate and qualifying conditions introduced with effect from 10 April 2022.

• Baker Tilly — Ángel Pérez El IVA en las donaciones de productos (25 April 2022). Published tax analysis explaining that qualifying donors retain input VAT deductibility.

• Reuse News Fashion companies demand VAT cut on used clothes (23 November 2025). Earlier coverage of calls to improve the financial conditions for second-hand clothing sales.