Significant penalties can be imposed by the authorities
for non-compliance with the EPR obligation

The waste management system in Hungary has been significantly changed from 1 July 2023 by the introduction of Extended Producer Responsibility (hereinafter "EPR"). Registration deadlines have already passed, but many companies are only now realising whether they will be affected by the new obligation. It is not yet too late to assess the EPR obligation and register now to avoid adverse legal consequences.

In addition to paying the EPR fee, the EPR obligors should count with more administrative burdens after the entry into force:

• As of 31 May 2023, the obligor had to register on the electronic interface operated by MOHU MOL Waste Management Ltd. with the provision of the specified data. The companies also had to request the registration from the national waste management authority.
• At the same time, they had to declare the way how they intended to comply with the EPR obligation (i.e. collective or individual performance).
• As from the entry into force of the EPR system, the companies are obliged to keep detailed records of their movements of products and waste and also of the customer declarations.
• As of 1 July 2023, businesses were required to create an 8-digit circular code (“KF code”) for the products subject to the EPR obligation. They had to set up their data records and invoicing systems in line with the KF codes.
• On the basis of the data record, companies should perform data provision on quarterly basis to the waste management authority.
• In case of any changes the companies should request the application of the changes into the register. If it is necessary the cancellation should also be requested.
• The companies should applicate the invoice clause related to the payment of the EPR fee on the connected invoices.
• They should pay the extended producer responsibility fee on a quarterly basis.

The supervisory authorities regarding the compliance with the EPR obligations are the national waste management authority and the local waste management authority which has a jurisdiction and competence for the concerned activity.

We note that in case of non-compliance with the EPR obligation (e.g. failure to comply with a deadline) the waste management authority may impose penalties for the default.

If the obligated company did not request the registration to the waste management authority by 31 May 2023, the authority may impose a waste management penalty. In case of the fulfilment of certain conditions the authority may suspend the placing on the market of the circular product until the compliance.

In terms of the amount of the fine, the authority may impose a lump sum penalty (e.g. if the company does not comply with the reporting, registration and notification obligations, the amount of the penalty is HUF 200,000), but in the case of more significant non-compliance, the penalty may be calculated by the statutory penalty calculation and may even be millions of forints.

However, it is possible, under certain conditions, to submit a legal remedy or request for the reduction of the penalty, for which our experts are at your disposal.

In order to reduce the administrative burden, we can also help your business with the following services:

• identification of circular products and mapping of the CV codes based on the information provided by the customer;
• Identifying and registering the KFCs and providing the customer with the necessary information on the identification of the KFCs and the registration of the KFCs to the national waste management authority;
• advice on setting up the invoicing software, exemptions, exceptions to the EPR obligation, record keeping obligations;
• liaising with the waste management authority and supporting any inspections by the authority.

3 August, 2023

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.