Plastic taxes in Europe: where we stand and what needs to be done

Image Source: shutterstock | Alina Kruk

The EU plastic levy was introduced in 2021 as part of the temporary EU recovery package to support Member States affected by the Covid-19 pandemic. There are currently very different combinations of laws, levies and taxes that are applied differently by individual states. We take a basic look at the topic, look in detail at the UK, Spain, Italy and Germany, examine the consequences for companies in the packaging industry and tell you which questions you should clarify.

 

The basics of the plastic tax

The term “plastic tax” refers to the EU plastic levy, which was introduced in 2021 as part of the temporary EU recovery package to support member states affected by the Covid-19 pandemic.

  • The plastic tax will provide the EU budget 2021-2027 with a new, additional source of revenue estimated by the WTS Global Report at around 7 billion euros per year.
  • In line with the European strategy, national contributions will be set in proportion to the amount of plastic packaging waste placed on the market but not recycled in each Member State.
  • A standard rate of EUR 0.80 per kilogramme of non-recycled plastic packaging waste is charged for this quantity.
  • The contributions are calculated based on Eurostat data, which are already collected and transmitted by the Member States as part of existing reporting obligations.
  • It is up to the member states themselves to decide how to finance the tax to be paid to the EU in their own country.

 

Financing options

At present, two main approaches to counter-financing the EU plastics levy dominate among the Member States.

  • The Member States pay the contribution from their national budgets, regardless of whether they have set up a national system for levying the tax (as in the case of Sweden) or not.
  • The member states draft their own tax laws that burden certain payers for defined reasons and set up a national collection system for this purpose. Each country defines the taxed products, the mechanism for levying the tax, possible refund options, etc. itself.

 

Important difference: plastic tax and EPR fees

It is important to distinguish between plastic tax and EPR charges.

  • A fee under the Extended Producer Responsibility (EPR) system is linked to participation in a corresponding EPR system and is intended to cover the costs of waste treatment in the country. EPR fees are based on the implementation of the EU Single-Use Plastic Directive (SUPD).
  • Plastic taxes, on the other hand, are purely a source of revenue for the European treasury or, in the case of the UK, for the national treasury.

 

Differences in the handling of plastic waste in Europe

In recent years, EU Member States have begun to implement not only European waste legislation, but also their own national regulations and measures to tackle the problem of plastic waste.

There are currently various combinations of laws, levies and taxes that are applied differently by the individual member states. The existing measures can be divided into four categories:

  • taxes on plastic packaging (plastic packaging tax; PPT);
  • prohibitions and labelling regulations for single-use plastics (SUP);
  • extended producer responsibility (EPR) fees and licence requirements for waste management systems;
  • charges for the disposal of waste.

 

Country-specific legislation

Many countries levy taxes on certain types of plastic packaging. For example, there are taxes on plastic bags in around 27 countries and territories on four continents.

We go into detail for the UK, Spain, Italy and Germany. We show you how these countries have established or want to establish PPT systems. We focus on the plastic tax and not on EPR fees, which are based on the implementation of the Single-Use Plastic Directive (SUPD).

 

Great Britain

  • The UK was the first country to introduce a plastic tax, which applies to plastic packaging that is produced or imported in the country and contains less than 30 per cent recycled plastic.
  • Since 1st of April 2024, the tax has been £217.85 per tonne.
  • According to surveys conducted by the trade journal EUWID (issue 34.2024), a total of 4,669 companies are registered. This figure is far below the originally assumed number of 20,000 companies.
  • With revenues falling, a turnover of £268 million was generated in the period 2023/2024.
  • The visible effects of the tax are interesting. Both imports and domestic production have fallen. Exports have collapsed.
  • The number of plastic packaging items that are not affected by the tax due to the use of at least 30 per cent recycled material rose by 6 per cent.

 

Spain

  • A tax on non-reusable, plastic-based packaging has been introduced in Spain.
  • Non-reusable packaging does not go through multiple cycles during its life cycle and cannot be refilled or reused.
  • According to the Spanish Waste and Soil Protection Act, which came into force on 1st of January 2023, the tax rate is €0.45 per kilogramme of non-recyclable plastic packaging.
  • Taxable events include the manufacture, import and intra-Community acquisition in Spain.
  • The aim is to reduce single-use plastic packaging by 50 per cent by 2026 and by 70 per cent by 2030 compared to the 2022 level.
  • In 2023, the tax on single-use plastic packaging in Spain generated a total of around 663 million euros.

 

Italy

  • The tax on plastic packaging, which was originally due to come into force on July 1st, 2020, will not come into force until 1st of July 2026 after several postponements, although there may be a further postponement.
  • The tax is expected to be levied at a rate of 0.45€ per kilogramme and applies to single-use plastic products (manufatti con singolo impiego; MACSI).
  • The tax is regulated in Article 1, paragraphs 634 to 658 of Law 160/2019, but the associated implementing measures, which will define the corresponding operational details, have yet to be implemented. Currently, only a draft circulated in 2021 is available.
  • The tax is applied to products intended for the “storage, protection, handling or supply of goods or foodstuffs” and made from “plastics consisting of organic polymers of synthetic origin” that are not intended for repeated use.
  • It should be noted that Law 160/2019 states that single-use plastic products in the form of films, foils and tapes will be subject to the tax. The exact list of products to be taxed will be specified in the implementing regulations. It is expected that items such as bottles, bags and food packaging made of polyethylene, Tetra Pak packaging, expanded polystyrene packaging and plastic caps will be subject to the tax.
  • The tax is also levied on semi-finished products, including preforms, manufactured (in whole or in part) using the aforementioned plastics and used in the manufacture of MACSI.

 

Germany

  • In Germany, after two postponements, the responsibility for paying the plastic levy will be shifted from taxpayers to polluters from 1st of January 2026, as stipulated in the coalition agreement.
  • The German government is currently still in the process of coordinating the specific organisation of the national distribution of the EU plastics levy.
  • Various options are being examined. The exact mechanism and addressees of the regulation as well as the products included and the amount of the national levy of the EU plastics levy have not yet been finalised.
  • The potential revenue from this tax is estimated at around 1.4 billion euros per year.

 

What does the plastics tax mean for the economy?

Attention to plastics is increasing not only at European level, but also worldwide. The introduction of plastics taxes is progressing rapidly and it is important to keep abreast of both European developments and developments in the countries where companies have business or production facilities. After all, the introduction of plastic taxes can result in significant additional costs for companies, although the specific impact will vary depending on the type of plastic tax in different jurisdictions.

  • The immediate impact is the increase in costs for the manufacturers and importers concerned, as plastic taxes are levied on the plastic products falling within the scope of application.
  • Indirectly, entire downstream supply chains can be affected as product costs rise. This applies from the companies that purchase plastic packaging or components through to consumers and even waste disposal companies.
  • The current legal framework for plastics is not harmonised in Europe. Even if no “plastic tax” is levied on plastic products, this does not mean that there are no additional costs associated with the use or consumption of plastic products.
  • It is therefore important to keep abreast of developments in legislation – both tax and non-tax – and to assess its applicability to the organisation.

 

You should clarify these questions

  • What types of plastics fall within the scope of application (disposable, plastic bags, microplastics, plastic waste, etc.)?
  • Will restrictions be introduced on the percentage of recyclable or non-recyclable plastics?
  • When are plastics subject to tax (import, production, distribution, market entry, etc.)?
  • What reporting obligations exist? Do new systems need to be introduced to record the percentage of non-recycled plastic?
  • Are there other plastic levies or waste contributions in the country where your organisation operates?

As B+P, we are happy to help you answer these questions. Simply get in touch with us.


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