Plastic Tax: Hungary

last updated on 21 July 2023

1. Implementation of plastic/environmental tax

Local status of the implementation of plastic tax and legal basis

Act LXXXV of 2011 on Environmental Protection Product Charges entered into force on 1 September 2011.

From 1 July 2023, a new obligation, the payment of the extended producer responsibility (EPR) fee, and the related administrative obligations, applies. Enterprises that currently have to pay an environmental product charge are certainly affected by the EPR obligations, but the ERP obligation is broader than the environmental product fee.

In addition to the payment of the EPR fee, a wide range of companies will also have to register, keep records, and provide quarterly data.

Those enterprises who are affected by the EPR obligation, must register on the surface of the system established for this purpose.

The first payment of the EPR fee is expected to become due in the third quarter (in October 2023). The fee is payable by the 10th of the month following the quarter in question, subject to reporting to the Waste Management Authority.

2. Plastic/Environmental Tax scope and rates

Person liable to pay the tax

In general the product charge liability arises at the first person when he:

places the product on the domestic market or
uses it for his own account, or
takes the items on stock

Tax base

The tax obligation shall be determined on the basis of the total weight of the taxable product. If the product itself is not in the list, however if the product contains a taxable product as a component or accessory, the weight of this product part is decisive.

The rate is varied that ranges from 19 Ft/Kg to 1900 Ft/Kg.

Product scope

To identify the products subject to the tax, the implementing regulation of the law uses a so-called product code (KT code) and a packaging code (CsK code). The declaration must be completed on the basis of this classification. Alignment needs to be carried out between the customs tariff numbers and the KT code/CsK code.

According to the law, the products subject to the environmental charge are divided into the following categories:

batteries;
packaging products;
other petroleum products;
electric appliances and electronic equipment;
tires;
commercial printing paper;
other plastic products,
other chemical products,
paper stationary.

A specific product is subject to a product charge,

if it corresponds to the definition in the Act,
its Customs tariff code is listed in the Annex 1 of the Act
is not included in the exceptions.

There are special rules regarding other petroleum products, contract manufacturing or packaging waste holder etc.

Regarding the new law the scope of products are:

packaging materials
specific single-use plastic products
electrical and electronic equipment
batteries and accumulators;
motor vehicles
tyres
office paper
promotional paper
cooking oil and grease
certain textile products
wooden furniture.

Under the legislation, the existing environmental product fee with similar obligations will remain in parallel with the EPR. The products covered by the product charge and the EPR are very similar, but the EPR covers a much wider range of products. For products that are subject to both EPR and environmental product fee, the amount of the environmental product fee is expected to be reduced (not yet implemented)

The EPR obligation must be fulfilled to the concession company (MOHU Zrt) appointed by the Waste Management Authority.

Impacts and consequences (for entrepreneur and/or private individuals)

The debtor shall keep a register reflecting the reality of the obligations relating to the products subject to the product charge.

Exemption/exclusion from taxation

There are many exceptions and specialties within the legislation that each product and arrangement need to be reviewed on case-by-case basis.

Time of taxation

A taxable person must notify the Hungarian National Tax and Customs Administration within 15 days of the start of the activity with the product subject to the product charge.

Sanctions for violations

Potential penalty set in the regulation can be considered high compared to other types of taxes. In case of failure to pay product charge or in case of having a shortage, the penalty could be 100 percent of the tax shortage. In case of unlawful claim, the penalty is three times of the unlawfully claimed amount.

Deadlines

In general, the deadline for the declaration is the 20th day of the month following the quarter. With regard to the fourth quarter, the taxpayer has to make an advance tax payment, which he must fulfil as part of the declaration for the third quarter. The amount of the advance payment is 80 percent of the third of the environmental charge that has already been paid for the first three quarters.

It is possible to apply a yearly flat rate for marginal polluters if conditions are met. In this case, payment to be made and declaration has to be submitted on 20th January following the calendar year.

Insights

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