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Executive summary

As set out in April this year, Spain is introducing a new tax on non-reusable plastic packaging as of 1 January 2023 (see EY Global Tax Alert, Spain introduces new indirect tax on non-reusable plastic packaging as of 1 January 2023, dated 13 April 2022 for more information). In July 2022, the Spanish General Directorate of Taxes Law in coordination with the Excise Department issued a set of interpretative guidelines in the form of FAQs.

Detailed discussion

The tax applies to non-reusable plastic packaging and will take effect as of 1 January 2023. The secondary legislation is also available in draft, and some changes are likely.

This Alert provides an overview of some of the answers provided in the FAQs document. The guidelines seek to clarify certain questions around scope, exemptions, thresholds, certification, and tax base, among others.

It is expected there will be additional questions and clarifications as uncertainties still remain regarding potential changes to accounting records, formal obligations regarding exempt products, and registration details.

The FAQs were also discussed in a webcast which took place on 27 September 2022, you can watch the replay here.

Products that are within the scope of the tax

The FAQs confirms that primary, secondary and tertiary packaging are within the scope of the tax. It also provides non-exhaustive lists of examples of products that are in and out of scope as follows:

Beauty, health and cosmetics

• Cosmetic product applicators (e.g., mascara brushes that are part of the container closures)
• Bottles, jerrycans and jugs for hygiene products (e.g., gel, shampoo, soap), for industrial products (e.g., lubricants, disinfectants, herbicides)
• Single-dose containers for drugstore or cosmetic products (e.g., creams, make-up, welcome products in hotels) or for samples for advertising purposes

Food and beverages

• Trays used to contain and protect food (e.g., sliced and baked goods, prepared food, fruit, meat, fish)
• Bottles, jerrycans and jugs for food products (e.g., soft drinks, oil, sauces, beverages), designed for single use, even if they can be filled and re-used
• Single-dose containers for food products (e.g., oil, vinegar, sauces, yoghurts, butter, fruits, eggs, cakes, pastries)

Other purposes

• Film used to contain, protect, handle or deliver goods or products (e.g., food, wrap books, magazines, colognes, suitcases, flowers, laundry, phone screens)
• Blister packs, boxes, cases and similar products containing a single product or an assortment of products
• Vacuum packaging bags

Secondary and tertiary packaging

• Plastic rings that group several units in a pack (e.g., used for beverage cans
• Packaging tape and film, including film used for a group of sale units or collective packaging (e.g., cigarette cartons, mineral water bottles)
• Protective bubble film that wraps several sale units
• Pallet protective film

Examples of products that are not part of objective scope of the tax¹

• Air fresheners
• Reusable food trays (e.g., used in schools)
• Pens
• Coffee capsules

Effective tax date

The FAQs reinforce the effective date of 1 January 2023 for the new tax:

• Imports, when the accrual of import duties corresponding to the import of products subject to tax takes place as of 1 January 2023
• Intra-community acquisitions, when the accrual of the tax occurs as of 1 January 2023 (the accrual for intra-European Union (EU) acquisition is the 15th day of the month following the commencement of the transport, unless the invoice issued prior to that date)
• Manufacturing, when sales or deliveries of products previously manufactured take place after 1 January 2023 (even in the case that the manufacturing ended during 2022) or when advance payments corresponding to such deliveries are made after 1 January 2023

Treatment for empty containers or packaged products

The FAQs confirm the tax applies to both empty containers and containers, providing functions of containment, protection, manipulation, distribution or presentation of merchandise.

Applicability throughout the Spanish territory

The tax will be applied throughout the Spanish territory; therefore, the territories of the Canary Islands, Ceuta and Melilla should be included.

For purposes of the tax, the entry of products subject to the tax into the Canary Islands, Ceuta and Melilla from territories other than the Spanish Mainland and the Balearic Islands, will be considered an import. Entry of products subject to the tax in the Canary Islands, Ceuta and Melilla from the Peninsula and the Balearic Islands will not be considered an import or intra-community acquisition (it will be deemed a domestic movement).

Thresholds for small value exemption

The FAQs provide an important clarification regarding the 5kg threshold. Thresholds are separate for each taxable event scenario – 5kg threshold for intra-community acquisitions and 5kg for imports. Computations should be completed per calendar month.

Calculation of value-added tax (VAT) tax base

The FAQs clarify that the plastic tax should be considered for VAT purposes, and therefore the amount forms part of the taxable base.

Clarifications for some manufacturer situations

In the FAQs, the authorities seek to clarify certain specific manufacturer situations. It is expected the authorities will continue to share further clarifications.

Example

A manufacturing company sells semi-finished products to a Spanish handling company, which transforms the product into a final container and delivers it to a client located outside the territory of application of the tax. Would the non-taxation scenario prescribed in art. 73 b) of Law 7/2022 to the first delivery made by the manufacturer apply?

