The DRS system is launched. DRS fee should be paid by the manufacturers, but there is no EPR or VAT liability in this regard

 Registration deadline: 15 November

From 1 January 2024, the mandatory deposit-charged products return system for products placed on the market domestically, i.e. DRS, will enter into force.

With the introduction of the new system, a number of new tasks will fall on producers and the concession company, i.e. MOHU. Although distributors who do not subject to the EPR and also the general public will have to prepare for the related collection activities. Packaging subject to the DRS fee will be exempted from the EPR fee and manufacturers will not have to take the DRS fee into account when determining the VAT base.

The products subject to the mandatory DRS fee will also include single-use and reusable beverage containers in the form of bottles or cans of metal, plastic and glass material of 0.1 to 3 litres (except for milk-based beverage products and subject to the exemption rule also applicable to the volume of sales and the form of the containers).

Who will be affected by DRS?

• MOHU as the operator of the DRS system.
• The manufacturers. Manufacturers will in future be required to register their products concerned, pay a quarterly fee and ensure a DRS fee for future consumer refunds.
• Consumers who ensure that bottles of the quality specified in the legislation are delivered to the redemption points in exchange for a refund of the DRS fee previously paid.
• Distributors who take back waste as required by the respective rules and contribute to the rebate of the DRS fee in the form of a redeemable voucher (e.g. shops with more than 400 square metres of sales space will be required to operate a vending machine, while shops with less sales space will be able to join the scheme voluntarily)

The deadline for manufacturers to register is 15 November. Return machine operators are also required to register

From 1 April 2023, manufacturers of defined beverage packaging (i.e. DRS manufacturers, i.e. packaging manufacturers in the EPR) will be required to register in the MOHU Partner Portal.

Please note that from 1 January 2024, only products that have been submitted for product registration and passed the audit by 15 November 2023 will be eligible for the return. In addition, a sample of the packaging covered by the deposit-charged products return system should be submitted to MOHU and the return machine operators during the registration process.

If a product is registered later than the prescribed deadline, it will only be audited after the prescribed lead time of 45 days and can be placed on the market. Products must comply with the marking requirements published in the legislation.

Those who operate a return machine in retail units should register at MOHU in this regard.

Additional obligations for companies involved in DRS

The companies subject to the DRS should pay a connection and service fee to MOHU for the affected products with deposit fee. The amount of the fee will be set out in a ministerial decree.

Emission data for products covered by the DRS are required to be reported for the first quarter of 2024 based on the logic of the circular coding system. Companies that qualify as packaging manufacturers under the EPR system will be classified as DRS producers in the DRS.

In addition to the service and connection fees, a DRS fee is also payable to MOHU for the number of DRS products placed on the market in single-use packaging. The manufacturer shall pay the DRS fee for the mandatory DRS fee liable, non-reusable products placed on the market during the month in question by the last day of the month following the reference month.

Change in the EPR system

However, Government Regulation 450/2023 (X. 4.) on the deposit fee amends the EPR Regulation in the sense that no extended producer responsibility fee is payable by the producer for products subject to the mandatory DRS fee if there is an existing mandatory DRS fee obligation.

MOHU pays the VAT instead of the manufacturers for the non-returned products

Based on the related amendment to the VAT Act, the DRS fee will not be included in the VAT base of the supply of goods, i.e. it will effectively be treated outside the scope of VAT in the case of all supplies. In order to ensure that the taxation of products which have not be returned - but which are subject to DRS fee – has been performed, the tax payment obligation will be incurred once a year. Accordingly, the VAT will be paid by the concession company. The tax base will be the DSR fee of the products not returned on the last day of the year. The HUF 50 per products should be considered as the amount which also includes the proportionate amount of the tax payable.

The services provided by VGD Hungary in relation to the DRS system are:

• identification of the products subject to the DRS fee and the establishment of the circular codes on the basis of the information provided by the Client;
• fulfilment of the obligation related to register (and registration);
• tax advisory services regarding exemptions, exceptions, record-keeping obligations;
• compliance services regarding the data reporting obligations;
• liaising with the waste management authority, supporting during a potential audit.

Should you have any questions regarding the registration process or are interested in further details, our experts are at your disposal.