This article was co-authored by Right to Repair Europe’s national members, including Markus Piringer from Repair Network Vienna, Katrin Meyer from Runder Tisch Reparatur, Ronan Groussier from Halte à l’Obsolescence Programmée and Jessika Richter from Lund University, Sweden.
Visual: own canva design, illustration by Macrovector
While we wait for the proposal of new consumer legislation to promote repair from the EU Commission, success stories from member states provide wonderful examples of far-reaching measures on repair that we’d like to see at EU level.
Despite some legislative progress, none of the EU legislation currently in the pipeline tackles the unfair cost of repair. Requiring manufacturers to make spare parts available (for example through the new ecodesign rules on smartphones and tablets) is a very good step, but this doesn’t mean that these parts will be affordable.
To tackle this, financial incentives are needed to ensure affordability of repair. Let’s look at national policy examples such as the repair bonuses in Austria and Germany, the newly implemented French repair fund, and tax breaks on repair in Sweden as inspiration for EU level policies that could lead to eventually preventing large amounts of waste.
Repair bonuses in Austria and Germany
The repair bonus was first piloted in the city of Graz in Austria in 2017. Citizens could be refunded up to 50% of the total cost of a repair, up to a maximum of €100. The system initially only applied to very few electrical appliances. After the success of the repair bonus in Graz, the system was later extended to 3 Austrian federal states (Styria, Upper Austria, Lower Austria) and to the city of Salzburg, resulting in approximately 260 tons of e-waste avoided between September 2018 and December 2019.
In the autumn of 2020, a repair funding scheme was also introduced in the city of Vienna, resulting in 90% of the claimed items being successfully repaired, thereby saving 540 tons of CO2 and supporting 83 local businesses. In contrast to other regions, the repair bonus in Vienna was introduced as a voucher. This more customer-friendly version proved to be very successful and was consequently adopted as an Austrian-wide scheme which was introduced in April 2022.
In practice, under the Austrian “Reparaturbonus”, each voucher covers 50% of the repair cost, up to €200 per product repair. It also subsidises 50% of the price of a cost estimate of a repair, up to a maximum of €30. The bonus can be redeemed when the invoice is paid and must be valid at this point in time, regardless of when the order was placed. The bonus, redeemable at 3,153 repair shops around Austria, is financed by €130 million from the EU Covid-19 recovery fund, and has already subsidized 353.196 repairs from April to December 2022.
Another success story involves the repair bonus in the German state of Thuringia. The system, which was introduced in 2021 with an initial funding amount of €500,000, soon had to be expanded due to high demand for repairs! Meanwhile, the second funding period has also been exhausted, almost 12,000 repairs were funded in 2022. In 2023, phase three will kick off.
The basic principle is simple: the Thuringian Ministry of the Environment covers 50% of the repair bill, up to a maximum of €100. During the first funding phase in 2021, for which an evaluation is now available, an average of around €75 per repair was subsidised. Settlement takes place via the consumers: they submit their bill online and apply for reimbursement.
What was proven in Thuringia is that people want to repair things. Previously, repairs failed not necessarily due to lack of options, but simply because the repair costs were too high. Accordingly, the bonus was used extensively in both urban and rural areas. Smartphone repair shops in particular have seen a real boom in business since the introduction of the bonus.
Accordingly, the rest of the German states are closely observing developments in Thuringia. Following a limited but successful pilot project in the city of Leipzig, the state of Saxony has now also decided to follow suit by introducing a repair bonus. In December, the State Parliament made a total of €2.5 million available for the years 2023 and 2024.
The possibility of further repair subsidies is currently being discussed in many other of the 16 German states. Proposals are currently being considered in Bremen, Hesse and Saarland. In Berlin, a repair bonus has been announced in the government programme (Koalitionsvertrag). This being said, implementation is not yet in sight.
The French repair fund
The newly launched repair fund in France also provides a good example of how governments can help to make repair more affordable. Through this fund, a reduction is directly discounted from the consumer’s repair bill. The scheme is financed through Extended Producer Responsibility (EPR) fees paid by producers and managed by French eco-organisations. Consumers receive a significant reduction of their repair bill (around 20%), which applies to all out-of-warranty repairs for eligible products.
