Abstract Green VAT for business that will help Europe go greener and also increase the competiveness of our industry by decreasing the VAT by 5 %. It is a two-step VAT by applying it to manufacturers and also you and me. A benefit it has is it not an economic burden for industry for not producing green products. Instead they are given an incentive to produce green products by giving them a lower VAT and thereby gain a competitive advantage against other industries outside the EU-zone.

1. Jan Softa CEO of Somerco
Date: 2013 - 10 - 08
Enhance the EC member states competiveness
Part 10: Green VAT for business
Abstract
Green VAT for business that will help Europe go greener and also increase the competiveness of our industry by
decreasing the VAT by 5 %. It is a two-step VAT by applying it to manufacturers and also you and me. A
benefit it has is it not an economic burden for industry for not producing green products. Instead they are given
an incentive to produce green products by giving them a lower VAT and thereby gain a competitive advantage
against other industries outside the EU-zone.
Background
Helping geniuses! Our slogan sums up who Somerco aims to help. Somerco are a company
that target to help researchers and innovators so that these geniuses can create prosperity and
jobs in society. In this discussion draft, I present how green VAT for business will help
Europe go greener and also increase the competiveness of our industry.
Introduction
On 27 March 2013, the European Commission adopted a Green Paper on "A 2030 framework
for climate and energy policies". This document launches a public consultation lasting until 2
July, allowing Member States, other EU institutions and stakeholders to express their views;
for example on the type, nature and level of potential climate and energy targets for 2030, but
also on other important aspects of EU energy policy in a 2030 perspective. Here is an
addition to this green paper that can be discussed. I present what tools that can be used, how
green VAT for business can be approved and what technological functions that can be used
for an effective implementing in society.
The suggestion revolves around a green VAT for business that not forces the manufacturing
industry an economic burden for not producing green products. Instead they are given an
incentive to produce green products by giving them a lower VAT and thereby gain a
competitive advantage against other industries outside the EU-zone.
Tool
To direct society to greener alternatives for the well-being of people and nature in the long
run are in the interest for many governments. It is a massive change of direction to go green
in industry, agriculture and society. To achieve this, efficient tools are needed that are not too
costly for the income of the government and that do not damage the industries
competiveness. The tool I suggest is green VAT for business. This green VAT for business
has the purpose to increase the competiveness of European companies by giving it incentives
to produce green products and for retailers to sell and market these products.
Approval
There is a need for products and services to be approved as eligible for green VAT somehow.
The International Standard Organisation (ISO) already has standards for environmental
management as the ISO 14000 – Environmental management. It is an example where

2. Jan Softa CEO of Somerco
Date: 2013 - 10 - 08
standardization is used as a way to decide what can and cannot be approved as environmental
friendly. When there is an ISO standard that we in Europe consider to be enough to qualify
for this green VAT it should be used. However, this shift of society can be further increased
and developed on a European level. Therefore, to also use ESO for green VAT for businesses
is an effective way because it will be applicable for all Europe.1 It could be said that
standards adopted by ESO equals the control of our own pace to a greener Europe.
Functionality
For those retailers who sell so called green products and services it has to be easy to use in
their daily business. To use a technology that is used throughout Europe is needed such as the
barcode. A barcode is an optical machine-readable representation of data relating to the
object to which it is attached. Barcodes such as the UPC have become a ubiquitous element
of modern civilization, as evidenced by their enthusiastic adoption by stores around the
world; most items other than fresh produce from a grocery store now have UPC barcodes. 2
Green VAT
The vast majority of countries use VAT on products and services. Some of them have a flat
VAT, meaning the same VAT level on all products and services. Most countries have the
same VAT for most products and services with exemptions such as for books and basic food
products as milk. To use different VAT levels is common. Therefore, it should be able to
have another level on green VAT for business.
In the implementation of the green VAT for business I suggest a decrease of 5% on products
manufactured in the EU-zone. It means when the manufacturer of products sell it to retailers
there is a 5% lower VAT and when the retailer sell to you, me and companies there is also a
lower VAT. What should be included in the green VAT for business is further discussed in
the next paragraph.
Include what?
There are different options to measure and decide what should be eligible for green VAT for
business. An obvious target for decreasing the CO2 emissions is to focus on transport. We
already see hybrid busses in many cities and to increase this development is beneficial for the
climate. However, I choose to point out the benefits by applying a green VAT for businesses
on manufactured products and parts of products, industry processes and services.
We can already find plenty of examples on manufactured products that are considered as
green such as light bulbs, washing machines, batteries, lubricants for engines and so on. Also
parts of manufactured products could be eligible for green VAT such as parts in medical
machines and catalysts in car engines. If we look at catalysts in car engines it becomes clear
what separates my suggestion for green VAT for business compared to focus on CO2
emissions. In my suggestion, it means the company who manufacture the car can buy the
catalyst from a subcontractor with a 5% VAT decrease in price, while with a focus entirely
on CO2 emissions only the buyer of the car knows it is environmental friendly. To also use
my suggestions for a green VAT for business benefit more chains from raw material to enduser.
1
2
European Standardisation Organisation.
Barcode. http://en.wikipedia.org/wiki/Barcode

