Uncertainties of the new tax paradigm on non-reusable plastics

The management of the new Excise Tax on Non-Reusable Plastic Packaging is very complex in practice, both for taxpayers and for the Tax Administration itself

Author: Pablo Mateos, Tax Lawyer at Bové Montero y Asociados

On 1 January 2023, Law 7/2022 of 8 April on Waste and Contaminated Land for a Circular Economy came into force, introducing the new Excise Tax on Non-Reusable Plastic Packaging (“IEEPNR”). It aims to reduce the generation of non-reusable plastic packaging waste and promote its recycling, thus contributing to the achievement of the Sustainable Development Goals included in the 2030 Agenda.

The IEEPNR is an indirect tax on the manufacture, import or intra-Community acquisition of non-reusable plastic packaging and its accessories, as well as on the irregular introduction of such products in the tax area. The taxable amount is the quantity of non-recycled plastic, expressed in kilograms, contained in the non-reusable packaging and its accessories, to which the tax rate of 45 euro cents per kilogram must be applied in order to obtain the gross tax liability. There is also an exemption of five kilograms per month.

In this respect, although in principle we might think that we are dealing with a simple tax, the reality is quite different, since this new tax does not only affect packaging, but also extends to all types of plastic packaging used to wrap any type of product. Moreover, the tax does not only affect manufacturers, since it applies to anyone who imports or acquires goods within the Community, whether they are legal entities or individuals, whether they are entrepreneurs or professionals or not.

It also imposes a number of formal obligations – such as certifying the origin and quantity of non-recycled plastic in each purchase or import, and keeping a record of plastic stocks with the tax administration – that are very difficult for taxpayers to comply with.

Furthermore, although this is not a new tax in our neighbouring countries, its implementation is perhaps the most questionable. Currently, only the United Kingdom and Italy have decided to introduce a similar tax, but in the first case an exemption threshold of up to ten tonnes per year has been set and, in the case of Italy, the entry into force of the tax (scheduled for 2023) has been postponed. This leaves Spain as the only European country to implement this tax.

In short, for the reasons outlined above, we are faced with a tax that will be very complex to manage in practice, both for taxpayers and for the tax administration itself.

Therefore, although in principle the IEEPNR is here to stay, it is to be hoped that it will be accompanied by a fundamental change in the legislation, such as the exclusion of packaging from the scope of the tax, the exclusion of intra-Community acquisitions and imports from the taxable event or an increase in the current exemption limit of five kilograms of non-recycled plastic per month, all in the interest of guaranteeing the necessary legal certainty for taxpayers.