Changes to the Environmental Product Charge and Extended Producer Responsibility (EPR) government regulation for 2025

Changes to the Environmental Product Charge and Extended Producer Responsibility (EPR) government regulation for 2025

Legislative turbulence at the end of last year

On 23.12.2024, No 133 of  Hungarian Gazette was published, which also includes Act LXXXIX of 2024 amending certain energy-related acts, which also includes amendments to the Environmental Product Fee Act and the Waste Act. In addition, a decree amending government decrees in the field of energy was published in issue 138 of the Hungarian Gazette of 30th December. Several relevant laws were also amended at the end of the year, but this article focuses on the changes to the product charge and EPR charge regulations, which are presented in more detail.

All in all, one eye is crying and the other is laughing. We are pleased to see (in memoriam) the removal of the duplicate and unnecessary administrative burden of the environmental product charge, which has already become redundant in the last year and a half with the advent of the EPR Regulation. This is clearly the result of the persistent and tenacious work of professional organisations, in which Green Tax Service Ltd. has been actively involved. The other eye, however, is very much crying when reading the amendment to the EPR Regulation. Unfortunately, we can say that the proposals of the largest professional organisations to move forward, clarify the law and even make the taxpayers comply with the law, thus predestining higher concession revenues (and, moreover, the prayers of many of us) were not heard. We cannot trivialise the introduction of the obligation for blended frying oils, the exemption of artificial grasses from the textile products, or the simplification of the administrative burden for a certain group of small producers and small farmers who are currently either part of the system or not. Unfortunately, we can say that these changes fall far short of what was hoped for. That said, the ‘EPR pre-enactment’ of the Penalty Regulation has taken place, which foreshadows the controls that can now be expected, assuming a presumably large number of operators who are currently free-riding, and trusting that it is not the companies in the system, seeking to comply with the current complex regulations and seeking to behave in a law-abiding manner, that will be targeted.

We now look at the legislative changes related to the product charge, extended producer responsibility fee, penalty regulation and a short list of legislation that has been considered relevant and amended.

1. Changes in legislation on environmental product charges

Most important and most welcome is the abolition of the product charge obligation for EPR obligated product flows from 1st January 2025. The parallel maintenance of the product charge and the EPR regime has raised a number of questions and, in our view, has become unnecessary. In practice, the product fee return for these product streams has been an unnecessary additional administrative burden, and the current amendment has made it unnecessary to submit returns with a HUF 0 payment obligation in most cases.

This means that the double reporting of the following will no longer apply:

• battery
• electrical, electronic equipment
• packaging
• tyre
• advertising paper
• the office stationary

Of course, it should be stressed that the obligation remains unchanged for other petroleum products, other plastic products „reinforced” with carrier bags and other chemical products.

Other, operational changes

·         In the case of sales abroad, the product charge cannot be reclaimed on used or wasted products subject to the product charge, except for other petroleum products.

·         The provisions in force prior to 1st January 2025 apply to product charge obligations, including the related refund, incurred before 1st January 2025, with certain exceptions.

·         The state tax authority will continue to perform its duties in relation to liabilities incurred before 1st January 2025 after 1st January 2025, in accordance with the rules in force on the date the liability arose.

·         The state tax authority will close the product fee liability of the debtor who has registered after 1st January 2025 for products no longer subject to product fees and the takeover contracts declared for products belonging to these product groups ex officio on 31st December 2024. (Note: in the absence of transfer contracts for the above product flows, the transfer clauses must be removed from the invoice, as must the declarations).

·         In the case of plastic carrier bags for packaging, the debtor must declare his product fee liability for other plastic products after 31st December 2024.

·         In the case of plastic carrier bag packaging, a person who assumes the product charge obligation by contract before 1st January 2025 will fulfil his product charge obligation after 1st January 2025 according to the rules for the product flow of other plastic products.

·         Annexes 1, 2, 4 of the Act are amended in accordance with the above.

·         Procedural rules for the product charge warehouse in addition to the products subject to the EPR has been amended

·         Importantly, the possibility of deducting the amount of the extended producer responsibility fee under the Ht (Waste Law). has been retained for plastic carrier bags.

2. Changes related to the Extended Producer Responsibility (EPR) Regulation

·         The first domestic placing on the market of a product is considered to be the domestic placing on the market of a „circular product” obtained with a declaration, as well as the use of frying oil and fats obtained with a declaration as a non-raw material.

·         A transfer before release for consumption under the Excise Duty Act is not considered a release for consumption

·         Delivery abroad may be certified by a transport document or consignment note

·         The final separation of foreign-produced packaging from the product is considered to be own-use if the separated packaging becomes packaging waste domestically.

·         The provisions on the final separation of reusable packaging owned by a domestic economic operator and returned from abroad that is included in the reusable packaging register of the national waste management authority, and on the final separation of reusable packaging that is part of packaging imported from abroad and its certified return to the country within 365 days, have been repealed by the above amendment.

·         If the amount of the invoice to be issued for the EPR fee is less than HUF 1,000, the concession company will not issue an invoice for the EPR fee on a quarterly basis, but when the amount of the fees established for the previous quarters but not yet invoiced reaches HUF 1,000 in aggregate.

·         Decree 60/2023 of 15.XI.) of the AM, if the annual taxable income from his activity in the tax year preceding the tax year in question did not exceed five times the annual minimum wage in the year preceding the tax year in question, he may keep a special, simplified register and submit the data annually to the national waste management authority by 20th January of the year following the tax year in question.

