Draft government decree amending the extended producer responsibility scheme published

Tax & Legal Alert | PwC Hungary | 22 June 2023

The published draft legislation contains a number of substantial amendments to Government Decree No. 80/2023 (III. 14.) on the detailed rules of operation of the extended producer responsibility (“EPR”) scheme (“Government Decree”). The draft is available here.

The most important of the expected changes are summarised below.

1. Clarification of product range

Under the amendment, consumer packaging of medicinal products will no longer qualify as a circular product, thus, no EPR fee is payable on them. However, bulk and transport packaging of medicinal products will continue to be treated as a circular product and to be subject to the EPR fee, and consumer packaging may be subject to the environmental protection product fee.

It is clear from the section of the draft on identification codes that certain packaging classified as single-use plastic products will be treated as single-use plastic products rather than as packaging.

2. Liability for reusable packaging

So far, the Government Decree has only contained a rule for reusable packaging returned from abroad owned by a domestic entity, under which the separation of such packaging from the product cannot be treated as own use, and thus no extended producer obligation can arise.

The draft adds to this provision the additional requirement that the “exemption” applies if the reusable packaging concerned has been registered in the waste management authority’s register of reusable packaging, and the extended producer responsibility fee has been paid in advance.

The draft sets out additional cases where no extended producer responsibility fee is payable for reusable packaging:

the permanent separation from the product of reusable packaging material, which is part of packaging imported from abroad, provided that such packaging is returned abroad within 365 days (the fact of delivery abroad can be proved by a delivery note or transport document);
separating the reusable packaging material used in a rental scheme from the product or creating packaging from it, if the lessor of the reusable packaging material is licensed to operate a rental scheme under separate legislation (unless waste is generated from the reusable packaging material);
in the case of the placing on the market of packaging made from reusable packaging material registered in the reusable packaging material register of the waste management authority (except for the first placing on the market of packaging made from reusable packaging material).

3. Fees payable by car manufacturers

In the case of motor vehicles, the Government Decree allows the manufacturer of the motor vehicle to contractually assume the EPR obligations for certain products (electrical and electronic equipment, tyres and batteries, accumulators).

The draft clarifies that, in case of an EPR fee takeover agreement, the vehicle manufacturer is entitled to pay the EPR fee at a flat rate.

The definition of the EPR fee for circular products that are part of motor vehicles has been clarified: the weight of the motor vehicle must be reduced by the weight of the circular product component or accessory, except in the case of the flat-rate option.

4. Using frying oil as raw material for the manufacture of other products

The draft would also allow the use of a customer declaration for frying oils if the frying oil is used as raw material for the manufacture of another product and is incorporated into the product. In this case, the seller would not be obliged to pay the EPR fee. The declaring customer would have to provide proof of the use of the frying oil, otherwise they would become liable to pay the fee.

This option does not apply to frying fats.

5. Determining the obligation based on entering circular economy products into inventory

In addition to placing on the domestic market and own use, the extended producer responsibility scheme would also include entering circular economy products into inventory as a basis for payment of the EPR fee. Those choosing this option will be liable to pay the fee based on the quantity taken into stock rather than the quantity placed on the market. Manufacturers could choose this option to fulfil the payment obligation quarterly.

6. “Self-revision”

The draft would give economic operators the option to correct their data retroactively. Under the new rules, manufacturers would have until 31 March of the year following the base year to amend their data for each quarter concerned.

7. Packaging designed and intended to be filled at the point of sale to the customer

The amendment changes the identity of the obligated person in relation to packaging made up of packaging material intended and designed to be filled at the point of sale to the customer and packaging made up of single-use packaging sold, filled, or intended and designed to be filled at the point of sale to the customer.

Under the new rules, the extended producer responsibility for such packaging falls on the manufacturer of the packaging material.

For them, the draft extends the deadline for registration with the waste management authority until 31 July 2023.

8. Text to be indicated on the invoice

For retail sales, it will not be necessary to indicate the text which describes that the EPR fee is payable by the seller.

9. Customer declaration

According to the Government Decree, the EPR fee will not be payable if the manufacturer’s customer declares that at least sixty percent of the circular products purchased are sold abroad.

According to the amendment, the customer’s declaration must include – in addition to the previously required data items – an indication of the legal provision on which the declaration is based.

An administrative simplification is that the declaring customer does not have to submit proof of delivery to the waste management authority.

10. Technical modifications

The draft contains several technical modifications, including about fee codes, the identification codes for circular products, mandatory elements of the takeover agreement, and the date on which the obligation arises.

The modifications contained in the draft affect the regulatory framework of the previously published Government Decree in several aspects. It is therefore worth considering how the changes will affect the obligations of those affected. Our expert colleagues gladly provide assistance with the timely and efficient review of those effects.

The draft also includes amendments to other related legislation. Stakeholders have until 27 June 2023 to share their views on the draft in a public consultation by sending an email to tarsadalmiegyeztetes@em.gov.hu.