New year brings excise duty on non-reusable plastic packaging to Spain

The new excise tax on non-reusable plastic packaging (IEPNR) will come into force in Spain on 1 January 2023. Despite numerous rumours of a possible delay in its application, the Ministry of Finance in the 2023 General Budget has already informed the European Commission that the excise duty on packaging will be one of its primary new sources of revenue.

The IEPNR, which was set out in Law 7/2022 of 8 April on waste and contaminated soils for a circular economy, has been the subject of discussion in the current economic context. Its enforcement, on 1 January 2023, has already been delayed due to an amendment approved during the parliamentary processing of the law.

What does it consist of?

The IEPNR applies throughout Spain, including Ceuta, Melilla, and the Canary Islands, and taxes the introduction and manufacture of non-reusable plastic in Spain. In general terms, Law 7/2022 includes a comprehensive definition of what it considers "packaging" so that not only packaging used directly for selling products will be taxed but also grouped or transport packaging (products composed of more than one material will be taxed only for the amount of non-recycled plastic they contain).
The concepts of "packaging," "non-reusable," and "plastic," as defined by the law, delimit the objective scope of this tax.

Who is affected?

In general terms, any company operating in Spanish territory that is a taxpayer and manufactures, acquires from European Union countries or imports from third countries both non-reusable plastic packaging and products that are protected or packed using this type of packaging. In addition, the "irregular possession" of such packaging is also subject to the tax.

The IEPNR applies the rate of €0.45 per kilogramme of plastic in packaging that falls under the target scope (excluding the amount of recycled plastic).

Are there any deductions or exemptions?

The Law specifies various technical mechanisms to ensure that the tax is not paid (non-taxation, exemption) or is reimbursed (deduction, refund) regarding products that are shipped outside Spain or that do not involve the introduction of plastic into Spain. The following cases of exemption or non-taxation stand out:

• Paints, inks, lacquers and adhesives used in the packaging are exempt.
• Imports and intra-community acquisitions of packaging whose non-recycled plastic content does not exceed the 5 kilogramme threshold in one month are exempt.
• Packaging for medicines, medical devices, goods for special medical purposes, infant formula for hospital use, or hazardous waste of medical origin are exempt.

Similarly, the importer or purchasers (non-taxpayers) may request a refund of the tax in some instances, such as:

• When packages purchased are shipped outside Spanish territory.
• Where packaging is destroyed or rendered unsuitable for use before it is delivered or made available on Spanish territory.
• When packaging is returned for its destruction or for its reintroduction to the manufacturing process.

Technically, the proposed system seems correct but could lead to excessive management complexity.

What are the formal obligations arising from the IEPNR?

Manufacturers and intra-community purchasers will have to self-assess and pay the tax in the same periods (monthly or quarterly) of VAT self-assessment. Importers will settle the tax through the corresponding customs forms.

The law also provides for a series of accounting, registration, invoicing, and customer information obligations.

Osborne Clarke comment

The IEPNR is a non-harmonised tax at a European level. Other countries such as the United Kingdom, Belgium, and Italy have already regulated a similar tax in their legislation. They have also planned for these taxes to be enforced on 1 January 2023. 

Given that it will affect both manufacturers and any importer or intra-community purchaser of plastic packaging, companies will have to adapt processes and management systems to comply with the formal and material requirements of the tax. 

Furthermore, compliance with the tax requirements will entail a much higher cost to the taxpayer than the tax itself. In short, considering that manufacturers will include the cost of this new tax in the price of the products, it will be the consumer who will end up bearing the tax burden of the tax.
The current regulation raises controversial issues requiring a regulatory development that has yet to be carried out. Likewise, the ministerial order that will regulate the relevant formal obligations has not been approved, despite the imminent entry into force of the tax.