Changes of waste management and environmental product fee rules 01.07.2023

Dear Clients, Dear Readers,

From 01.07.2023, the rules related to waste will be significantly transformed. The new regulation affects not only those who have paid (or have not paid, but should have paid) environmental product fee (EPF) so far, but also those who purchase, manufacture or sell the product range concerned (which is larger than the scope of EPF).

1.    The new Extended Producer Responsibility scheme (EPR)

Product scope concerned

The new rules cover so-called “circular products”. These include the following 11 product categories (product categories marked with * are also included in the EPF regulation, so actually you must be prepared for dual administration):

• packaging*,
• single-use and other plastic products
• electrical and electronic equipment*
• batteries and accumulators*
• motor vehicles
• tyres*
• office paper*
• advertising paper*
• cooking oil and fat
• textile products
• furniture made of wood.

There are minor differences in the concepts of EPR and EPF regulation, but products already identified for EPF purposes can more or less correspond to the classification of the EPR system. Products covered by EPR must be identified by the 8-digit KF code. The first 4 digits of this (product and material flow codes) can be roughly determined by the 1st to 3rd digits of the CSK and KT codes known in the EPF system, which must be supplemented by the group code (digits 5-6), the liability code (digit 7) and the origin code (digit 8).

How the new system works

The system is basically based on collective performance, within the framework of which obliged companies have to pay a fee to the concession company appointed by the state (MOL Waste Management Zrt - MOHU) in case of production, placing on the market or using the listed products (or the waste arising from them). The basis of the fee, similarly to the EPF system, is the weight of products. The tariffs of circular products are not yet known – this is expected to be regulated by a government decree to be published in May.  

Obligation to provide data and pay fees

The EPR technical process is as follows:

• By the 20th of the month following the quarter in question, data must be reported to the Green Authority on the quantity of relevant products (expected on data reporting sytem “OKIRKAPU”). The deadline for the first reporting of Q3 2023 weights is October 20, 2023.
• The Green Authority forwards the data to MOHU by the 25th day of the month following the quarter in question.
• Based on the reported data, MOHU will issue an invoice about the EPR fee with a 15-day payment deadline. (It is still possible to modify the data provided before the payment deadline.)

Steps to be taken before the implementation of the new EPR system

• Those who do not have one yet must apply for a so-called KÜJ number (Environmental Client Code). This is possible in the OKIRKAPU system, the fastest way is if the company’s representative requests it with his/her own customer portal if he/she has any (“Client Gate” – “ügyfélkapu” registration). If not, a paper-based application is required with a dedicated PoA.
• All companies concerned must register in the EPR system by 31 May.
• Based on the current information, only the main product groups concerned have to be provided during registration, in addition to company data, but it is advisable to identify the affected products according to the so-called KF codes as soon as possible for the mandatory registration from 1 July.
• Invoices for products covered by EPR shall state that 'The EPF fee shall be paid by the seller'.

The relationship between the EPR system and the product fee

In parallel with the EPR system, the product fee obligation will continue until the 20th day of the month following the quarter in question. For products covered by both schemes, the EPR fee paid to MOL may be deducted from the product fee. (According to preliminary expectations, the fee payable to MOL will usually be higher than the product fee, but the absence of EPF payment obligation does not mean an exemption from EPF report.)

Open questions

A number of technical issues have arisen in connection with the new system,which are expected to be resolved only by subsequent interpretations by authorities or legislative amendments, e.g.:

• It is not clear yet, how EPR fee (which is to be determined on “placing on market” basis – output side) can be offset with EPF for those who use the “entry into stock” method (input side) for EPF.
• The rules regarding the audit of EPR reports and possible sanctions (who will carry out these tasks and with what rights, etc.) are unclear, nor whether correction will be possible after the invoice deadline.
• For reusable pallets, the actual regulation does not yet eliminate multiple charges because of reuse.
• For the time being, the EPR scheme does not have any exemption for those placing circular products on the market in small quantities, nor does it provide them with administrative simplification or flat-rate payments.
• It is questionable in what form foreign distance selling companies that sell circular products to Hungary without being registered in Hungary due to their foreign OSS/I-OSS registration (or even doing business outside of it).

2.    EPF changes

In parallel with the introduction of the EPR system, there are also some changes within the product fee rules:

• So far, the law has set specific limits for certain types of equipment within electrical and electronic products for so-called small polluters. This will be abolished and only the 100 kg limit for the entire product range will remain.
• Disposable electronic cigarettes will be subject to charges as electronic equipment.
• Placing on the market refers to the 'transfer of the products concerned domestically as an electronic service by the manufacturer established abroad to end users'. The intention of this new regulation is likely to be the involvement of e-commerce players more widely in the EPF system than before.
• Previously, when returning tyres collected in Hungary and shipped abroad for renewal, a product fee had to be paid based on the weight of the added material – this obligation is going to be cancelled.
• The option of individual waste management is cancelled.
• The change in the custom tariff code of solar panels has been updated in the law on EPF, and it is also stipulated that custom tariff numbers of the year preceding the current year are applicable for EPF purposes.

We hope that our newsletter will help you interpret and apply the new tax rules. If you have any questions or need assistance in transferring EPF (“KT” or “CSK” codes) to EPR codes please feel free to contact us.

Kind regards:

ABT Treuhand group

Date: 12. May 2023 | Topic: Business