The range of goods subject to the product fee is to narrow substantially in Hungary from 1 January 2025. Following the amendment to Act LXXXV of 2011 on the Environmental Product Fee, by narrowing the scope of goods subject to the product fee the Hungarian government aims to reduce the double administrative burden for obligated parties in the case of goods that fall under both the product-fee system and the extended producer responsibility (EPR) scheme.
Range of goods subject to the product fee to narrow
Under proposal T/9720 submitted to amend certain energy-related laws and included in the 2024 autumn tax law amendments, packaging, batteries, electrical/electronic equipment, tyres, office paper and advertisement paper will no longer be subject to the product fee from 1 January 2025. These products also fall under the EPR, so owing to payment of the EPR fee – after the rollout of the extended producer responsibility system in Hungary last year – there has already been no obligation to pay the product fee in these cases; however, the administrative tasks (notification, record-keeping, declarations, etc.) have so far remained in place.
Other petroleum products, other chemical products and other plastic products will continue to be deemed goods subject to the product fee. The only change here is that the plastic carrier bags, which have been included under packaging until now, will be subject to the environmental product fee in the category of other plastic products from 2025. Please note that those affected will have to make a new notification to the tax authority in this respect.
Other key changes in product-fee law
Among the other changes, perhaps the most important and the one affecting most economic operators in Hungary is that from the beginning of next year, the bill removes the obligation to assess, declare and make product-fee advance payments, further reducing the burden on taxpayers.
The bill also aims to remove the possibility of farmers’ organisations assuming such obligations from next year onwards.
The proposed amendments affect businesses that apply flat rates for vehicles as well, since the method for calculating flat rates is set to change. In line with narrowing the range of goods subject to the product fee, the flat rate would exclude batteries, tyres and electrical/electronic equipment, leaving only lubricating oil, while the flat rates would be determined per unit.
Transitional rules
According to the proposed amendments, the provisions in force before 1 January 2025 will apply to product-fee liabilities – including related refunds – incurred before 1 January 2025.
The Hungarian tax authority will continue to carry out its duties in relation to liabilities incurred before 1 January 2025 in accordance with the rules in force on the date such liabilities arose.
Another important transitional rule is that as of 31 December 2024, the tax authority will officially close the contracts for assuming product-fee liabilities concluded in respect of products to be removed from the product-fee obligation.
What to watch out for
Importantly, the planned changes will not fundamentally affect the main environmental product fee obligations. In the case of goods subject to the product fees, the obligations to notify, keep records, submit returns and make payments must still be fulfilled by those concerned. The legislators do not plan to change the legal consequences either, while the ability to assume payments of product-fee liabilities will remain, albeit with minor changes. There will be no change in the rates for goods subject to the product fee in Hungary either.
The tax consulting team of WTS Klient Hungary is staffed with qualified EPR and environmental product fee advisers to assist clients with their enquiries on product fees and the extended producer responsibility scheme. If you need specialist help with this, please do not hesitate to contact us.
