Indirect Tax News - January 2022

Tax on non-reusable plastic expected to be passed

The Spanish parliament is debating a bill on waste and contaminated soil that includes the introduction of a tax on non-reusable (i.e., single use) plastic. The proposed measures are designed to discourage the production and use of non-reusable plastic and, therefore, protect human health and the environment.

The plastic tax would be a special indirect tax that transposes into Spanish law two EU directives (directive 2018/851 of 30 May 2018, which amends the Waste Framework Directive and directive 2019/04 of 5 June 2019, which focuses on reducing the impact of certain plastic products on the environment).

The main features of the proposed tax are as follows:

  • Taxable event: The taxable event would be the manufacture, import or intra-EU acquisition of non-reusable plastic packaging where the product is intended to be used in the Spanish territory. “Reusable packaging” for these purposes would mean packaging conceived and designed for multiple rotations throughout its life cycle. The abstract definition of what is reusable or non-reusable packaging likely will lead to controversies in practice.
  • Taxpayer: Manufacturers of products and those making intra-EU acquisitions or imports into Spain would be subject to the tax.
  • Taxable amount and tax rate: The taxable amount would be the quantity (expressed in kilograms) of non-reusable plastic and the tax rate would be EUR 0.45 per kilogram. The taxable base could be reduced if the taxpayer uses recycled plastic in the manufacturing process.
  • Exemptions: The following exemptions from the tax would apply:
    • The manufacture, import or intra-community acquisition of non-reusable plastic packaging that is shipped directly to other EU member states or non-EU countries;
    • The manufacture, import and intra-community acquisition of non-reusable plastic packaging that is destroyed before the deadline for filing the tax return; and
    • The manufacture, import or intra-community acquisition of non-reusable plastic packaging used as the primary packaging for medicine.
  • Formalities: Certain formalities and filing obligations would apply and taxpayers would be permitted to take certain deductions in their tax returns (although the official tax return has not been approved).

A tax return would have to be filed for the plastic tax, with penalties applying for noncompliance with the formalities associated with the tax.

The draft bill, originally published in June 2020, is expected to be passed in the near future and will apply as from 2023.

Amparo Sanchis Sierra

Alvaro Gomez-Elvira