As discussed in our previous article, the Extended Producer Responsibility (EPR) fee is introduced in Hungary from 1 July 2023, while the Environmental Product Charge (KTD) will remain in place, despite the large overlap in the range of products covered. However, in order to avoid double taxation, the amount of the EPR fee will be deductible from the amount of the KTD. It is therefore very important to know what KTD and/or EPR rates are applicable to a product.

The EPR rates valid for 2023

The EPR rates for individual products are set out in Ministerial Decree 8/2023 EM of the Ministry of Energy, promulgated on 2 June 2023, with respect to collective fulfilment. It is important to emphasize that the EPR rates indicated in the EM Decree are only valid for 2023.

According to the EPR legislation, the EPR rate may be set in a separate decree for each year, failing which the EPR rates for the year preceding the year in question will be indexed, as set out in the relevant provision of law on EPR.

The EPR rates are significantly higher than the KTD rates

As expected, in case of products, the EPR rates for circular products subject to EPR will be significantly higher than the KTD rates for the same or similar flows of products or materials in 2023.

The table below illustrates, without aiming at to be exhaustive, how the EPR and KTD rates compare for each product:

As can be seen from the above, for some products the EPR rate will be almost ten times the amount of KTD in 2023. For example, while the KTD rate for metal, paper and cardboard packaging will be only 19 HUF/kg, the EPR rate for paper packaging will be 173 HUF/kg for paper packaging and 186 HUF/kg for metal packaging.

The KTD rate will be higher than the EPR rate for the same or similar circular products perhaps only for single-use non-biodegradable bags (1900 HUF/kg) and biodegradable plastic bags (500 HUF/kg). However, as shown in the table above, as a general rule, the EPR rate for plastic packaging will be 219 Ft/Kg, while the general KTD rate for plastic packaging products other than plastic bags will be only 57 Ft/Kg.

Submitting KTD declarations may become a mere administrative obligation

Given that in 2023 the EPR rate for most circular products appears to be higher than the KTD rate for the same or similar flows of products or materials, the amount of KTD owed may well be zero for many businesses this year, which means that KTD may become a mere administrative obligation if the tax subject is not working with one of the few products for which the EPR rate does not exceed the KTD rate.

However, a higher EPR rate could also lead to an increase in the consumer price of certain products if businesses build in the additional costs of this new type of tax.

It is essential to ensure that both the EPR and the KTD obligations, as well as their rates are correctly determined for each product, and that the parties concerned register on the electronic interface operated by MOHU, and then register with the waste management authority.

If you need assistance in connection with the performance of your EPR or KDT obligations, please do not hesitate to contact our experts.

This newsletter is based on the information available at the date of its publication and is written for general information purposes only; therefore, it does not constitute or replace personalised tax advice in any respect.