Taxation on the transmission of used consumer goods and circular economy

Abstract

The current possibility offered by social networks and other virtual platforms to interrelate people from any distance has considerably increased the sales of second-hand goods between private individuals. This allows a longer use of personal property that can contribute to the promote «the circular economy», as long as it avoids throwing away or putting aside useless goods that can fulfill their purpose in the hands of other people.

However, the indirect taxation on these transmissions presents inadequacies. The Asset Transfer and Legal Documentation Tax (Impuesto sobre Transmissiones Patrimoniales y Actos Jurídicos Documentados) although it is designed for application on transfers of movable property in general, is actually effective for those of goods registered in registers, and for goods acquired by businessmen who use them for resale. The growth of sales between private individuals requires a reflection in the design of the tax, which should discriminate according to the value of the goods transmitted and should take measures to effectively apply the tax on goods of higher value, avoiding the widespread noncompliance, which is not investigated. In the paper some proposals to this effect are made.

On the other hand, the sale of used goods to entrepreneurs by individuals, also poses a specific problem in the light of jurisprudence and legislative inaction for too long. In this sense, are pending appeals and a preliminary ruling by the ECJ.