Plastic tax in Germany: Single-Use Plastic Fund Act leads to new obligations for manufacturers
Since January 1, 2021, member states have already been paying 80 cents per kilogram of non-recycled plastic waste to the European Union (EU). However, this is not a plastic tax, but a levy on plastic waste. This difference will have serious consequences for manufacturers in terms of tax law from 2024.
Since the levy is not a tax, it does not have to be passed on to the private sector. Each member state is free to decide if and to what extent the private sector will be charged. The refinancing of these levies varies from country to country. For example, Spain has enacted a special tax of 45 cents per kilogram on non-recycled single-use plastic packaging as of January 1, 2023.
Other countries, including Germany, finance the levy entirely from their budgets. This will gradually change from 2024. From such year, the levies will become mandatory for manufacturers as a result of the Single-Use Plastics Fund Act, which came into force in May 2023.
According to a study by the German Federal Environment Agency, the public sector incurs annual costs of 434 million euros in connection with single-use plastic products, for example, through the cleaning of public areas. In the future, such costs are to be borne by producers, fillers, sellers or importers who provide or sell single-use plastic products on the German market for the first time (hereinafter collectively referred to as Manufacturers). This is provided for in the Single-Use Plastic Fund Act
What are the goals of the Single-Use Plastics Directive and the Single-Use Plastics Fund Act?
In doing so, the law pursues different objectives: Single-use plastic products, which cause significant environmental pollution and are used in a resource-inefficient manner, are to be used more sustainably. In addition, environmental waste is to be reduced and the cleanliness of public spaces promoted. Furthermore, the Act implements Articles 8 (1) to (7) and 14 of Directive (EU) 2019/904
This Single-Use Plastics Directive also aims to prevent and reduce the impact of plastic products on the environment and human health, and to promote the transition to a circular economy with innovative and sustainable business models, articles and materials. To this end, the Directive specifies various measures, for example, reducing the consumption of single-use plastic articles, but also extended producer responsibility (Article 8 Single-Use Plastics Directive). These measures must be transposed into national law by the member states.
How is the Single-Use Plastic Fund Act going to be implemented?
The Single-Use Plastics Fund Act provides for the establishment and management of a corresponding fund. Obligated manufacturers are to pay a single-use plastic levy into this fund as a special levy with a financing function. For the purpose of the Act, importers also qualify as manufacturers. The amount of the levy depends on the type and volume of single-use plastic products that are made available or sold on the German market for the first time by the respective manufacturer, multiplied by a levy rate.
The funds are to be used, among other things, to finance collection, cleaning and awareness-raising costs incurred in connection with single-use plastic products. To this end, it is envisaged that money from the fund will be paid out according to a points-based system, for example, to public waste management organizations.
Both obligated and eligible parties must register and submit annual reports. In doing so, manufacturers must declare the type and volume of single-use plastic products they are making available or selling on the market for the first time. Unregistered manufacturers must not make the products available and sell them on the market or otherwise sell their products commercially. If manufacturers do not file a report, the volume of single-use plastic products first made available and sold on the market by them is estimated for the purposes of determining the levy. Single-use plastics covered by the Act are:
- Food containers (intended for food to be consumed directly from the containers).
- Bags and foil packaging
- Beverage containers and deposit beverage bottles
- Beverage cups
- Light plastic carrier bags
- Wet wipes
- Tobacco products with filters and filters for tobacco products
From January 1, 2026, this will also apply to manufacturers of fireworks.
The Act will come into force in stages: from January 1, 2024, manufacturers and eligible parties will be required to register, among other things. The ban on selling or providing listed single-use plastic products by non-registered manufacturers or other companies will also come into force. Obligated parties will also be subject to the levy from this year, although the amount of the levy will not be determined until 2025 and will then be payable for the previous year. Accordingly, companies will have to comply with their reporting obligation from 2025. The first payments to beneficiaries will be made in the same year.
Challenges for the international market
Companies outside the EU also have to pay levies on plastic products. In the United Kingdom, for example, a plastic packaging tax has been in force since April 1, 2022, which applies not only to manufacturers but also to importers of more than ten tons of plastic packaging elements. Internationally operating companies from the various sectors therefore have to comply with different regulations within Europe, which they should monitor on an ongoing basis.