German Federal Parliament approves Single-Use Plastics levy, Federal Council approval is next step

Executive summary

Based on the European Union (EU) Single-Use Plastics Directive regulations, the German Federal Parliament approved legislation on 2 March 2023 to implement a Single-Use Plastics levy in Germany (EWKFondG), with first payments expected in 2025. The next step is approval from the German Federal Council, which is expected by end of March 2023. 

The measure aims to reduce waste and to 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 which includes 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 fulfil their obligations.

Detailed discussion

Scope of the levy

The legislative scope intends to cover all goods mentioned in Appendix E of the EU Directive (simplified):

• Food containers intended for immediate consumption

• Packets and wrappers made from flexible material containing food that is intended for immediate consumption

• Beverage containers with a capacity of up to three liters

• Cups for beverages, including covers and lids

• Lightweight plastic carrier bags

• Wet wipes, i.e., pre-wetted personal care and domestic wipes

• Balloons, except balloons for industrial or other professional uses and applications that are not distributed to consumers

• Tobacco products with filters and filters marketed for use in combination with tobacco products

Levy principles

Based on the 2024 figures, businesses will be required to pay the levy for the first time in spring of 2025. The levy amount is to be determined and is subject to scientific research. The amounts are likely to be adjusted over time.

The charges range from €0.06 per kilogram of wet wipes, €24.50 per kilogram of non-deposit beverage cup to €8,945 per kilogram for filters for cigarettes and other tobacco products.

The levy will be paid by businesses who 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) that contain single-use items are not established in Germany, this will need to be actioned by their German representative, who must have registered beforehand.

Refunds

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.

Penalties

A penalty regime will be in place for cases of non-compliance (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 non-compliance. In addition, the penalty regime includes the ability to impose the sanctions against businesses enabling non-compliant operators to offer their goods on the German market (e.g., electronic interfaces/online marketplaces).

Outlook

The new levy is viewed as a starting point, especially from the perspective of communities’ representatives. It is worth considering that the scope may be expanded to other types of packaging waste found in communities across Germany. 

Implications

Businesses who 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 fulfil obligations under the regime.

In addition, businesses should be aware that another form of plastic packaging tax is also being evaluated from a political perspective in Germany. This would be a separate measure designed to refinance the cost of the EU Plastic Levy, which must be paid annually from the German Federal Budget to the EU Budget. However, yet there is no progress with the planning of a plastic packaging tax in Germany.

These developments should also be viewed in the context of a packed 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 (for example, 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).

For additional information with respect to this Alert, please contact the following:

EY Law Rechtsanwaltsgesellschaft Steuerberatungsgesellschaft

• Dr. Simon Meyer, Environmental Law

• Dr. René Schmelting, Environmental Law

Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft

• Richard J. Albert, Global Trade and Indirect Tax

• Maike Moore, Sustainability Tax Services

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.