June 2, 2023
Germany to implement Single-Use Plastics levy from 2024, extending scope to certain fireworks from 2027
Based on the European Union (EU) Single-Use Plastics Directive regulations, Germany will implement a Single-Use Plastics levy (EWKFondG) for single-use plastics released on the market from 2024, with first payments expected to be due in 2025.
The measure aims to reduce waste and stimulate better use of plastic as a resource and is also aligned to broader circular-economy objectives. As a result, producers of single-use plastic items will 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; those affected include 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 fulfill their obligations.
Scope of the levy
The legislative scope intends to cover all goods mentioned in Appendix E of the EU Directive (simplified):
From 2027, the levy will also cover fireworks containing plastic parts.
Based on 2024 figures, businesses will be required to pay the levy for the first time in spring of 2025. The levy amount is yet to be laid down in a supplementery legal act.
Based on a scientific study, the planned charges range from €0.06 per kilogram of wet wipes, €24.50 per kilogram of a single-use beverage cups containing plastics to €8,945 per kilogram for filters for cigarettes and other tobacco products. The amounts are likely to be adjusted over time.
The levy will be paid by businesses that 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) in the German market that contain single-use items are not established in Germany, remission of the levy will need to be handled by their German representative, who must have registered beforehand.
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 noncompliance (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 noncompliance. In addition, the penalty regime includes the ability to impose the sanctions against businesses enabling noncompliant operators to offer their goods on the German market (e.g., electronic interfaces/online marketplaces).
The new levy is viewed as a starting point, especially from the perspective of community representatives. It is worth considering that the scope may be expanded to other types of packaging waste found in communities across Germany.
Businesses that release impacted goods to the market 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 fulfill obligations under the regime.
Initial discussion with stakeholders shows that a wide range of products will be covered by the regulation. This especially concerns food wrapped in flexible plastic bags (e.g., plastic bags filled with potato chips, flexible plastic bags filled with gummy bears etc.).
Identifying the products, suppliers and trade lanes in scope to prepare for the reporting obligation can be a significant effort that requires preparation well in advance. For a number of products, it is also recommended to take the opportunity to obtain classification rulings to determine whether or not a product is covered by the levy and thus increase legal certainty.
It is also important for businesses to monitor further legal developments. It is expected that some operators may lodge legal action challenging the new regulations or individual product scope decisions of the competent authority, as well as eventual extensions of scope.
Also note, there is development in Germany around general packaging taxes, see EY Tax Alert 2023-0995.
Furthermore, these developments should be viewed in the context of a plastic packaging landscape across Europe. Other notable developments include plastic packaging taxes in Spain and the United Kingdom (UK), ongoing work by the EU to revise the Packaging and Packaging Waste Directive and extended producer responsibility obligations (e.g., the UK recently introduced new regulations — see EY Global Tax Alert, UK packaging waste regulations are effective as of 28 February 2023, dated 2 March 2023).
EY Law Rechtsanwaltsgesellschaft Steuerberatungsgesellschaft
Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft
Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor