As the end of the year approaches this means that along with Christmas decorations in the shops we are also seeing legislative amendments being approved by the National Assembly one after the other. Accordingly, on 17 October MPs approved the amendment to the Act on the Environmental Product Fee effective from next year. The aim of the legislative changes is to simplify compliance with the product fee obligations, ensure a uniform interpretation of the law and comply with the changes to the EU Directive on waste electrical and electronic equipment. Below I will give an outline of the most important changes to the Act on the Environmental Product Fee.
Planned amendments to Act on the Environmental Product Fee that were not adopted
It is important to note that the draft law submitted at the end of September included a number of elements whose primary aim was to increase the product fee. These provisions have been removed in the meantime, so they are not included in the approved version of the Act on the Environmental Product Fee. Consequently, the product fee for advertisement paper will not increase from HUF 85/kg to HUF 114 /kg, and thin plastic bags used in “sales outlets” will not be included in the category of advertising bags, so their fee remains unchanged at HUF 57/kg instead of the planned HUF 1,900 /kg.
Definition changes
According to the regulations prescribed by the Act on the Environmental Product Fee effective from 1 January 2018, and in line with the provisions of Directive 2012/19/EU on waste electrical and electronic equipment, large-scale fixed industrial tools as well as electrical and electronic equipment designed to be used in space are not categorised as electrical and electronic equipment, consequently, no product fee is payable for these types of equipment. This change is certainly good for Hungarian companies producing these products in Hungary, or importing and selling them in Hungary.
Looking at the definition changes we should point out that the amendment to the Act on the Environmental Product Fee clearly defines plastic bags used to collect separated waste, while drink packaging made of metal appears as a new term; at the same time, the definition of commercial packaging and commercial packaging materials no longer applies.
In addition, the definition of advertisement paper will also be simplified next year since it contain no exceptions that are not clearly identifiable.
Decreasing product fees
In accordance with the amendment, the electrical and electronic equipment categories are also to change, and the product fee of all electrical and electronic equipment will be a uniform HUF 57/kg. Due to this standardisation the product fee of consumer electronic products (current product fee HUF 114/kg), and mobile phones (current product fee HUF 304/kg) will be considerably reduced.
While the categories of commercial packaging and commercial packaging material have been removed, metal packaging for drinks is included in the packaging materials category as drink packaging made of metal, and as a result, its product fee is reduced from HUF 304/kg to HUF 57/kg.
Amendments to the Act on the Environmental Product Fee effective from 1 January 2018 give preference to hybrid or fully electric vehicles with a reduced environmental impact, which means that only 70% in the case of hybrid vehicles and 50% in the case of fully electric cars is charged from the normal product fee or product-fee flat rate.
Other key changes to the Act on the Environmental Product Fee
The amendment to the Act on the Environmental Product Fee makes it clear that if a new product-fee taxpayer with a new tax number is created as a result of the transformation, merger or division of a previous taxpayer, or if the grounds based on which the obligation is assumed changes, then new contracts assuming these obligations must be concluded and reported to the NAV.
Keeping records will also be simplified for these taxpayers because from the beginning of next year the regulation on product fees will apply the rules on the classification of goods effective from 1 January of the given year, instead of the classification rules effective on 1 January 2010. In light of the legislative changes we recommend revising customs tariff headings, and modifying records if necessary.
