EPR fine for failure to report quarterly data

Where a producer fails to report the quantities of circular products placed on the market, the waste management authority will calculate the amount of the EPR fine as the product actually placed on the market multiplied by half of the unit rate for that product stream. In other words, in the case of failure to report the data, and thus to pay the fee, the amount of the fine imposed is 50% of the EPR fee for the total actual quantity failed to be declared.

EPR fine for reporting false data

If the producer provides false data on the quantity of circular product placed on the market or taken into stock by him in the context of the provision of data under the Government Decree on the detailed rules for the operation of the extended producer responsibility system, and thereby fulfils his obligation to pay the fee on the basis of a lower than actual quantity of circular product, the waste management authority shall determine the amount of the fine without setting a basic fine and a multiplier, by multiplying the difference between the actual quantity data and the quantity data provided by the producer, by half the unit rate of the charge for the given product stream. Thus, the EPR fine is half of the EPR fee shortfall in this case too.

In addition to the payment of the EPR fine, producers will continue to be obliged to provide complete and accurate data for the relevant quarterly period.

It is important to note that in the case of the above infringements, the waste management authority will determine the fine on the basis of the maximum charge rate set within the product price, if the material price of the circular product cannot be determined in detail from the producer’s records.

Notification, record-keeping obligations, controls

There has been no change in the level of fines that can be imposed for non-compliance or inadequate compliance with the notification and record-keeping obligations in relation to the EPR. Failure to comply with these obligations will continue to be subject to a fine of HUF 200,000, while failure to comply properly will result in a maximum fine of HUF 200,000.

The Hungarian waste management authority is responsible for the inspection of  the authenticity and completeness of the data reported, and the businesses concerned can expect to be contacted for data reconciliation, on-site inspections and, if necessary, additional documentation. The new legislation aims to oblige producers to provide accurate and timely data, thus contributing to the transparency and efficiency of the waste management system.

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.

This article provides general information and does not constitute advice.

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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.

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But the last few hot days of June brought a cold shower. On 29 June, two days before entering into force, Government Decree 276/2023 (VI.29) amended the rules of certain government decrees related to the extended producer responsibility scheme, including the EPR decree, in several places. Below we have summarised the main changes to the EPR decree, which, importantly, came into force on 1 July. Those affected should therefore consider the impact of any changes on their business as soon as possible. 

Key changes affecting packaging 

According to the latest amendments to the EPR decree, the extended producer responsibility obligation for packaging that is made from packaging designed and intended for filling at the point of sale to the consumer – and packaging made from single-use packaging sold, filled or designed and intended to be filled at the point of sale to the consumer – is imposed on the manufacturer of the packaging, instead of the entity selling the packaging to the producer of the packaging.

Changes affecting reusable packaging 

Thanks to the new amendments, an option similar to the product fee scheme and beneficial for stakeholders was introduced to the EPR decree from 1 July. Accordingly, final separation from the product of reusable packaging that is part of packaging imported from abroad does not constitute use for own purposes and therefore does not give rise to an EPR obligation, if the reusable packaging is verifiably returned to the foreign country within 365 days of the obligation arising. The legislator also clarified that delivery abroad can be certified by a transport document or a waybill.

The amendments also clarify that, for the final separation of reusable packaging owned by a Hungarian economic operator and returned from abroad, reusable packaging shall mean packaging included in the register of reusable packaging at the National Waste Management Authority.

Another positive change for manufacturers of reusable packaging is that, with the exception of the placing on the Hungarian market of packaging made for the first time from reusable packaging, manufacturers do not have to pay the extended producer responsibility fee for the placing on the market of packaging made from reusable packaging material if the reusable packaging used to produce the packaging is included in the National Waste Management Authority’s register of reusable packaging. 

Amendments relating to assuming contractual obligations 

From 1 July, not only vehicle manufacturers but also farmer organisations will be able to take advantage of the option to assume contractual obligations. In the case of a circular product placed on the Hungarian market via a farmer organisation under EU rules, the farmer organisation can take over the EPR obligation. Compared to the previous provisions of the EPR decree, the minimum information content of the associated contracts changed in the legislation as of 1 July.

A further change from the previous provisions of the EPR decree is that when assuming contractual obligations, the vehicle manufacturer is entitled to a flat-rate payment, and this selection cannot be changed within the given year.

