The importance of repair and maintenance (R & M) activities that contribute to prolonging the lifetime of goods is highlighted as a key component in the transition to a sustainable circular economy (CE). The impact of Value-added Tax (VAT) on R&M activities is empirically analysed and a critical analysis of their tax treatment in the VAT Law (LIVA) and the existing tax benefit regime is carried out. On this basis, a VAT reform proposal is formulated, focusing on zero-rate benefits and exemptions. The impact and fiscal cost is quantified, as well as ways to compensate for this fiscal cost.