To map and address these roadblocks, The Coalition Circular Accounting (CCA) studied the ‘Bike-as-a-Service’ company Swapfiets. The report ‘Making cycling circular: the case of Swapfiets’ outlines two main issues hindering ‘Product-as-a-Service’ businesses: VAT and linear depreciation.
Due to the specifics of its business model, Swapfiets does not qualify for a discounted VAT rate of 9%. Because adjusting the business model would be detrimental to the company and its circularity performance, the CCA recommends legislative changes on how VAT is applied at the EU level.
In addition, the value of Swapfiets’ assets is considered to depreciate linearly, despite the fact that the company extensively repairs and maintains its products, making actual depreciation not linear at all. This means Swaptfiets is disincentivised to perform value-adding repairs. The CCA concluded that Swapfiets should seek a new financing arrangement not based on the value of the assets, but rather on the value of its contracts or more detailed projections of the future growth potential of the business.
The case of Swapfiets can be used by other ‘Product-as-a-Service’ businesses to tackle their accounting and taxation issues. The study can be downloaded here
Join the Circular Investment Readiness Network on April 17th from 8.30 to 10.00 to discover how to leverage impact measurement to attract investors
The inauguration event of the Circular Investment Readiness Network (CIRN) on November 21st marked a milestone for the supporters of sustainable economic practices.
The transition to a circular economy requires innovation in various directions, including production, consumption, and disposal. This webinar focuses on how to facilitate innovation in small to medium-sized European cities, with a particular focus on promoting circular economy business ideas.
CircularInvest and DEFINITE-CCRI are launching the Circular Investment Readiness Network, a Europe-wide community of practice to help circular economy projects overcome development and funding challenges. The initiative will officially kick off online on the 21st of November, 2023, from 10:00 to 11:30 CET.