Hungarian environmental product charge obligation of foreign taxpayers registered in the OSS system

Since the introduction of the One Stop Shop (OSS) system, many questions have arisen about the obligation for the foreign companies, who opt to use the OSS, to declare and pay environmental product charges. One of these is the possible environmental product charge obligation, which can be settled in a satisfactory manner due to an interpretation by the Hungarian Tax Authorities received recently.

From 1 July 2021, companies involved in distance selling and registered in the EU member states are entitled to use the OSS system in the country of their economic establishment, through which they can pay VAT on their distance sales to the other EU member states under their tax ID issued in the country of establishment.

It is necessary to examine whether, as a result of sales to Hungary, such foreign companies have an obligation to pay other types of taxes under the Hungarian tax laws - e.g. environmental product charge - despite not having an economic presence in Hungary.

The interpretation of the Environmental Product Charge Act does not allow us to conclude clearly that foreign companies that do not have a Hungarian VAT registration, but distance-sell to Hungary and are registered in the OSS system are certainly excluded from the scope of environmental product charge obligation. This legal uncertainty may have been due to the fact that the Environmental Product Charge Act was not harmonized at the same time as the introduction of the OSS.

According to a legal interpretation received from the tax authority, distance selling companies that are registered in Hungary should be liable to pay environmental product fee on the products subject to product charge sold under their Hungarian tax ID, or on packaging of the sold products. At the same time, the tax authority took the position that a foreign taxable persons applying for the OSS, who do not legally have a Hungarian VAT registration, have no obligation to register and pay environmental product charge under the rules in force.

The received legal interpretation has exactly resolved the uncertainty, which in the future, the legislators will, we assume, address at the legislative level.

Our full article is available in Hungarian our website below.
Author: Ágnes Molnár-Buti, VAT compliance supervisor, Qualified Economist.

5. April, 2022

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