Ushering in a truly circular economy, i.e. one that runs on
products, components, and materials that are reused instead of
discarded, requires more than the will to change one's
behaviour. It takes real updates to how we approach the taxation of
services and materials.
Our last article looked at how stakeholders would feel the
different VAT impacts of the resell model, one concrete
circular business model. We would like this time to examine another
circular business model, the product-as-a-service (PaaS)
model. We'll look at the fiscal implications (both in terms of
VAT and direct tax) for service provider, customer, and State.
What is the product-as-a-service model?
Do we actually need to own the products we use? That is
the question that drives the performance economy. First studied by
Walter Stahel in the late 1980s,1 the "functional service
economy" (also called performance economy or
service economy) introduced new business models where a
company sells
