Hungary: Extended producer responsibility scheme and Green Tax Act changes affect manufacturing activities and sale of products in Hungary and abroad
An overview from LeitnerLeitner Hungary
Judit Jancsa-Pék LL.M. from LeitnerLeitner Hungary, updates on two significant legislative changes that will be applied in Hungary from 1 July 2023. The “Extended producer responsibility scheme (EPR)” will affect businesses engaged in manufacturing activities in Hungary; or who are making their first sale of products manufactured abroad. The change in the Green Tax Act will also impact foreign online shops that sell products to Hungary.
Read the full overview of these changes from our member firm in Hungary below:
Extended Producer Responsibility scheme
From 1 July 2023, the Extended Producer Responsibility scheme (hereafter referred to as “EPR”) will be applied in Hungary. Contrary to its name, the EPR covers not only manufacturers, but also the first placing on the market in Hungary of so-called circular products produced abroad. In other words, all companies that import the products listed below from abroad into Hungary and sell them for the first time domestically are covered by the EPR. Putting on the market also includes, under the EPR Decree, the own use of circular products, i.e. for example the use of foreign-made products for investment, renovation, maintenance and any other use of the product not mentioned above, including use, consumption or putting into use in the context of the provision of services (which does not result in the creation of own-account inventories under the accounting rules); if, after use, the circular product becomes waste domestically.
It is considered a circular product under the EPR:
¬ packaging (e.g. paper, plastic, metal, wood)
¬ certain single-use and other plastic products (e.g.: food storage containers, beverage bottles, beverage cups, wet wipes)
¬ electrical and electronic equipment (e.g.: heat exchange equipment, certain computing devices, lighting fixtures)
¬ batteries (e.g. portable batteries, accumulators, car accumulator)
¬ motor vehicle
¬ tyres (rubber tyres, retreaded rubber tyres)
¬ office paper (e.g. copy paper, binder box, notebook)
¬ advertising paper (e.g. books, newspapers, printed matter)
¬ frying oil, frying fat (for example, sunflower seed, rape seed, olive oil of specified tariff headings)
¬ certain textile products (e.g. certain knitted or crocheted articles of clothing, blankets, carpets, footwear – qualification made based on customs tariff number)
¬ certain wooden furniture (for example: convertible seating furniture, kitchen furniture, bedroom furniture, office furniture).
It is important to note that not only circular products from abroad placed on the market in Hungary are covered by the EPR, but also their packaging (consumer, collective and transport/protective packaging). In summary, domestic producers of circular products and companies importing products – circular or otherwise – from abroad and selling them for the first time in Hungary, as well as foreign webshops, must apply the EPR because of the product and/or its packaging. In addition, the EPR must also be applied by companies using circular products imported from abroad for their own use.
The EPR imposes the following obligations on companies placing circular products on the market:
¬ Registration on the website of the concession company (MOHU MOL Zrt.)
¬ Submission of a registration application to the waste management authority (deadline 31 May 2023)
¬ Keeping a register and submitting data in accordance with the legal requirements
¬ Payment of extended producer responsibility fee
¬ Invoices issued with the text specified in the legislation.
An undertaking established abroad and placing a circular product on the domestic market may fulfil its obligations under the EPR Regulation through a domestic authorised representative, for which a written authorisation is required. A webshop placing a circular product on the market in Hungary shall fulfil its obligations under the EPR Regulation only through a domestic authorised representative.
Please note that if a company covered by the EPR does not apply for registration with the waste management authority, the authority will impose a penalty. If, after the penalty has been imposed, the company still fails to comply with the obligation to register, the authority will prohibit the sale of circular products until the obligations have been fulfilled.
After 1 July 2023, foreign webshops selling green taxable products (e.g.: electronic devices; beauty or personal care products, soaps, detergents; batteries, accumulators, lubricants made from mineral oil) to Hungarian end-users are also subject to the Green Tax Act, which means that they must register with the Hungarian tax authority, keep records, file tax returns and pay tax. An important rule is that foreign webshops must pay green tax on the packaging of all products sold to Hungarian end-users.
A green tax liability is imposed on the webshop that first places products (or their green taxable accessories, components and packaging) subject to green tax on the market in Hungary.
Obligations for foreign online shops:
¬ notification obligation: companies operating on 1 July 2023 must register with the Hungarian tax authority by 15 July 2023, companies starting their activities later must register within 15 days of starting their activities using a registration form
¬ the taxable person must keep a register of green taxable products (e.g. electronic products placed on the market, packaging waste produced abroad and dismantled in Hungary). The register must be suitable for the identification of the tax return data, therefore the products concerned must be listed separately by “KT” code (environmental product code), “CsK” code (packaging catalogue code number), on a weight basis, in some cases on a piece basis.
¬ tax returns, tax payment obligations: the obligation to pay green tax must be declared to the tax authority by the 20th of the month following the quarter in question by sending the “KTBEV” form electronically. The green tax due must be paid by the deadline set for the return.
Companies can also fulfil these obligations through an authorised representative in Hungary.
In determining the amount of green tax payable, the EPR fee payable in connection with the EPR described above should be taken into account.
LeitnerLeitner supports its Clients in fulfilling their EPR and green tax obligations with the following services:
¬ providing support for the fulfilment of registration (to MOHU MOL) and registration (to waste management authority) obligations
¬ categorization of company activities based on the EPR
¬ the EPR classification of manufactured (distributed) products, as well as their components and accessories
¬ EPR register, creation of circulation codes in connection with it
¬ classification of circular products under the EPR fee code
¬ assistance in fulfilling the obligation to provide data
¬ advice on EPR-related invoicing rules, modification of invoicing programs
¬ in the case of a manufacturer established abroad and a foreign online store, fulfilling EPR obligations as an authorized representative
¬ advice regarding the assumption of EPR obligations and individual performance
¬ support in fulfilling obligations under the Green Tax Act
¬ assistance in dividing the environmental protection product fee and the EPR payment obligation.
For further information, please contact Judit Jancsa-Pék LL.M.
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