Taking to stock: new rule in EPR decree 

The possibility of taking to stock was added to the EPR decree, presumably to ensure consistency with the product fee legislation. Accordingly, the producer is entitled to keep records on the circular products taken to stock instead of circular products placed on the market, but may not change this selection within the given quarter. 

Subsequent changes to data reporting 

The previous wording of the EPR decree gave those affected a relatively short time to amend their data reporting. This is because only 15 days were given from receipt of the EPR fee invoice issued by the concession company to make any changes. This deadline has now been extended slightly: under the new rules, manufacturers, concession companies and concession subcontractors may amend the data submitted for each quarter of the given year until 31 March of the year following said year at the latest.

Change to invoice clause 

Thanks to last-minute amendments to the EPR decree in Hungary, those placing circular goods on the Hungarian market in the context of a retail sale are exempt from the obligation to add clauses to their invoices.

Statement-based exemption 

The amendments clarified the relevant part of the EPR decree, since the previous wording could be construed as meaning the customer must ship at least 60% of the circular product abroad when providing a statement. Under the new legislation, no extended producer responsibility fee must be paid if the customer of the fee-paying manufacturer declares and verifies that at least 60% of the purchased circular product is delivered abroad, either separately or as part of another product. Another change is that delivery abroad can be certified by a transport document or a waybill in the future, and no invoice or other document proving completion of the transaction is required.

Other changes to EPR decree 

It is also good to know that, as a result of the amendments, certain annexes to the EPR decree entered into force with different content as of 1 July. Among other things, the circular codes for certain circular products have changed, as well as the part relating to the minimum data content of the registers.

The last-minute changes to the EPR decree could affect the way most economic operators work, so we believe it is important that the next step for the businesses concerned is to review their processes and consider the impact of these amendments on their processes. If you need specialist help with this, please do not hesitate to contact us.

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EPR fees many times higher than product fees

Yet after reading through the EPR fee decree, they will have been saddened to see that the EPR fees are several times higher than the product fee rates. There are some product groups where the difference is 2/3-fold, but there are also some product groups where the EPR fee is more than 9 times the current product fee (e.g. paper and cardboard packaging), and there is only one exception where the EPR fee is equal to the product fee, and that is wood packaging (19 HUF/kg).

The EPR fees are payable from 1 July, and since the product fees will also remain after 1 July, we can rightly ask how the payment obligations of those affected will change after this date in Hungary. For products that are subject to both the product fee and the EPR fee, the legislation allows us to deduct the EPR fee from the product fee payable from 1 July. Since the EPR fees are almost always higher than the product fee, overall this means there will be no product fee payable for these products, but the much higher EPR fee will be there instead, i.e. the payment obligation will increase.

Sample calculation for EPR fees

Let’s look at an example. A company in Hungary purchases small computer equipment in cardboard packaging from abroad, and sells it – with the packaging – to its Hungarian customers. One piece of equipment weighs 3 kg, and the associated packaging is 0.5 kg. Both the packaging and the computer equipment are considered circular products, and are also subject to product fees. For each piece of equipment the company’s product fee liability so far was HUF 180.50 (3 kg x HUF 57/kg (product fee for electronic equipment) + 0.5 kg x HUF 19/kg (product fee for paper packaging)). From 1 July, an EPR fee of HUF 869.50 will be charged for each piece of equipment and its packaging (3 kg x HUF 261/kg (EPR fee for electronic equipment) + 0.5 kg x HUF 173/kg (EPR rate for paper packaging)), and since the EPR fees exceed the product fee rates, the product fee for the equipment does not have to be paid. The total payment obligation will increase from HUF 180.50 to HUF 869.50 from 1 July.

Although the computer equipment in the above example will no longer be subject to the product fee, please remember that the other product fee obligations will not cease after 1 July, so product fee records will still have to be kept and returns will still have to be submitted every quarter.

Other obligations in EPR system

In addition to paying the higher EPR fees, from 1 July this company will also have to keep records in the EPR system and report quarterly data to the National Waste Management Authority. Furthermore, the invoice on the sale of the computer equipment in Hungary will have to include the following clause: “The seller is liable for paying the extended producer responsibility fee.”

