A European Emissions Trading Scheme Allowance (EUA), often known as a ‘carbon credit’, authorises the holder to emit one tonne of carbon dioxide. Carbon credits are of value to those whose industrial activities produce such emissions. They are traded on recognised exchanges and elsewhere.

Until 31 July 2009, a supply of EUAs was standard-rated, but zero-rating applied under VATA 1994, Sch. 8, former Grp. 17, item 1 from 1 August 2009 to 31 October 2010, when the reverse charge started to apply VATA 1994, Sch. 8, former Grp. 17, item 1.

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