Circular economy

What it means

The circular economy is a model in which products, materials and resources stay in use for as long as possible. Instead of the linear “make, use, throw away”, it relies on longer life, repair, reuse, refurbishment and recycling, with waste becoming a raw material.

The EU promotes it through many rules: extended producer responsibility for packaging and products, deposit schemes for drinks containers, requirements on repairability and recycled content, and restrictions on single-use plastics. Circularity is also one of the objectives of the EU taxonomy.

For companies it means new obligations but also opportunities. Saving materials and energy, selling secondary raw materials, offering repair or rental instead of sales, and scoring better in customers’ ESG reporting can all bring a competitive edge.

How it works in practice

For most small and medium-sized firms the circular economy starts with practical steps: proper waste records, sorting, choice of packaging, longer equipment life and repair rather than replacement. These often save money too.

EU funds and other grant calls are often available for circular economy projects, such as recycling technology or material savings. When an application is prepared, we help with the financial part and with making sure the costs match the eligible expenditure.

The model raises accounting and tax questions: selling secondary raw materials is revenue, scrap metal is often subject to the VAT reverse charge, and renting or servicing instead of selling changes how revenue and assets are reported.

What to watch out for

The most common risk is greenwashing, presenting the company as “circular” or “sustainable” without evidence. Rules on environmental claims are tightening, and unsupported claims may be misleading advertising.

The second risk is underestimating packaging and product obligations. A company that imports or packs goods may be a packaging producer with registration and fee obligations without realising it, and has to pay back fees at an inspection.