Due to the higher EPR fees and the new obligations related to the EPR system, it is important that the next step for the companies affected should be to review their processes, identify their circular products, set up their records system and prepare their billing software for including the invoice clause by 1 July. If you need specialist help with this do not hesitate to contact us.

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What had to be done by 30 April?

The deadline of 30 April applied to businesses and institutions that produce waste, and collect waste separately. The entities subject to the obligation and opting for collective fulfilment after Government Decree 80/2023 entered into force had to register on the electronic platform operated by the concession company (MOHU MOL Hulladékgazdálkodási Zrt.). These companies were typically already contracted with a service provider, and had transported packaging or other waste from their Hungarian sites. Organisations starting such activities now have 15 days to register. When registering, the necessary information for contracting must be provided on the MOHU website (what waste is generated, how it is collected, where it is collected) in order to be able to sign a contract for waste collection from 1 July. Failure to register can trigger a waste management fine of up to HUF 200,000, so it is worthwhile fulfilling this duty as soon as possible. This is still possible on the MOHU website even after the 30 April deadline.

Double registration required until the end of May!

Registration is required on two different electronic platforms by 31 May:

• As mentioned above, those who qualify as a producer under the EPR scheme must register via the MOHU electronic platform. In the case of products manufactured in Hungary, the producer is the manufacturer of the product. If the product is not manufactured in Hungary, the producer is the company that first places the product on the market in Hungary as part of its business activity. For “new” producers, registration is required before the start of the activity.

• You also need to register on the electronic platform of the National Waste Management Authority (OKIRkapu), which can be done by a person authorised to sign on behalf of the company after logging in through the government portal. The process can also be carried out by an authorised representative with a power of attorney, but in this case, please note that the authorisation process takes time, so it is worth starting now. Data has to be provided to the National Waste Management Authority with a KÜJ number requested via the OKIRkapu (for the first time by 20 October, for the quarter from July until the end of September). The KÜJ number (environmental client number) is the environmental ID for companies, organisations and individuals. 

Is the environmental product fee payment system here to stay? 

The environmental product fee obligations will remain, but there will be a new environmental product fee calculation formula to work with parallel to the start of the EPR scheme from 1 July 2023.

If someone pays the product fee, they will most likely be affected by the EPR scheme too, but the product fee system will still not be discontinued. This means returns still have to be filed and the environmental product fee still needs to be paid. It is important to be aware of which products are covered by the two schemes. However, applying the product fee calculation method in force from 1 July, when dealing with the same product the EPR fee can be deducted from the amount of the environmental product fee payable.

What do the environmental product fee and the EPR scheme have in common, and where do they differ? 

Environmental product fee returns still have to be submitted to the tax authority. For the EPR, however, data must be provided to the National Waste Management Authority (just like the product fee, this mainly relates to the quantity of products subject to the obligation).

As regards fee payments, the two systems are the same in that both fees are calculated based on the weight of the waste or polluting product, and the accounting period is the same, i.e. both fees are payable quarterly. However, the difference is that the product fee is payable by the 20^th day of the month following the given quarter, while the EPR fee is payable to the concession company based on an invoice issued by the concession company.

The invoice clauses set out in the EPR scheme have to be indicated on all invoices issued on the placing of circular products on the market, and/or on other documents that verify such placing on the market. Text that is generally used: “The seller is liable for paying the extended producer responsibility fee.” There are invoice clauses in the case of the environmental product fee too, but such do not apply to all invoices and supporting documents, and only in certain cases must information be included.

We have no stock, we do not handle packaging, we do not generate waste. Can we be subject to the scheme?

Many distribution chains in Hungary are set up in such a way that the Hungarian-registered subsidiary only invoices the products to the Hungarian customer as part of a distribution chain, the products do not arrive at the warehouse of the intermediary partner, and the end-customer receives the product directly. In this chain, such a company would be the first domestic distributor and subject to paying the environmental product fee, which is not clear at first sight.

This also shows that – prior to the launch in July – distribution chains need to be reviewed, the product ranges concerned must be identified, and the basis for the two fee payment systems established, in order to avoid paying double the fees.

As the EPR scheme and the obligations it imposes affect a wide range of businesses in Hungary, we recommend that all companies should assess as soon as possible whether or not their activity and their products will make them affected by the new administrative and fee-payment obligation. If you need specialist help with this do not hesitate to contact us.

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