3. Jan Softa CEO of Somerco
Date: 2013 - 10 - 08
To promote green industry processes has gained more advocates by researchers and policy
makers. The reason is that much can be gained by this focus because you find large polluters
here. It will be large factor for a greener society. To measure the CO2 emission is a way to
decrease the air pollution and an additional way is to focus on the toxic level of chemicals
that are used in the industry processes. Therefore, to also include industry processes for green
VAT would help companies become more environmental friendly and at the same time
increase their competitiveness by being able to offer lower prices for these manufactured
products. It would mean that when a company opt for using less toxic chemicals the green
VAT for businesses could be applied.
There are plenty of options for applying green VAT for businesses in the service sector such
as loyalty card programs for different types of green products. However, the greatest benefit
could be gained in ordinary services such as when you buy a service from your plumber or
taxi driver it could qualify for green VAT. For instance, are your plumber driving an
environmental friendly vehicle and are using tools that has been manufactured by industry
processes that are eligible for green VAT. This example highlight a two-step green VAT for
business. The first step will be when the plumber buys an environmental friendly vehicle and
some of its tools that has been manufactured by industry processes that are eligible for green
VAT. The next step for the green VAT is when you and I buy this green plumber services.
Winners
Is this a win (producer) – win (retailer) – win (people) – loose (government) system. It
depends how you look at it. It is clear that the government will lose VAT income in this
system for a few percentages. So let's look at what incentives the European governments have
for implementing this VAT. (A) The obvious are a greener society in the immediate future
and in the long-run. (B) A direction of the manufacturing industry toward greener products
which will benefit energy consumption and pollution in society. (C) An increased
competence and production of green products that start in Europe will give European
companies a competitive advantage against companies from other parts of the world. It is
achieved by reaching the critical mass for profit sooner for these products and therefore it
also becomes easier to export outside the EU-zone. (D) The R & D for green products will
get a boost in the EU-zone which will benefit industry based in Europe in the long-run. (E) A
spill-over effect is that companies with their head office outside the EU-zone have a huge
incentive to start production of green products in the EU-zone and (F) it is quite possible that
they place R & D in the EU-zone. In conclusion, I think this is as close as you can get to a
win-win-win-win system as possible.
Pace
As mentioned before, it is a big change of direction of society to go greener and therefore it
needs tools that can be effectively used. To achieve result the best way is to be able to
measure it. Therefore, the targets needs to be as specific as possible and this is possible to
achieve by deciding when to implement the green VAT for business for the manufacturing of
products and part of products, for industry processes and for services. The ideal would have
been to implement the green VAT for business all at once, but I believe it would work better
and benefit more by taking them at different dates. Thereby, industry, ESO and government
have time to prepare for the implementation. I hope my suggestion for green VAT for
business helps Europe to reach the targets of 2020 and also the Commissions targets of 2030.

4. Jan Softa CEO of Somerco
Date: 2013 - 10 - 08
Horizon 2020 & EU Structural and Investment Funds Growth Programme
Horizon 2020 and EUs Structural and Investment Funds cannot be the implementer of a green
VAT for business, but it can contribute to a greener development in Europe. For instance,
when you apply for funding in Horizon 2020 the Commission could highlight its ambitions
for a greener Europe by asking if the project has an ambition to work after any "green
standards" or has the ambition to set new "green standards". It is not that different from what
FP7 are doing when they ask projects to describe how they conduct ethical testing in clinical
trials. To apply this for all projects is not possible such as in the development of software, but
too many projects.

5. Jan Softa CEO of Somerco
Date: 2013 - 10 - 08
Draft proposals
Enhance the competiveness of EC member states Part 1 - Designated tax to science
Enhance the competiveness of EC member states Part 2 – Strategy to support the software
industry
Enhance the competiveness of EC member states Part 3 – Actions to support women in ICT
Enhance the competiveness of EC member states Part 4 – Going abroad – Competitive assets
Enhance the competiveness of EC member states Part 5 – Business incubators, financial
recycling and incentives into reward
Enhance the competiveness of EC member states Part 6 – Standardization as a tool to
increase competiveness
Enhance the competiveness of EC member states Part 7 – Different types of innovations
Enhance the competiveness of EC member states Part 8 - Open source from science to
society
Enhance the competiveness of EC member states Part 9 – Crowd sourcing and crowd funding
(In progress)
Enhance the competiveness of EC member states Part 10 – Green VAT for business
Enhance the competiveness of EC member states Part 11 = No title yet
Enhance the competiveness of EC member states Overview – Old and new key areas in order
to increase the competiveness of the industry (In progress)
Input on threats against information society