In the case of semi-finished products, the accrual of the tax occurs at the time the manufacturer makes the first delivery or makes it available to the acquirer in the territory of application of the tax. Subsequently, "the Spanish handling company" may request the refund of the tax in accordance with article 81.1.d) of the Law if it ships the product outside the territory of application of the tax.

Reporting frequency of statements provided by customers of some exempt products

The Law does not provide guidance on statement frequency and it is therefore up to the contracting parties. The only established requirement is that the taxpayer obtains a statement indicating the intended use of the purchased products to which the exemption will apply – mainly drugs, health products, or food for special medical uses.

Medicines, medical devices and veterinary purposes

The FAQs provide further definitions on medical devices and clarify that medical devices used only for human purposes are exempt. The Law does not specify in terms of medicines, therefore both human and veterinary purposes are covered. It is also confirmed that the exemption is available for primary (e.g., blisters), secondary packaging and tertiary packaging.

Destruction of plastic packaging

The FAQs seek to clarify the concept of destruction of packaging. The benefit will only apply when the relevant products "have ceased to be suitable for use or destroyed as a result of extraordinary circumstances" (e.g., building where goods are stored caught fire).

The FAQs clarify that destruction of packaging that will not be used in the final sale to the customer (e.g., some items of clothing) is not included in the scope of such tax benefits. While the packaging is destroyed as it needs to be removed prior to the sale, it is clarified that this is not a case of destruction, but the natural end of the lifecycle of non-reusable packaging as the plastic has complied with its intended function.

Certification for recycled plastic

The FAQs provide more information about certification. Recycled plastic must be certified by entities, accredited by the National Entity of Accreditation ("ENAC" in Spanish) or by the national accreditation body of any other EU Member State. In terms of third countries, the taxpayer requires a certification from any entity accredited by a National Accreditation Body with an agreement of international recognition with ENAC. In the case of chemically recycled plastic, the amount will be accredited through the certificate issued by the corresponding accredited entity.

During 2023, however, as an interim more flexible regime, the taxpayers (importers and intra-EU purchasers) will be allowed to prove the recycled content by means of a responsible statement made and signed by the manufacturer of the package.

Certification throughout the supply chain

It is sufficient for the taxpayers – manufacturer, importer or intra-community purchasers –to have the certification issued by the entity accredited for these purposes. The information contained in the certification would be communicated down to the following operators involved in the supply chain via invoices or certificates, where appropriate.

Tax refunds for products spoiled during the distribution chain

The FAQs provide a reminder of the mechanisms to obtain a tax refund. In summary, when the products are damaged while in possession of any acquirer other than the taxpayer, it will be possible to obtain the tax refund through the manufacturer or whoever made the intra-community acquisition or import.

Proof of tax payments

The FAQs provide that the proof of tax payments for manufacturers and intra-community purchasers will be the evidence of the payment made when submitting the plastic tax return, whereas the proof for importers will be the payment letter connected to the submission of the import customs declaration.

In the case of operators purchasing goods from manufacturers, importers, intra-community acquirers or other acquirers who may have interest on having a proof of payment of the tax in the products purchased, two different scenarios should be distinguished:

• Products purchased from manufacturers – via the invoice of acquisition of the relevant products, through which the manufacturer must include the information of plastic tax, i.e., amount of the tax accrued, amount of non-recycled plastic (in kilograms) and, if any exemption is applicable, the relevant article in the Law.
• Products purchased from importers, intra-community acquirers or other acquirers – via statement or invoice. It should be noted that the Law requires these operators to disclose the information of plastic tax when the purchaser requests them to do so. In such a case, they can provide such information either through the sale invoice or through a separate certificate.

Finally, the FAQs establish that, if there are different products on the invoice, manufacturers and other operators obliged to disclose the tax information must separately record the data relating to each product.

Next steps

The tax will be effective as of 1 January 2023. Therefore, companies have a window to assess the potential impact of this new tax on their business, considering the products covered, the relevant flows (inbound and outbound) and the associated obligations. Elements to focus on include identifying potential gaps in terms of data availability, internal processes, and resources, with the aim to design and implement the appropriate corrective actions promptly.

It is important to continue monitoring further legislative developments, as there may be further changes as part of the legislative process. However, the published Law and associated FAQs provide a firm basis for companies to start preparing now and also prepare for the potential adaptations that may be necessary in order to comply with the tax as from 1 January 2023.

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

Ernst & Young Abogados, Madrid

• Pedro Gonzalez-Gaggero | pedro.gonzalez-gaggero@es.ey.com
• Ángel Pascual | angel.pascualgonzalo@es.ey.com

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ENDNOTE

1. These products may be out of the scope for different reasons, for example, some of them are deemed to be reusable; others because the plastic element is an integral part of the product itself and is needed to contain, protect, sustain or preserve the product during its whole lifecycle and intended to be used, consumed or eliminated jointly with that product.