As part of the EU’s economic recovery package and circular economy policies, the EU introduced a “plastic levy” based on the amount of non-recycled plastic packaging waste produced by each Member State as a new own resource with effect from 1 January 2021. The contribution of each Member State is calculated at a rate of EUR 0.80 per kilogram of non-recycled plastic packaging waste produced.
Each Member State can choose how to recoup this contribution, which results in a lack of harmonisation between the different Member States.
In the case of Spain, a special tax on non-reusable plastic packaging (Plastic Tax) has been introduced by Law 7/2022 of 8 April 2022 on the management of waste and contaminated soil to promote a circular economy (Plastic Tax Law), which entered into force on 1 January 2023.
The Plastic Tax is an indirect tax levied on the use in Spain of non-reusable packaging containing plastic, irrespective of whether the packaging is empty or if is used to contain, protect, handle, distribute or display goods. It taxes the amount of non-recycled plastic used in non-reusable plastic packaging, expressed in kilograms, when the packaging is delivered, either through its sale by the manufacturer, an intra-EU acquisition, or by importation. Consequently, the plastic contained in goods does not trigger the Plastic Tax because it only applies to packaging.
The Plastic Tax taxpayer is either the manufacturer, the importer into the EU or the acquirer of the intra-EU acquisition of the packaging.
The tax rate is EUR 0.45 per kilogram of non-recycled plastic and is levied on the manufacturing, importation or intra-EU acquisition of the following products: non-reusable packaging containing plastic,semi-finished plastic products to be used to produce non-reusable packaging, and products containing plastic that enable the non-reusable packaging containing plastic to be closed, marketed or presented. The Plastic Tax is also levied when these products are brought into Spain irregularly, which is when the owner, possessor or user of the products cannot evidence if it manufactured, imported or acquired them within the EU.
The Plastic Tax Law provides for a number of exemptions, including: packaging used for medicines, sanitary products, meals for special medical uses and hazardous health waste, products that cannot be used or are to be destroyed, and intra-EU acquisitions and imports of less than five kilograms of non-reusable plastic packaging per month (low-volume operators).
The Plastic Tax is not levied on reusable packaging, or products that are not designed to “contain, protect, handle, distribute and display goods” or that form part of goods and are used together with them.
Plastic that is recycled, either as a result of mechanical or chemical recycling processes, is not taxable as long as taxpayers have a certificate issued by an official certifying entity confirming that it is recycled (until 31 December 2023, a formal declaration by the manufacturer indicating the amount of recycled plastic will suffice). The Plastic Tax Law does not define “recycled plastic” so it is unclear if in order to be deemed recycled, plastic packaging should be made of 100% recycled plastic or if a lower percentage would be acceptable (as is the case in other countries).
Finally, manufacturers and intra-EU acquirers may seek compensation for the Plastic Tax they have paid and importers and acquirers not considered taxpayers may seek a refund of those amounts in certain scenarios, such as when the packaging products in question end up outside of Spain, are destroyed or are returned.
The main formality that Plastic Tax payers will have to fulfil is filing monthly/quarterly Plastic Tax returns (using form 592) by the 20th of the month following the relevant month /quarter. Importers and purchasers that are not considered taxpayers can seek refunds by filing requests (using form A22) by the 20th of the month following the calendar quarter in which the circumstances entitling them to seek the tax refund took place.
Manufacturers and intra-EU purchasers had to register with the Plastic Tax territorial registry corresponding to their tax domicile or place of business by 30 January 2023 (new operators must register before they start an activity on which the Plastic Tax is levied), unless they handle less than five kilograms of non-reusable plastic packaging per month. Representatives of non-resident taxpayers must register with the Plastic Tax registry before undertaking any transactions on which the Plastic Tax is levied.
For example, a purchaser who brings non-reusable plastic packaging containing more than five kilograms of non-recycled plastic into Spain must pay the Plastic Tax. If it acquires the packaging from within the EU, it must register with the Plastic Tax territorial registry, self-assess and pay the Plastic Tax (by filing form 592) and keep a record of inventories of containers, which must be submitted through the official tax authorities’ website. In contrast, importers do not need to register and the Plastic Tax will be paid at customs (so no self-assessment is needed).
Besides the general penalties for late payment and filing of tax returns, there are specific penalties for breaching specific Plastic Tax obligations, such as:
- Failing to register with the Plastic Tax territorial registry: fixed fine of EUR 1,000.
- Certifying entities issuing a false or incorrect certification of the amount of recycled plastic in packaging: a fine of 50–75% of the Plastic Tax that should have been paid, with a minimum fine of EUR 1,000.
- Undue application of the exemptions: a fine equal to 150% of the tax benefit, with a minimum fine of EUR 1,000.
Most controversial aspects
In order to calculate the taxable amount and, ultimately, how much Plastic Tax is due, taxpayers must know how much non-recycled plastic is in the non-reusable plastic packaging contained in the shipments they receive. This is clearly a challenge, as this information should be furnished by suppliers who until now did not have to comply with this type of requirement.
While businesses are accustomed to collecting data for tax and other purposes, the data Plastic Tax payers need to collate and record to accurately calculate their Plastic Tax liability is particularly complex and burdensome.
Taxpayers should make sure that they have analysed their product portfolio in detail, identifying potential gaps in terms of data availability, internal processes, and resources, in order to be able to take corrective action promptly. Also, the collected data must be reliable and verifiable, should it be questioned by the Spanish tax authorities.
Many questions remain open, and Plastic Tax payers should closely monitor upcoming implementing regulations and tax authorities’ guidelines which, hopefully, should ‘shine some light’ on this new complex tax.