As a trend we see that environmental taxes are gaining relevance and as such are being introduced and implemented more and more. The taxation of plastic is a clear example of this trend.
In this newsflash we would like to focus on the so-called 'Plastic Packaging Taxes' we see being introduced in the EU. Also focussing on some of the items companies need to take into account.
As of 1 January 2021 a contribution based on the non-recycled plastic packaging waste of an EU Member State was introduced as a new revenue source to the 2021-2027 EU budget. This follows the announcement of the EU in July 2020. That a new plastic packaging levy will be introduced with effect from 1 January 2021 as part of the coronavirus pandemic recovery package.
The levy applies at a Member State level at a rate of EUR 800/tonne of non-recycled plastic packaging waste, and is remitted by Member States to the EU as an own resource. The amount to contribute is calculated based on Eurostat data, which is already available under existing reporting obligations. It is however up to the Member States how to finance this levy, for example by implementing a plastic tax on certain plastics products/packaging or implementing no tax at all and paying it from their general budget.
Even before the above mentioned EU-wide levy was introduced several Member States were already planning to introduce plastic packaging taxes. Where others already had a type of levy (often not called a tax) on plastic packaging, like for example in the Netherlands.
Since there is no coordinated approach from the EU in relation to plastic packaging levy/taxes/waste contribution, companies need to be aware of the different approaches/legislation in the Member States they operate in. This makes that this type of tax/levy/waste contribution is difficult to implement using a more general approach.
Some of the items to take into consideration and as such where the taxes/levies/contribution can differ are:
- Taxable point: at import, manufacturing, distribution, entering the market etc.;
- Types of plastic packaging in scope, are all types of plastic packaging dutiable or only specific types of plastic or types of packaging;
- Does the fact that recycled or recyclable plastic is used make a difference;
- How to evidence that the plastic packaging is recycled or can be recycled;
- Refund possible in case the plastic leaves the Member State;
- Reporting obligations, to which authorities, are registration, licenses or authorization required;
- How/where within the company to obtain the required information from (if even already available) to be able to correctly report and subsequently pay the tax/levy/contribution.
The above shows that there are a lot of different items to take into consideration and these can differ per Member State. As such it is important to keep on top of developments and start preparation in time to be able to be compliant. Below we have included a table with high level information of the Member States which are currently furthest along in introducing/implementing a plastic packaging tax. This however does not mean that there are not already plastic packaging taxes/levies/waste contribution (often not real taxes, however an amount to be paid is expected for the plastic packaging being introduced on the market) in place in other Member States. Examples are the Netherlands (waste contribution on packaging), Belgium (levy on packages of beverages), Hungary (packaging tax, not only plastic) and Romenia (packaging tax, not only plastic)..
Example countries which intend to implement a plastic packaging tax:
Expected introduction date
Responsibility within the company
What we have seen in practice is that often the data to be able to report to the authorities is controlled by operational teams within a company. Like for example logistics or procurement. However, these parties often have no or little experience with dealing with tax authorities, making tax decisions or implementing robust processes and controls to manage tax risks. We have experienced that in case the sole responsibility was with the operational teams to implement and manage these types of taxes, it is often the tax function that is called in afterwards to 'fire-fight' when there are disputes, assessment or of significant enquiries from the tax authorities.
As such we believe it is of great value that the operational teams and the tax function work closely together from the start. This to ensure that from the start a robust tax decision making process and appropriate processes and controls are implemented, staff is properly trained and that a strong relationship between the teams will develop. Which will also help in staying up to date on developments within the company that might affect the tax and updates/changes in relation to requirements from the tax authorities.
From the above it becomes clear that EU Member States implement environmental levies like a plastic packaging tax in their own way, with their own rules and legislation. As such it is important in case your company operates in different Member States to see whether you are affected and what your exact obligations are to be compliant. In addition it is also important to determine who is best suited within the company to implement and be responsible for the tax/levy/contribution and whether this is not a combined team of different departments.
Should you need any advice on this matter, please contact your usual PwC customs and international trade specialist at PwC.