VATSC06572 - Consideration: Payments that are not consideration: Payments in specific sectors: Emissions trading: VAT position
In the UK permits to emit carbon dioxide are issued by a government agency on behalf of the Department of Energy and Climate Change. »Ê¹ÚÌåÓýappy are outside the scope of VAT.
»Ê¹ÚÌåÓýapp initial allocation of allowances in the UK is also by UK government department to permit-holding businesses. This too is outside the scope of VAT, because they the allowances are issued free of charge under public statute.
»Ê¹ÚÌåÓýapp second phase of the EUETS law also permits national governments to sell surplus allowances at auction. »Ê¹ÚÌåÓýapp sale of these allowances, along with allowances traded between businesses, financial institutions and the like, are within the scope of VAT (see VATSC06573).