On the basis of the extended producer responsibility fee (hereinafter: EPR) data supply, MOL Hulladékgazdálkodási Zrt. (hereinafter: MOHU) issues two accounting vouchers to the companies liable to pay the EPR fee: one for the EPR fee share due to MOHU and one for the EPR fee share due to the municipality.

In connection with the EPR data supply for the third quarter of 2023, MOHU sent an accounting voucher to domestic taxable persons for the EPR fee share due to the municipality without VAT and issued an invoice for the amount due to MOHU only in which VAT at the rate of 27% was charged.

Changes in the VAT exemption of municipalities in respect of the EPR fee

However, from Q4 of 2023, MOHU will send invoices to domestic taxable persons for both the EPR fee due to the municipality and the EPR fee due to MOHU with 27% VAT.

On 21 February 2024, MOHU published the following information on its website concerning the change related to the invoicing:

“The National Tax and Customs Administration (NAV) and the Ministry of Finance (PM) have issued a joint statement informing MOHU Zrt. that the EPR fee payable by producers to MOHU MOL Hulladékgazdálkodási Zrt., but due to the municipalities is considered consideration for the supply of services for VAT purposes.

In accordance with the joint NAV-PM statement, from 1 February 2024, MOHU MOL Hullgazdálkodási Zrt. will issue its invoices to manufacturers having their registered seat or business premises subject to the EPR fee paying obligation for the part of the EPR fee due to the municipalities  with 27% VAT charged, while the invoices issued to manufacturers not having their registered office or business premises in Hungary – given that in their case, within the meaning of the VAT Act, the place of performance of the service is not Hungary – do not include VAT.”

Although the above means that domestic operators will now have to finance the full VAT on the EPR fee, for those who have the right to deduct VAT, this may only be of interest from a liquidity point of view. In fact, the invoices issued by MOHU will, in principle, allow domestic operators to deduct input VAT in their VAT returns.

The above information from MOHU also makes it clear that the invoices to companies with no permanent establishment in Hungary who are obliged to pay EPR in Hungary will be issued without charging VAT. These businesses will have to comply with their respective national rules applicable to the payment of VAT. Under the reverse charge rules, businesses established in the EU will therefore have to charge VAT themselves in accordance with their national rules and they will also be entitled to deduct the VAT they charge accordingly.

Since the joint NAV-PM statement is based on the same legal provisions that were in force in Q3 of 2023, it is possible that EPR taxpayers will soon receive corrective invoices from MOHU.

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If you have any further questions regarding the EPR or product charge provisions, or you are unsure how your company is affected by these two obligations, our tax experts are ready to assist you and your company.

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.