Sweden’s Supreme Court discussing carbon offsetting again – trade or aid?

June 27, 2018

hfd_color_leftEarlier this month Sweden’s Supreme Court debated whether carbon offsetting should be treated as trade or aid for VAT purposes. At ZeroMission we’ve always considered carbon offsetting to be trade and not aid and the court’s ruling appears to support this.

 

Back in 2014 the Supreme Court determined that Saltå Kvarn’s investments in carbon offsetting should be considered as aid for business tax purposes, a decision that has since been widely discussed and criticised, including within the government.

 

The recent case was brought by the tax agency. A lower court had determined that the offsetting sold by an NGO was a service with definable value for the customers – Swedish companies wishing to take responsibility for their greenhouse gas emissions. The Supreme Court in this case agreed.

 

In the same way as we pay for services to clean up our rubbish and do our recycling, we need services to take care of our atmosphere. Since the atmosphere is global and shared, these services can be provided anywhere. When smallholders in less developed countries plant and take care of trees in return for payments (as in ZeroMission’s offset projects) then they are providing a service.

 

The Supreme Court argued as follows in this case:

  • Companies that wish to offset for their impact on the climate from carbon dioxide emissions from their activities can make a contract for offsetting. The provider is responsible for planting enough trees to sequester the desired volume of carbon dioxide as well as for take actions to verify that this has been done. For these activities the company pays a sum of money which is taken to correspond to the amount of carbon dioxide that the company wants to offset. There is a direct connection between the services provide and the money received by the provider.

We agree!

 

 

 

Claire Wigg
claire.wigg@zeromission.se