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Major Overhaul of Green Tax Regulation in Hungary

Circular products, extended producer responsibility, mandatory return system: new terms and new concept behind the new green tax regulation coming in 2023 in Hungary. The modification of the Green Tax Act has been already adopted, and the governmental decree with the specifications is to follow.

As of 1 July 2023, MOL Plc will be solely responsible for the waste recovery activity, which MOL Plc will finance from the newly implemented ‘extended producer responsibility fee’, which will not replace green tax (environmental product charge) but will be deductible from it.

The new legislation introduces the concept of circular products, which covers green tax products (packaging, batteries, electrical and electronic products, tyres, etc) and some new items (textile products, wooden furniture, single-use plastic products, motor vehicles, cooking oil and fat). Under the so-called extended producer responsibility system for circular products producers and, in the case of foreign production, distributors are to pay an extended producer responsibility fee for MOL for the collection, transportation, and treatment of waste from their products. Exemptions and assumptions under the green tax system will not be applicable in this regard. The above also follows that the former individual waste management concept and corresponding green tax reduction will be abolished.

As a second step, from 1 January 2024, the current ‘deposit-fee’ system for plastic, glass and metal bottles of beverage products will be replaced by the mandatory return system. Under the new rules, the price of such products will already include a so-called ‘return fee’, which would be refunded to the consumer when the bottles are returned. Therefore, distributors (above a certain sales area size) will have to provide automatic return facilities. In addition, producers and distributors will be allowed and encouraged to expand the return system to other circular products at their discretion (voluntary return system) since the application of the return system is expected to be exempt from both the extended producer responsibility fee and the environmental product charge as well.

Taxpayers already subject to green tax in Hungary should re-evaluate their position under the new rules and the extended product scope and applicability on foreign webshops might trigger tax obligations for new taxpayers as well. The new regulation also implies significant administrative tasks for the taxpayers. As a first step, to comply with the July 1 start of the new system, taxpayers subject to extended producer responsibility fee are required to register in the new extended producer responsibility system by 30 April 2023 at the latest.