Changes to the environmental product charge (“green tax”) regulation in Hungary from July 2023
With the adoption of Act LXXVI of 2022 Amending Certain Acts Related to Waste Management, the regulation of the environmental product charge will be significantly changed from 1 July 2023
The green tax regulation has been changed due to the amendment of Act CLXXXV of 2012 on Waste (hereinafter: "Act on Waste"), which transposed the provisions on the extended producer responsibility scheme to comply with EU law. Extended producer responsibility is a key element of the concession system that will be introduced in July 2023.
The change in legislation imposes additional administrative burdens on a wide range of businesses. The detailed rules for extended producer responsibility will be set out in a forthcoming government decree, the draft of which was submitted for public consultation by the Ministry of Technology and Industry at the end of last year.
VGD Hungary's tax experts will monitor the adoption of the detailed rules and support the clients concerned in the transition to the new system according to their individual needs.
The following is a brief overview of the changes to the green tax legislation (and the underlying changes to the Act on Waste). The implementation rules are outlined on the basis of the relevant draft government decree.
I. THE EXTENDED PRODUCER RESPONSIBILITY SCHEME (BASED ON THE DRAFT GOVERNMENT REGULATION)
1. The extended producer responsibility scheme and the launch of the concession system
Under the extended producer responsibility scheme, which will start on 1 July 2023, the producer will bear the financial responsibility for the management of waste after it becomes waste throughout the life cycle of the product. The waste management obligations are fulfilled by the concession company through collective fulfilment of the extended producer responsibility fee paid by the producers.
2. Products in the scope of the extended producer responsibility scheme
Products covered by extended producer responsibility overlap significantly with products subject to green tax. It should be noted that under the extended producer responsibility scheme, the "Circular Code" is used to identify products, instead of the customs tariff headings used in the green tax system.
3. The extended producer responsibility fee
Manufacturers covered by the extended producer responsibility scheme will become liable to pay an extended producer responsibility fee after placing the products concerned on the market.
II. LEGISLATIVE AMENDMENTS AFFECTING THE ENVIRONMENTAL PRODUCT CHARGE („GREEN TAX”)
1. Changes to the method of determining the green tax
The extended producer responsibility fee will be deductible from the green tax payable.
2. Green tax liability for distance sales by foreign online shops in Hungary
The definition of “taxable placing on the market” has been extended to include the transfer of a product by a manufacturer established abroad to end-users in Hungary within the framework of an e-commerce service. Taxable transfers include selling as accessories or components of other products and selling packaging materials as part of product packaging. In this way, the legislator has ensured competitive neutrality between Hungarian and foreign registered traders of e-commerce services with regard to the obligation to pay green tax.
Therefore, the Hungarian tax authority's previous interpretation of the law, as reported in one of our previous newsletters, will no longer apply.
3. Negligible quantity of electrical and electronic equipment
The list of products in the scope of the flat-rate green tax payable by option by micro and small enterprises has been amended. For electronic products, the previous breakdown into ten subcategories has been abolished and the quantitative threshold has been set at 100 kgs of electrical and electronic equipment.
4. Abolishment of individual waste management and collective fulfilment
The restructuring of the extended producer responsibility system will remove the possibility to fulfil the product fee obligation as an individual waste manager or to fulfil it collectively.
5. Clarification of the scope of products subject to green tax
The definition of solar panels subject to the green tax has been clarified (see under "photovoltaic panel") and the scope of electrical and electronic equipment subject to the green tax has been extended to include disposable electronic cigarettes.
6. Determination of tariff headings
The tariff headings for the products subject to green tax should be determined on the basis of the customs nomenclature in force on 1 January of the preceding year instead of the nomenclature in force on 1 January of the current year.
7. Retreading used tyres abroad: cancellation of the green tax liability
Following the retreading abroad of used tyres collected in Hungary, the obligation to pay the green tax on the import of the retreaded tyres into Hungary was based on the weight of the material added during the retreading process, which was now abolished.
5 January, 2023
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Should you have any questions regarding this newsletter,
the tax experts of VGD Hungary will be pleased to assist you.
This newsletter provides general information and does not constitute tax advice.
