The extended producer responsibility system enters into force on 1 July 2023 in Hungary

The legislative amendments necessary to comply with the European Union directives on waste management were adopted by the Hungarian Parliament in December 2022. The draft of the detailed rules (government decrees, ministerial and other regulations) is currently available. As of 1 July 2023, the Hungarian State will be responsible for maintaining the domestic waste management system, with the actual operation being carried out by a service provider, selected through a tender procedure.

The basic principle of the European Union’s waste policy is that the costs of waste management (re-use, recycling, disposal) arising at the end of the life cycle of a certain product should be borne by the producers. This is called extended producers’ responsibility (hereinafter: EPR). The aim of the EPR is to ensure that the concept of circular economy is put into practice.

The EU makes the implementation of the EPR system mandatory for 5 product/material streams (some single-use plastic products, electrical and electronic equipment, packaging, vehicles, and batteries). According to the draft legislation, the Hungarian Government is contemplating introducing this system for 6 additional material streams (cooking oil, tyres, office paper, advertising material, textiles, wooden furniture).

In addition to the introduction of the EPR system, the amended legislation also requires the payment of an environmental product fee, meaning that in the case of certain material/product streams, both the EPR and the environmental product fee will need to be paid. However, the amount of the paid EPR fee may be deductible from the amount of the environmental product fee liability assessed in line with the relevant regulation. If the deduction of the EPR fee results in a zero or a negative amount, no environmental product fee payment liability will arise. The resulting increase in the administrative burden will be further complicated by the fact that the environmental product fee will continue to be declared on the basis of the tariff codes, while a new 8-digit MIF code will be used for EPR reporting purposes.

Our company's tax and sustainability consultancy departments have decades of experience in services concerning the environmental product fee (administration, assessment and declaration of the fee, etc.) and can therefore contribute to preparing for this new obligation.

The Hungarian State will be responsible for the following aspects of waste management: reception, collection, transport, pre-treatment, trade, and transfer for treatment of the waste. This will be financed by producers through the EPR fee.

The EPR system will be accompanied by a mandatory take-back fee for certain packaging (glass, aluminium beverage containers, etc.) and a financial contribution to the investment and operating costs of the take-back system, which will also be borne by producers.

The EU legislation explicitly sets forth that the EPR fee and the fees for the establishment and operation of the take-back system paid by producers should not exceed the level of the justified costs (including a reasonable profit) for any given material stream. The EU legislation also set forth that cross-subsidisation is prohibited. Thus, the EPR fee and the operating fee related to the take-back system cannot be used to finance possible losses generated by public services. Furthermore, the utilization of the EPR fee and the operating fee paid by producers should be publicly accounted.

Our audit and financial advisory services department have considerable experience in reviewing cost statements and can therefore assist in the audit and review of settlements related to the EPR fees and the operating fees payable in relation to the take-back system.

For some product streams, the producer will have the possibility to fulfil its waste management obligations individually, based on a subcontracting agreement with the service provider. In the case of individual fulfilment, the EPR fee payable will be reduced by the amount of the producer's reasonable costs arising in relation to the waste management tasks.

Our sustainability and financial consulting departments are highly experienced in providing decision-supporting cost-benefit analyses that can guide in choosing between individual and collective performance.

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