Recycling fee - tax settlement

Service-Tax

The confusion around the topic of what the recycling fee is (fees for plastic bags) results from the obligation imposed by the European Union related to limiting the number of plastic bags placed on the market, and thus posing a potential threat to the environment. In addition to the aspect strictly related to the fee itself, there is a tax thread, i.e. can such a fee be treated as income and tax deductible costs? In addition, there is a topic of VAT on each plastic bag sold and the need to pay it to the state budget already during 2018.

What is the recycling fee?

The Act of October 12, 2017 amending the Act on the management of packaging and packaging waste and certain other acts (Journal of Laws of 2017, item 2056 of November 7, 2017) introduced to the Act of June 13, 2013 on the management of packaging and packaging waste (Journal of Laws of 2018, item 150, ie of 18/01/2018) chapter 6a entitled "Recycling fee". Pursuant to Art. 40a above of the Act: An entrepreneur running a retail or wholesale unit in which light plastic shopping bags for packing products offered in this unit are offered, is obliged to collect a recycling fee from the buyer of a light plastic shopping bag.

The maximum amount of the recycling fee in accordance with Art. 40b above. of the act cannot exceed PLN 1. The amount of the recycling fee is determined by means of an ordinance issued by the minister of the environment in consultation with the minister responsible for public finance and the minister responsible for economy. In accordance with the ordinance of the Minister of the Environment of December 8, 2017 (Journal of Laws of 2017, item 2293 of December 20, 2017), the recycling fee is PLN 0.20 per one packaging (shopping bag) made of plastic.

The recycling fee collected by the entrepreneur is the income of the state budget and must be transferred to it by March 15 of the year following the calendar year in which it was collected, which means that the recycling fee collected in 2018 will be paid to the budget in March 2019.

In this case, the entrepreneur referred to in Art. 40a of the Act on the management of packaging and packaging waste, acts as the collector. Collects a recycling fee, which is paid in full by the consumer (client), and then pays it to the state budget within the prescribed period.

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The Ministry of the Environment estimates that in 2019 the state budget will receive PLN 1.1 billion from the recycling fee.

However, the good news is that the recycling fee does not apply to plastic bags with a thickness of less than 15 micrometers, which are intended for packaging food sold in bulk as their primary packaging, e.g. bags for vegetables, fruit, bread. The penalty for not collecting the recycling fee is PLN 500-20,000 and will be imposed by the competent voivodeship inspector of commercial inspection by way of a decision. More information on the recycling fee, in the form of questions and answers, is available on the website of the Ministry of Environment.

VAT tax on the plastic bag

According to the announcement of December 22, 2017 on the website of the Ministry of Finance, the Ministry of Finance informs that the recycling fee, which is part of the fee for the delivery of a light bag, is included in the tax base for this supply subject to VAT at a rate of 23%.

According to the Ministry of Finance, the calculation of 23% for each plastic bag, on which the recycling fee is charged, results from Art. 29a paragraph. 6 of the VAT Act (Journal of Laws of 2017, item 1221, i.e. of June 24, 2017).

The tax base includes, in accordance with art. 29a paragraph. 6 of the VAT Act:

  1. taxes, duties, fees and other charges of a similar nature, except for the amount of VAT itself,

  2. ancillary costs, such as commission, packaging, transport and insurance costs, charged by the supplier or service provider to the buyer or recipient.

According to the Ministry of Finance, similar taxes for plastic bags in other Member States are treated in the same way under the VAT regulations - they are included in the tax base of this tax.

In practice, this means that the recycling fee is the basis for calculating VAT. If the store decides to charge customers only a recycling fee of PLN 0.20, then VAT in the amount of 23% should be calculated on this amount.

PLN 0.20 (recycling fee) x 23% (tax rate) ≈ PLN 0.05

PLN 0.20 + PLN 0.05 = PLN 0.25

Therefore, the minimum amount that the consumer will pay for a plastic bag is PLN 0.25.

Entrepreneurs should remember this, because they are responsible for collecting VAT on plastic bags and then paying it to the state budget. It is estimated that the income from VAT collected by entrepreneurs in connection with the sale of plastic bags will amount to about a quarter of a billion zlotys. VAT, contrary to the recycling fee, must be settled by the entrepreneur with the tax authority and transferred to the state budget already in 2018. Adding VAT to the price of plastic shopping bags raises a lot of controversy. Some believe that this is a manifestation of the excessive fiscalism of the state. According to experts, taxes, duties, fees and other charges of a similar nature, referred to in Art. 19a paragraph. 6 point 1 of the VAT Act, the entrepreneur who is an active VAT taxpayer is directly incumbent on the entrepreneur. On the other hand, the entity obliged to pay the recycling fee is the consumer (customer) who purchases the plastic bag. Therefore, it is considered that it cannot increase the tax base or constitute the tax base itself (if the entrepreneur does not add a margin to the plastic bag). The Ministry of Finance is of a different opinion.

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Recycling fee for plastic bags as income and tax expense

Pursuant to the amendments to the Act of February 15, 1992 on corporate income tax (CIT) and the Act of July 26, 1991 on personal income tax (PIT tax), which entered into force on January 1, 2018. , the recycling fee for plastic bags is both an income and a tax deductible cost for the entrepreneur.

Revenue, in accordance with Art. 11 sec. 1 of the PIT Act, money and cash values ​​as well as the value of received benefits in kind and other free benefits are received or made available to the taxpayer in the calendar year. The concept of revenue has not been defined under the CIT Act, however, the legislator lists in Art. 12 of the CIT Act, a catalog of property enhancements which, in consequence, lead to the generation of income for the taxpayer.

Pursuant to Art. 14 sec. 2 point 18 of the PIT Act, income from non-agricultural economic activity is also the recycling fee referred to in art. 40c of the Act of 13 June 2013 on the management of packaging and packaging waste (Journal of Laws of 2016, items 1863, 1948 and 2255 and of 2017, item 2056). A similar regulation was introduced into the CIT Act in Art. 12 sec. 1 point 11.

Therefore, the recycling fee is included in the revenue at the time of its collection (at the time of sale of the plastic bag).

At the same time, pursuant to Art. 22 sec. 1aa of the PIT Act and Art. 15 sec. 1aa of the CIT Act, the recycling fee paid is a tax-deductible cost: The recycling fee referred to in art. 40c of the Act of June 13, 2013 on the management of packaging and packaging waste.

The above means that the recycling fee may be recognized as a tax deductible cost only after it has been paid to the state budget, i.e. only in March of the year following its collection (the fee is payable by March 15 of the year following its collection). The entrepreneur will include the recycling fee in the net amount as tax deductible costs. He will not be able to deduct the amount of output VAT from the income. This is due to Art. 23 sec. 1 point 43 of the PIT Act and Art. 16 sec. 1 point 46 of the CIT Act. Therefore, the entrepreneur will show taxable income from the recycling fee in one tax year (the year of collecting the fee), and the tax deductible cost (in the same amount) only in the next year, in March, after paying the fee to the state budget.