A single-use plastic tax (Single-Use Plastics Fund Act or "EWKFondsG") was enacted in Germany on 11 May 2023 and will apply as from 1 January 2024 (although the first payments of the special levy will not be due until 2025). The introduction of the plastic tax also transposes the EU single use plastics directive into German law. Despite there being just under 18 months before the first assessment under the EWKFondsG, affected companies should begin now to prepare. By the beginning of 2024, companies must identify the extent to which they are subject to the tax—which will be administered by the German Federal Environment Agency (FEA) and the FEA will establish the conditions for fulfilling the future reporting obligations, if necessary.
With the enactment of the EWKFondsG, Germany joins other European countries that have introduced a similar tax (for example, see the Spain article and the UK article in the April 2023 issue of Indirect Tax News).
Background at the EU level
The "EU Green Deal" is a set of policy initiatives of the European Commission that are designed to reshape the economy and society in climate-neutral and sustainable ways by 2050. The package addresses areas such as the reduction of greenhouse gas emissions and decarbonisation of the energy sector, as well as advancement of the circular economy. The latter will require incentives for climate-neutral and circular pollutant-free products and compensation measures for environmentally harmful disposable products. To this end, the EU/Euratom Council Decision of 14 December 2020 introduced an EU single use plastics tax to be paid by member states on waste from non-recycled plastic packaging. In addition, Directive 2019/904 of 5 June 2019 created a framework for member states to implement measures to reduce the impact of certain single use plastic products on the environment based on a policy known as "extended producer responsibility," which aims to ensure that producers cover the costs arising from such products (e.g., waste collection, data collection, reporting, etc.).
Overview of the new legislation
The objective of the EWKFondsG is to reduce and prevent the detrimental impact of certain single-use plastic products on the environment and human health and promote innovative and sustainable business models, products and materials. To achieve this goal, the EWKFondsG regulates the market behaviour of certain persons, and the amounts collected from the special levy will go into a fund (still to be set up) from which waste management companies will be reimbursed for costs incurred in connection with the disposal and reduction of certain single-use plastic products.
The EWKFondsG will apply to the marketing of single-use plastic products, i.e., those that consist wholly or partially of plastic. Annex 1 to the EWKFondsG lists the products covered, with a focus on single-use plastic products in the food sector, e.g., food boxes with and without lids, film packaging for food or beverage containers up to three litters or beverage cups. Lightweight plastic carrier bags, as well as certain wet wipes, balloons, filters for tobacco products and, as from 2026, fireworks, also appear on the list.
The scope of application of the plastic tax is defined in the term "manufacturer.” All market participants (i.e., individuals, legal entities and partnerships with legal capacity) fall within the scope of the levy, as do producers that provide or sell single-use plastic products on the German market for the first time either for payment or free of charge. This includes the filler, seller and importer, regardless of whether they are established market participants in Germany. Manufacturers for purposes of the levy must register in the FEA central register during 2024. In addition, operators of electronic marketplaces and certain fulfilment service providers are affected where single-use plastic products are distributed by or through the marketplace/provider.
An annual reporting requirement will apply as from 2024, under which covered manufacturers will have to submit a report to the FEA by 15 May. The report will have to contain information on single-use plastic products first put into circulation in Germany by the manufacturer in the previous calendar year (although manufacturers that distributed less than 100 kg of the products concerned or only deposit bottles for the first time in the previous year are exempt from the reporting requirement).
After the report is submitted to the FEA, the manufacturer will receive an assessment notice based on the type and amount of single-use plastic products, with a specific rate applying to the declared amount of the product(s). The rates will be set by an ordinance, reviewed regularly and adjusted if necessary. According to the draft of the Single-Use Plastics Fund Ordinance (EWKFondsV), for example, the levy rate would be EUR 0.180 / kg for non-deposited beverage containers up to three litters or EUR 3.790 / kg for lightweight plastic carrier bags. A manufacturer will be able to appeal a decision on the levy, but an appeal will not defer the requirement to pay the levy, i.e., the deadline for paying the levy, which is one month after receipt of the notice, is not suspended by an appeal.
Manufacturer status and classification of a product as a single-use plastic product can be requested from the FEA.
Penalties will apply to manufacturers, as well as operators of electronic marketplaces and fulfilment service providers, for failure to comply with the rules, with the amount of the penalty depending on the type of violation. For example, the FEA is authorised to impose penalties where the information in the annual report is insufficient or inadequate. The penalty for making a payment more than three days late is a 1% surcharge above a de minimis threshold. Intentional or negligent violations of registration or reporting obligations constitute administrative offenses punishable by up to EUR 100,000.
All market participants that are affected or that cannot rule out that they are covered by the single-use plastics tax should familiarise themselves with the new law. Initially, it must be established whether the market participants and their products fall within the material and personal scope of application of the levy. In supply chains, for example, this involves the question of who (still) manufactures or trades in semi-finished products and who ultimately places covered single-use plastic products on the market. If necessary, registration in the FEA’s central register should be undertaken after 1 January 2024, and classification issues should be clarified during the application process. At the same time, internal structures, and processes should be reviewed and, if necessary, adapted to ensure that the requirements of the EWKFondsG are met.
Dr. Mario Wagner
BDO in Germany