Executive summary

Under Italy's Budget Law for fiscal year (FY) 2022, the plastic tax will enter into force on 1 January 2023. The tax was originally introduced by the Budget Law for FY 2020 and subsequently postponed several times.

In line with the European Union (EU) strategy for plastic, the plastic tax aims to reduce the production and consumption of single-use plastic products (so-called MACSI) as well as to promote circular economy principles.

Implementing rules, issued by Italian Customs and Revenue Agencies, will be published in the Official Gazette by year end.

Detailed discussion

Taxable persons

Depending on the country where the MACSI are produced or shipped from, persons subject to the new tax are:

• For MACSI manufactured in Italy, manufacturers or the subject, resident or nonresident, intending to sell MACSI, obtained on his behalf in a production plant, to other resident subjects
• For MACSI shipped from other EU Member States, it could be the purchaser or the seller depending on whether they are purchased for the purpose of an economic activity
• For MACSI shipped from non-EU countries, the importer

Products subject to tax

The new tax is applicable to MACSI composed totally or partially of organic polymers of synthetic origin which have (or are meant to have) the function of containment, protection, manipulation or delivery of goods or foodstuffs, not designed to be used repeatedly.

Plastic tax is thus intended to apply to a wide range of plastic products, including bottles, bags, food containers, tetra pack containers, packaging, rolls of pluri-ball plastic, caps and similar items which are made with the use, even partial, of plastic materials consisting of organic polymers of synthetic origin.

Conversely, the tax is not applicable to MACSI designed with long-lasting use or in specific cases and circumstances.

Taxable event

The relevant tax obligation arises in connection with the production, the import or the introduction from the EU of MACSI and the tax is due at the moment of release into consumption of the single good in the Italian territory, as defined by the law.

Amount of tax

Under the scope of application described above, plastic tax is due at 0.45 €/kg of virgin plastic included in the MACSI.

Plastic tax compliance

Depending on the subject liable to pay the plastic tax and its supply chain, different obligations may have to be met, including registration, accounting entries, quarterly tax returns, payments, and separate storage.

Non-established entities will have to appoint a tax representative who will have joint and several liability with the same.

As for MACSI coming from non-EU countries, the tax is assessed and collected at the time of importation directly by the Italian customs authorities, who are also in charge of any audit activities for all the other MACSI subject to plastic tax.

Where the amount of plastic tax due does not exceed €25, the plastic tax return is not submitted and the relevant payment is not due.

Thus, taxpayers should timely prepare in order to avoid penalties, client's complaints, and goods being blocked at the Italian customs.

Penalties

Failure to pay the plastic tax is subject to a penalty ranging from two to five times the unpaid tax, with a minimum of €250.

In the event of late payment, an administrative penalty will be levied, equal to 25% of the tax due, with a minimum of €150.

The late filing of the relevant quarterly returns is subject to a penalty ranging from €250 to 2,500.

Refunds

Depending on the supply chain, plastic tax is not due or can be reimbursed for MACSI which are transferred for consumption in other EU countries or for export, if certain requirements are met.

For this purpose, businesses are to ensure full traceability of all the subjects involved in the supply chain and the plastic tax actually paid.

A refund is allowed for amounts higher then €10.

Next steps

Although the plastic tax has been delayed several times, it will now be in force as of 1 January 2023, especially now that both the UK and Spanish authorities have approved similar taxes.

Thus, it is fundamental that businesses are prepared in time, as the plastic tax is one of the most complex indirect taxes in Italy and it is under the purview of Italian customs who generally examine in great detail prior to finalizing the registration process and for any audit activity.

Furthermore, wholesale clients and distributors may prefer purchasing from suppliers able to guarantee full traceability of the MACSI and correct tax compliance to avoid goods being blocked at the Italian borders or to recover plastic tax already paid on goods that are then consumed outside of Italy.

Finally, economic operators should consider this new tax in their pricing policies, supply chains and processes, in order to minimize the relevant impacts as much as possible.

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For additional information with respect to this Alert, please contact the following:

Studio Legale Tributario

• Alessandra Di Salvo, Rome, Milan | allesandra.di.salvo@it.ey.com