November 8, 2022
German Government releases draft legislation for a Single-Use Plastics levy in Germany
Based on the European Union (EU) Single-Use Plastics Directive regulations, the German Government has now approved a governmental draft for legislation to implement a Single-Use Plastics levy in Germany (EWKFondG). The legislation is in draft status with next legislative steps being consultation with the German Federal Parliament and the German Federal Council. It is expected that the law will pass in the first quarter of 2023.
The measure aims to reduce waste and to stimulate better use of plastic as a resource and is also aligned to broader circular economy ambitions. As a result, producers of single-use plastic items shall be responsible for waste management and recycling, cleaning of public areas as well as education and consumer awareness.
New obligations under the regime would impact a range of business transactions including: local (German) companies or manufacturers placing single-use items in the domestic market which includes importers, persons conducting intra-community acquisitions from other EU Member States in addition to foreign e-commerce sellers. Affected parties established outside Germany (i.e., business-to-consumer e-commerce sellers) must contract with an "authorized person" established in Germany to fulfil their obligations.
Scope of the levy
The legislative scope intends to cover all goods mentioned in Appendix E of the EU Directive (simplified):
Based on the 2024 figures, it is anticipated businesses will be required to pay the levy for the first time in spring of 2025. The levy amount is to be determined and is subject to scientific research. The levy amounts will be published in secondary legislation, which is expected soon.
The levy will be paid by businesses who place a product in the German market for the first time (including distance sales). The amount owed will be calculated based on annual declarations to be submitted by the business. If the persons placing product(s) that contain single-use items are not established in Germany, this will need to be actioned by their German representative, who must have registered beforehand.
It is also planned to establish a commission on single-use plastic, which will advise the Ministry on the levy amount, the score system and questions on which products are in scope of the regulation. Scope of products may therefore be revised. The commission will be comprised of 12 members; half will be representatives from the producer industry, and the other half will be representatives of waste management businesses, consumer and environmental organizations as well as representatives from local governments.
Generated revenues will flow into a new Single-Use Plastic Fund (the Fund), which will be managed by the Federal Environmental Agency. The Fund will finance the administration of collection and refund procedures. The remaining revenues are intended to be used to refund costs incurred by the public waste management authorities and other legal entities under public law who carry out activities such as waste management, cleaning and awareness building. These bodies must register and file official refund requests. The refund will be paid based on a score allocated to the respective body. Details on how the score will be allocated will be part of forthcoming secondary legislation.
A penalty regime will be in place for cases of non-compliance (e.g., non-registration, incorrect declaration of amount of single-use plastics). The authorities will also be qualified to seize all goods on the market in cases of non-compliance. In addition, the penalty regime includes the ability to impose the sanctions against businesses enabling non-compliant operators to offer their goods on the German market (e.g., electronic interfaces/online marketplaces).
Businesses who sell impacted goods should consider the potential financial impact, monitor further legal developments and start to prepare their operations for compliance with new obligations. It will be important to: (i) identify products subject to the levy; (ii) prepare for the filing requirements; and (iii) if needed, contract with an authorized person to fulfil obligations under the regime.
In addition, businesses should be aware that another form of plastic packaging tax is also being evaluated from a political perspective in Germany. This would be a separate measure designed to refinance the cost of the EU Plastic Levy, which has to be paid annually from the German Federal Budget to the EU Budget. However, given divergent opinion of the political parties, there is no progress with the planning of a plastic packaging tax in Germany.
For additional information with respect to this Alert, please contact the following:
EY Law Rechtsanwaltsgesellschaft Steuerberatungsgesellschaft
Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft