Title VII (articles 67 to 83 ) of Law 7/2022, of April 8, on waste and contaminated soil for a circular economy (hereinafter, the Waste Law), published in the Official State Gazette of April 9, 2022, introduces tax measures to encourage the circular economy, including the creation of a special tax on non-reusable plastic packings, whose entry into force is scheduled for January 1, 2023 which will be the subject of the following comments.
- Background
This new tax must be considered within the framework of Directive 2019/904, of June 5, 2019 , on the reduction of the impact of certain plastic products on the environment ("Directive on single-use plastics"), whose transposition is one of the objectives of the aforementioned Waste Law. Thus, the Law’s statement of reasons justifies the new tax as an economic instrument within the framework of the European waste policy whose purpose is to reduce their generation and improve the management of those whose generation cannot be avoided, for which it introduces an imposition on those treatments located in lower positions of the so-called “waste hierarchy policy” , a key concept in this field.
However, despite the absence of any reference in said statement of reasons or in the regulation of the figure itself, the introduction of this tax is the formula which, among the possible alternatives NOTE , has been adopted by Spain to meet its obligations derived from the new own resource of the European Union based on plastic, which was introduced as of January 1, 2021 through the legislative resolution of the European Parliament of March 25, 2021, within the framework of the EU budget for 2021-2027 where new financing figures are contemplated.
- Description of the main elements of the tax
II.1 Nature and purpose
The tax is configured as an indirect tax that falls on the use, in Spanish territory, of non-reusable packings that contain plastic, whether they are empty, or if they are presented containing, protecting, handling, distributing and presenting goods.
The declared purpose of the tax is to promote the prevention of the generation of non-reusable plastic packaging waste, as well as its recycling.
II.2 Objective scope
The following products are subject to the tax:
- Non-reusable packings containing plastic, as is considered the case when they have not been conceived, designed, and marketed to complete multiple circuits or rotations throughout their life cycle or to be refilled or reused for the same purpose for which they were designed.
However, those packings that, as an integral part of the product, are necessary to contain, support or preserve it throughout its useful life and all its elements are meant to be used, consumed, or eliminated together, are excluded.
- Semi-finished plastic products intended to obtain the packings, such as preforms or thermoplastic sheets.
- Products containing plastic intended to allow the closing, marketing, or presentation of non-reusable packings.
For these purposes, the term “packings” will be the one described in letter u) of article 2 of the Waste Law, which in turn refers to article 2.1 of Law 11/1997, on packings and packings waste.
Also, “plastic” shall mean the material defined in letter m) of article 2 of the Waste Law, which in turn refers to various European regulations.
II.3 Territorial scope
Applicable throughout the Spanish territory, without prejudice to the specialties derived from the regional tax regimes of concert and economic agreement of the Basque Country and Navarra.
II.4 Taxable events
There are three taxable events that determine eligibility to the tax, the manufacture, import and intra-community acquisition of the products that constitute its objective scope.
The irregular introduction of said products into Spanish territory is also subject to the tax. This be considered to be the case when, whoever owns, markets, transports or uses them, does not prove that they have been manufactured, imported, or acquired intra-community or does not justify their acquisition in the Spanish territory.
The definition of these constitutive activities of the different taxable events is made by article 71 of the Waste Law, according to which:
- Manufacturing is the elaboration of products subject to this tax. The incorporation into the packings of other plastic elements that, not constituting by themselves, individually, part of the objective scope of the tax, become part of them after their incorporation into the packings, is also considered as manufacturing.
On the other hand, anyone who, based on semi-finished products or other plastic elements referred to in article 68 letters b) and c) of the Waste Law, confers the final shape to the packings, will not have the status of manufacturer and, therefore, of taxpayer.
As the Law’s statement of reasons shows, the reason for this exclusion is that, usually, the manufacture of packings or certain parts thereof is conducted by different subjects. In order to reduce, as far as possible, the number of taxpayers, so facilitating the management of the tax and the reduction of the administrative burden of the subjects involved in the process, the rule is designed to tax the different components as they are obtained or produced, so that a manufacturing process that is limited to their final assembly is not taxed.
- Intra-community acquisition, in an analogous way as in the VAT regulations, refers to those supplies where transport is conducted from another member state to Spanish territory, excluding the Canary Islands, Ceuta, and Melilla to be placed at disposal of the purchaser.
As in VAT, there is the concept of assimilated operation which occurs when there is not a change of hands because it is the owner of the products who conducts their intra-community transport.
- For its part, the concept of importation includes the following scenarios:
- The entry into Spanish territory, except Ceuta and Melilla , with release for free circulation of the products subject to the tax from territories not included in the customs territory of the Union (that is, either from third countries or from territories of Member States excluded from the Customs territory of the Union, as is the case of Ceuta and Melilla or those others mentioned in number 2 of article 6 of Council Directive 2006/112, of November 28, of the common system of value added tax).
- The entry into the Canary Islands of the products subject to the tax from territories included in the Customs territory of the Union that are not part of the territory of application of the tax (that is, from other Member States, except it is from some of the territories excluded from the Custom territory in the aforementioned number 2 of article 6 of Council Directive 2006/112, of November 28, of the common system of value added tax), when said entry would have given rise to release for free circulation if said products had come from territories not included in the customs territory of the Union.
- The entry into Ceuta and Melilla of the products subject to the tax from territories that are not part of the territory of application of the tax (that is, from outside the Spanish territory, whether it is another Member State or a third country), when said entry would have given place to be released for free circulation if Regulation (EU) 952/2013 were to apply in said cities establishing the Union customs code.
II.5 Cases excluded from taxation
Without prejudice , in case of exemption, of having to comply with the formal obligations and, in any case, of the obligation to prove the compliance with the conditions required to benefit from the exclusion, the following will not be subject to the tax because of:
Either being out of the tax scope:
- The manufacture of the products subject to the tax when, prior to its accrual, they have ceased to be suitable for use or have been destroyed .
- The manufacture of those products subject to tax meant to be shipped directly by the manufacturer, or by a third party in his name or on his behalf, to a territory other than the one in which the tax is applied.
- The manufacture, import or intra-community acquisition of paints, inks, lacquers and adhesives, designed to be incorporated into the products that are part of the objective scope of the tax.
- The manufacture, import or intra-community acquisition of non-reusable packings that are not designed to be delivered together with the goods.
Or exempted from the tax:
- Both the manufacture and the intra-community acquisition of those products destined to provide the function of containment, protection, handling, distribution and presentation of medicines, health products, food for special medical uses, formulas for infants for hospital use or hazardous waste of origin sanitary, as well as plastic rolls for silage for agricultural and livestock use
- The intra-community acquisition of the products within the objective scope of the tax and that, prior to the end of the deadline for submitting the tax return corresponding to said taxable event, any of the following cases occur:
- They are intended to be sent directly by the intra-community purchaser, or by a third party in their name or on their behalf, to a territory other than the one in which the tax is applied.
- They are no longer suitable for use, or they have been destroyed, provided that the existence of said facts has been proven before the State Tax Administration Agency, by any of the means of proof admissible in law.
- Small imports or intra-community acquisitions of packings, namely those whose total amount of non-recycled plastic contained in the packings subject to import or intra-community acquisition will not exceed five kilograms.
- Finally, the manufacture, import or intra-community acquisition of semi-finished plastic products when they are not going to be used to obtain the packings within the objective scope of the tax, as well as products that contain plastic intended to allow the closure, commercialization or the presentation of non-reusable packing being destined to other uses.
Although the application of the different exemptions contemplated in the Waste Law is conditioned to the accreditation of the corresponding requisites in the terms provided in the Law and the regulatory development, special mention needs to be made of the way in which this issue is regulated for this latter case of exemption.
Indeed, the last paragraph of letter g) of article 76 of the Waste Law conditions the application of this exemption to the taxpayer being able to prove to the tax authorities the effective destination given to the products. To this end, taxpayers who firstly make the delivery or put at the disposal of the purchasers the goods subject to the tax, must obtain from them a previous declaration in which they state the destination of said products. This declaration must be kept by the taxpayer during the tax lapsing period.
- 6 Accrual
The accrual of the tax occurs:
- In the cases of manufacture, when the goods are firstly delivered or put at the disposal of the purchasers in the Spanish territory.
- In the case of an import, when the accrual of import duties takes place in accordance with customs legislation.
- In the case of intra-community acquisitions, on the 15th day of the month following that in which the dispatch or transport of these products to the purchaser begins, unless the invoice for said operations is issued prior to that date, in which case the accrual will occur on the date of issue.
- Finally, in the irregular introduction, at the time of introduction of the goods in the territory of application of the tax. If that moment is not known, in the oldest liquidation period among those not lapsed, unless the taxpayer proves that it corresponds to another.
II.7 Taxable base
The taxable base is the amount of non-recycled plastic contained in the products subject to the tax, expressed in kilograms. For these purposes:
- For the case of products within the objective scope of the tax, for which the tax had previously been accrued, and subsequently other plastic elements are incorporated so to form part of the same, the taxable base will exclusively consist of the amount of non-recycled plastic, expressed in kilograms, contained in these new products.
- The material defined in article 2. u) of the Waste Law obtained from recovery operations referred to in article 2. bc) of the Law will be considered recycled plastic .
- The amount of recycled plastic contained in the products that are part of the objective scope of the tax must be certified by any qualified certifying entity of those cited in number 3) of article 77 of the Waste Law, duly accredited by the National Entity of Accreditation (ENAC) or by the national accreditation body of any other Member State of the European Union, designated in accordance with the provisions of Regulation (EC) No. 765/2008 of the European Parliament and of the Council, or in the In the case of products manufactured outside the European Union, any other accreditation body with whom the ENAC has an international recognition agreement.
II.8 Tax quota
The tax quota is the amount resulting from applying the tax rate of 0.45 euros per kilogram to the taxable base.
However, to determine the tax debt in the self-assessment return corresponding to the period and subject to the required conditions being met, the taxpayer may deduct from the tax quota accrued in said period, the amount of the tax paid with respect to:
- In the case of intra-community acquisitions:
- The products that have been sent outside the territory of application of the tax by the taxpayer or by a third party in his name or on his behalf.
- The products that, prior to their first delivery or having been made available to the purchaser in the territory of application of the tax, have ceased to be suitable for use or have been destroyed.
- The products that, after their delivery or having been made available to the purchaser, have been returned for destruction or reincorporation into the manufacturing process, prior reimbursement of the amount of the tax corresponding to them to the purchaser.
- In the case of manufacturing of the products that are part of the objective scope of the tax, when after their delivery or having been made available to the purchaser they are returned for their destruction or for their reincorporation into the manufacturing process, prior reimbursement of the amount of the corresponding tax to the purchaser.
The application of these deductions requires that the taxpayer can prove before the tax authorities, by any of the means of proof admissible in law, that any of the circumstances entitling to the reduction listed above concur, and that he did pay the tax originally by means of the corresponding justifying document.
It is also worth noting the similarity with the VAT as regards the tax settlement mechanism for the event that in a declaration period the amounts subject to deduction exceed the tax quota accrued, resulting in a receivable position. For this case:
- The excess may be offset in subsequent self- assessments, provided that four years have not elapsed from the end of the settlement period in which said excess occurred.
We understand that such a deadline would be extended beyond the four years in any of those situations where, according to the General Tax Law, the lapsing period is interrupted,
- In any case, instead of deciding its carry-forward to subsequent periods, the taxpayer can opt to ask for the refund when the last tax return of the calendar year results is a receivable balance, because of the deductible amounts having exceed the tax accrued during the year.
II.9 Compliance
II.9.1 Tax declarations:
- In the cases of manufacturing or intra-community acquisition, taxpayers will be obliged to self-assess and pay de resulting tax debt to the tax authorities.
In terms of periodicity and like VAT, the periodical tax return will be the calendar quarter, except for those taxpayers who are obliged to file monthly VAT returns, in which case the periodicity for declaring this this tax will also be monthly.
- As happens with VAT, on imports the tax will be settled following the provisions of Customs regulations for the assessment of Customs debts.
II.9.2 Special tax refund scenarios
In addition to the refund mechanism that results from the mechanics of the tax, article 81 of the Waste Law recognizes the following specific refund scenarios, subject to the corresponding regulatory development:
- To the importers of the products within the objective scope of the tax, when any of the following situations occur:
- The products have been sent by them, or by a third party in their name or on their behalf, outside the territory of application of the tax, prior to their first delivery or having been made available to the purchaser in the territory of application of the tax.
- The products are no longer suitable for use or have been destroyed. prior to their first delivery or having been made available to the purchaser in the territory of application of the tax.
- After delivery or having been made available to the purchaser, the products have been returned for destruction or reincorporation into the manufacturing process, prior reimbursement to the purchaser.
- To the purchasers of the products within the objective scope of the tax when, not having the status of taxpayers, any of the following situations occur:
- Prove the shipment of these products outside the territory of application of the tax.
- Prove that the destination of said products is to be the packaging for medicines, health products, foods for special medical uses, formulas for infants for hospital use or hazardous waste of sanitary origin, or that of obtaining packings for such uses or that of allowing the closure, commercialization or presentation of these .
- To the purchasers of the products within the objective scope of the tax, that have been subject to it because they have been conceived, designed and marketed to be non-reusable, when they prove that, where appropriate, after making any modifications to them, can be reused.
- To the purchasers of:
- The semi-finished plastic products, referred to in article 68.1.b) of the Waste Law, when they are not going to be used to obtain the packings within the objective scope of the tax.
- The products that contain plastic destined to allow the closing, the commercialization or the presentation of non-reusable packings when they are not going to be given said uses.
The application of these deductions requires that the taxpayer can prove before the tax authorities, by any of the means of proof admissible in law, that any of the circumstances entitling to the reimbursement listed above concur, and that he did pay the tax
II.9.3 Census and record-keeping obligations
- Registration in the census.
A Territorial Registry of the Special Tax on non-reusable plastic containers is to be created so to maintain a census of taxpayers liable for the tax. The following will have the obligation to register:
- Prior to the start of their activity, taxpayers who conduct the activities indicated in article 72.1 of the Law, except for those that are expressly excluded
- Individuals or legal entities that represent taxpayers not established in Spanish territory who are obliged to the appointment of a representative, as later commented. They must register their representation prior to the first operation that constitutes a taxable event for this tax taking place (we understand that by the represented person).
In addition, people wanting to act as representatives must also register as such in the aforementioned Registry during the thirty calendar days following the entry into force of the Order regulating this issue.
- Invoicing formal obligations
As in VAT, on the sale or delivery of the products subject to the tax taking place within its territorial scope, certain formal obligations must be complied with, namely:
- In the first sale or delivery made after the manufacture, the manufacturers must charge to the purchaser the amount of the tax accrued on said sale or delivery. In the invoice they issue, they must separately mention:
- The accrued tax amount.
- The amount of non-recycled plastic contained in the products sold, expressed in kilograms.
- If any exemption is applicable, specifying the article by virtue of which the sale or delivery is exempt.
- In other cases, upon request of the purchaser , those who make the sales or deliveries of the products subject to the tax must record in a certificate, or in the invoices issued on the occasion of said sales or deliveries:
- The amount of the tax paid for said products or, if any exemption assumption was applicable, specifying the article under which said tax benefit was applied.
- The amount of non-recycled plastic contained in products, expressed in kilograms.
This obligation will not be applicable when simplified invoices are issued with the content referred to in article 7.1 of the Regulation that regulates invoicing obligations.
- Registration and information obligations
- Without prejudice to the accounting obligations established in other regulations, manufacturers who are so determined at the corresponding Ministerial Order, must keep an accounting of the products within the objective scope of the tax, and, where appropriate, of the necessary raw materials for obtaining them.
Compliance with this obligation will have to be carried out with the use of a computerized accounting system through the electronic site of the State Tax Administration Agency, where the accounting entries will have to be electronically submitted in accordance with the procedure and within the periods determined by the corresponding development regulation.
- On their side, taxpayers who make intra-community acquisitions of the products within the objective scope of the tax, except those determined by ministerial order, will keep a record book of stocks, which they will have to file to the managing office in accordance with the procedure and in the terms determined by the head of the Ministry of Finance.
- As regards Imports of products within the objective scope of the tax, the amount of imported non-recycled plastic expressed in kilograms and, if such is the case, the statement that the exemption for small imports provided for in article 75.f) of the Law applies, must be entered in the appropriate section of the import customs declaration.
- Obligation to appoint a representative by non-established taxpayers
As in the special VAT Import OSS regime for ecommerce, taxpayers not established in Spanish territory will be obliged to appoint a natural or legal person to represent them before the Tax Administration in relation to with their obligations for this tax, having to make said appointment prior to the performance of the first operation that constitutes a taxable event.
II.10 Offenses and penalties
Without prejudice of the general tax regime for this issue contemplated in the General Tax Law, article 83 of the Waste Law defines those behaviors constituting tax infractions for non-compliance with the obligations it establishes, also indicating the corresponding penalties.
II.10 Entry into force
In accordance with the provisions of the thirteenth final provision of the Waste Law, the tax will enter into force on January 1, 2023.
III. Conclusions
As our comments show, we are facing a Spanish regulation of the tax that is rather complex when determining the different elements for determining the tax (identification of the taxable events and its taxpayers, scenarios of exemption and tax exclusion, assessment of the taxable base and tax debt, etc.) and the formal obligations it involves. This complexity is aggravated by the fact that there is no harmonization at the EU level.
This makes this matter a complex legislative framework for those affected companies that operate at the level of various Member States in which there is a similar specific tax or levy on sole use plastics and required from them, a special analysis effort of the regulation applicable and its implications on the different internal business flows, price determination, adequacy of the computer systems for the management of the tax, etc.
NOTE Payment charged to the budget item without the introduction of new taxes or, on the contrary, with the creation of a specific tax or levy on non-recyclable plastic containers that helps to finance the budget of the new own resource of the European Union based on the plastic, this being the formula adopted or under study by a significant number of Member States.