·         For frying oils and fats, the following are included: heading 1517 90 91 HS and CN subheading 1517 90 91: mixtures of circular products as defined in 1.9.1 to 1.9.5

·         However, in the case of textile products, an exception is made for artificial grass of heading 5703 21 or 5703 31 and HS subheading 5703 31.

3. Amendment of the Regulation on fines in relation to the EPR

In parallel with this, the fine decree was also changed (Government Decree 271/2001 (XII. 21.) on the amount of waste management fines and the method of their imposition and determination).

Failure to register DRS:

The waste management authority shall set the amount of the fine at HUF 500,000, without establishing a basic fine and a multiplier, if the concession company fails to fulfil its obligation to register the compulsory returnable product within the deadline, as provided for in the Government Decree on the detailed rules for the establishment and application of the returnable product and the distribution of the returnable product.

Lack of EPR data reporting:

If the producer fails to provide data on the quantity of circular economy’s products placed on the market in accordance with the Government Decree on the detailed rules of the extended producer responsibility system, and thus fails to fulfil its obligation to pay the fee, the waste management authority shall determine the amount of the fine without setting a basic fine and a multiplier, by multiplying the actual quantity by half of the unit fee established for the given product stream.

Invalid EPR data reporting:

If the producer provides false data in the context of the data supply and thus fulfils the obligation to pay the fee on the basis of a lower than real quantity of circular economy’s products, the waste management authority shall determine the amount of the fine without setting a basic fine and multiplying factor, as the difference between the real quantity data and the quantity data provided, multiplied by half of the unit fee for the given product flow.

If the producer commits the infringement in respect of more than one product, the amounts of the fines per product and per offence are added together.

In the case of an infringement, the waste management authority shall determine the fine on the basis of the highest rate set within the product price, if the material price of the circular economy’s product cannot be determined in detail from the producer’s records.

4. A summary list of related legislative changes:

Hungarian Gazette No 131:

·         Act CLXXXV of 2012 on Waste

·         Government Decree No 416/2024 (20.XII.) amending certain government decrees for deregulation purposes in the interests of legal competitiveness

·         Government Decree 439/2012 (XII. 29.) on the registration and official licensing of waste management activities

·         Government Decree 246/2014 (IX. 29.) on the rules for the construction and operation of certain waste management facilities

·         Government Decree 309/2014 (XII. 11.) on registration and reporting obligations in relation to waste

·         Government Decree 369/2014 (XII. 30.) on waste motor vehicles

Hungarian Gazette No 133:

·         Act LXXXV of 2011 on Environmental Product Charges

·         Act CLXXXV of 2012 on Waste

·         Hungarian Gazette No 134:

·         EM Decree 34/2024 (XII. 23.) on the fees for administrative services in waste management procedures

Hungarian Gazette No 138:

·         Government Decree 271/2001 (XII. 21.) on the amount of waste management fines and on the method of their imposition and determination

·         Government Decree 343/2011 (XII. 29.) on the implementation of the Product Fee Act

·         Government Decree 442/2012 (XII. 29.) on packaging

·         Government Decree 197/2014 (VIII. 1.) on waste management activities related to electrical and electronic equipment

·         Government Decree No 533/2013 (XII. 30.) on the rules of the reusable packaging rental system is repealed

·         EPR Government Decree (Government Decree 80/2023 (III. 14.))

·         Government Decree 273/2023 (VI. 29.) on used cooking oil

·         Government Decree 275/2023 (VI. 29.) on the detailed rules of waste management activities related to textile waste

·         Government Decree No 450/2023 (X. 4.) on the detailed rules for the establishment and application of the redemption fee and the distribution of products subject to the redemption fee

·         Government Decree No 681/2023 (XII. 29.) on the detailed rules of environmental insurance in connection with waste management,

·         Decree 169/2024 (VI. 29.) of the Government on the detailed rules for the performance of waste management activities and waste management activities related to waste management within the scope of the public service activity and the use of the public service activity

Please note that in this summary we only present the changes that we consider most important, and that an in-depth study of the existing texts on product charges and the EPR system is necessary to understand the full amendment.

We hope that this technical summary has helped you to prepare for the changes in the EPR and environmental product charge regulations.  If you have any questions, please contact Green Tax Service Ltd at the usual contact details.

Statement

GREEN TAX SERVICE Ltd. declares that it has compiled this information in accordance with the requirements of the legislation on product charges and the extended producer responsibility scheme. It has acted with due care and diligence and in accordance with professional standards.

This summary does not include the full product fee law and its implementing regulation, or the extended producer responsibility government regulation. It is not intended to be exhaustive and does not contain exact citations of the legal norms, but rather provides practical guidance, the primary purpose of which is to make the summary understandable.

GREEN TAX SERVICE Ltd. informs the reader that the findings, opinions and proposals described in this summary reflect the interpretation, practice and professional opinion of the legal practitioners, which are considered professional opinions, recommendations and guidelines, but the contents of this summary are not legally binding. GREEN TAX SERVICE Ltd. disclaims any liability for any errors or omissions.

GREEN TAX SERVICE Ltd. has no competence to interpret the legislation, the information contained in this summary is a professional opinion, which is not binding on the courts or authorities in the event of a dispute.