VAT Implications for Waste Disposal

In recent times the treatment of VAT on waste disposal has been queried by a number of Waste Disposal Operators carrying on business in the industry. This article aims to clarify any misconceptions of VAT in this sector.

Legislation

The acceptance for disposal of waste material is a service and chargeable to VAT at the 13.5% rate in accordance with Paragraph (viii) of the Sixth Schedule Irish VAT Act 1972 as amended.

Section 11 of the Waste Management Amendment Act 2001 gave the Minister for the Environment and Local Government the power to make regulations providing for the imposition of a landfill levy. The Waste Management (Landfill Levy) Regulations 2002 (S.I No. 86 of 2002) imposed the levy with effect from 1 June 2002. The regulations provide that the accountable person is the person by whom the levy is payable, i.e. the operator of the landfill facility. Landfill facilities are in general operated by Local Authorities. The VAT position of local authorities is set out in Article 4(5) of the EU Sixth VAT Directive, which was transposed into Irish VAT law by Section 8(2A) Vat Act and is as follows:

Section 8(2A)(a) provides that local authorities shall be taxable persons only with respect to specified categories of supplies made by them of goods and services (other than certain sporting activities where there is distortion of competition which are specifically provided for in Section 8(3E) VAT Act) by the making of an Order by the Minister.

To date no such order has been made so accordingly they remain outside the scope of VAT for all other activities including the operation of landfill facilities.

Operation

Operators of landfill facilities pass on the levy to persons using the landfill facility.

Where a local authority charges fees and the levy to persons depositing waste in the licensed landfill facility no charge to VAT arises.

Where the person using the landfill facility in the course of operating a waste disposal business, charges a customer an amount for disposing of waste which includes the levy VAT is chargeable on the total consideration that the waste disposal operator becomes entitled to receive inclusive of the levy, or an amount equivalent to the levy.

There are a small number of landfill facilities operated by licensed private operators who like the local authorities are accountable persons for the levy. These operators charge a gate fee plus the levy, or an amount equivalent to the levy, to persons using the facilities. In these circumstances, VAT is chargeable on the total consideration that the landfill operator becomes entitled to receive inclusive of the levy, or an amount equivalent to the levy. A VAT registered waste disposal company using the private facility may deduct this VAT.

Where the person using the private landfill facility in course of operating a waste disposal business, charges customers an amount for disposing of waste which includes the levy, or an amount equivalent to the levy, VAT is chargeable on the total consideration that the waste disposal operator becomes entitled to receive inclusive of the levy, or an amount equivalent to the levy, but exclusive of Value Added Tax.

Charge by waste disposal operators to their customers.

In all circumstances where a waste disposal operator includes the levy in the amount which is charged to the customer, VAT is chargeable on the total consideration that the operator becomes entitled to receive inclusive of the levy.

Enquires on this article should be addressed to taxbrief@revenue.ie