The first repair fund focused on electric and electronic devices and was launched on 15 December 2022. In order to benefit from the discount, users may simply take their product to a repairer authorised to offer the bonus. A lump sum discount is set per product and deducted from the final cost of the repair. In the table below you can see a list of eligible products:
To offer the bonus, repairers must obtain the “Qualirepar” label, which has been specifically created in the context of the repair bonus. The label aims to guarantee the quality and reliability of the listed repairers and to give them visibility. At the end of each month, eco-organisations reimburse repairers for bonuses granted to their customers.
So far, the labelling process has been criticised by some as being too cumbersome for independent repairers, and the number of labelled repairers is still too low. To date 1031 repairers have obtained the label and 1800 are in the process of getting it. The French government aims at labelling at least 4000 repairers until the end of 2023.
The launch of this first fund is just the beginning of a broader project, as new funds will be launched progressively throughout 2023, for different product groups such as sporting goods, gardening and DIY products, and textiles.
The VAT reduction on repair in Sweden
For several years now, there has also been another approach to promoting repair in the form of a reduced Value Added Tax (VAT) on repair services.
In 2016 Sweden reduced its VAT rate from 25% to 12% for small repairs of bicycles, clothing and shoes. In 2022 this was further reduced to 6%, but will subsequently be reversed back to 12% in 2023.
The idea is not at all new. An EU Council Directive from 1999 introduced the option to reduce VAT on labour-intensive repair services such as bicycle or shoe repairs.This was eventually made a permanent option for member states to implement in 2009 through another Council Directive.
Several countries have adopted this measure from the beginning. For instance in Belgium a reduced VAT rate for small repairs (not 12% as in Sweden but only 6% – the minimum allowed by the EU Directive is 5%) was introduced on January 1st 2000, prolonged several times and made permanent as of July 2011. Many other countries have also adopted the measure (an overview of European VAT rates can be found here).
In Sweden, the measure is complemented by a system of tax deductibility of labour costs for white goods repair. So, how does it work?
This measure falls under the RUT system (‘Rengöring, Underhåll, Tvätt’ which means Cleaning, Maintenance & Laundry) meaning that 50% of the labour expenses for household appliance repair are tax deductible up to a maximum of 25000kr per year (slightly over €2500 euro) or 50000kr for people above 65 years old. The system allows the repair business to immediately deduct this amount from the invoice, so the customer never actually has to pay it.
A full overview of the procedure can be found here.
“You get the reduction through the fact that the provider of the service deducts part of the labor cost on your invoice. After you have paid the invoice, the provider of the service requests payout from the tax agency. When the tax agency grants the payment to the provider of the service, they already fill in the amount in your tax declaration. Keep in mind that you must have paid enough tax during the fiscal year to apply the deduction.”
Although the objective of the Swedish initiative was good, and we welcome any measures seeking to tackle the price of repair, the scheme was not without its shortcomings, and the general conclusion was that this specific set of measures did not have a huge effect on promoting repair. For example, the biggest discount only applies to repairs done at the consumer’s home, brown goods are excluded from the scope, and some repairers found the scheme’s paperwork overly burdensome.
It seems indeed that tax reductions are no silver bullet to tackle the price of repair. Fundamentally, tax breaks only apply to citizens who have enough income to pay tax in the first place, leaving behind the people most in need of help. And ultimately, VAT reduction does not deal with the issue of the availability of cheap new products competing with repair, of which the VAT part of the price is only part of the total cost in money and time taken on by the consumer.
So, whilst the EU has yet to introduce measures to ensure the affordability of repair, some member states are leading the way with initiatives aimed at ensuring their citizens can always access and afford a repair solution. Many of the schemes are still in their infancy, and so the most effective measure remains to be seen, but we support any measure to encourage the uptake of repair, and so will be monitoring the developments closely.
Interested in reading more about these initiatives? Here are some useful links:
- Evaluation report of the repair bonus in Thuringia
- EU behavioural study on consumers’ engagement in the circular economy, mentioning VAT reductions
- Behavioural study on consumers’ engagement in the circular economy (with reference to VAT reductions and giving background)
- Paper analysing the situation on repairs in Sweden
- Additional perspectives on the VAT reductions in Sweden
- Additional financial measures to promote repair in textiles in Amsterdam