Recycling fee for the flat-rate fee - who does it apply to and how to prove it?

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From January 1, 2018, lightweight plastic bags were subject to a symbolic fee, the so-called recycling fee. The ordinance of the Minister of the Environment stipulated that it would be PLN 0.20. On the other hand, bags less than 15 micrometers thick will remain free. As a rule, the recycling fee paid will constitute a tax deductible cost for the entrepreneur. However, what should be done in the case of entrepreneurs taxed with a flat rate? Will the flat-rate recycling fee reduce the tax payable? Check!

Recycling fee - who does it apply to?

Pursuant to the regulations in force since the beginning of 2018, an entrepreneur operating a retail or wholesale unit in which lightweight plastic shopping bags are offered, intended for packaging products offered in this unit, is required to charge a recycling fee from the buyer of this bag. This obligation applies not only to the food industry, but also to others, such as clothing or footwear stores.

Which bags are subject to the recycling fee?

The Act on the management of packaging and packaging waste indicates which bags are covered by the recycling fee. Pursuant to the Act, plastic bags are shopping bags with or without handles, made of plastic and offered in retail or wholesale trade units. These include:

a) lightweight plastic shopping bags with a material thickness of less than 50 micrometers,

(b) very light plastic shopping bags with a material thickness of less than 15 micrometers, which are required for hygiene reasons or are offered as primary packaging for food in bulk where this helps to prevent food waste.

Important!

The recycling fee covers bags with a material thickness of less than 50 micrometers. This means that if the bag is thicker than 50 microns, the recycling fee will not apply. However, this type of bags had not been provided free of charge before.

It should also be borne in mind that bags with a thickness of less than 15 micrometers, the so-called skidding, which are usually set in stores for self-packing of loose goods such as fruit. The exemption from collecting the fee applies if the bag is used as the basic packaging for fruit, vegetables or meat, which is related to hygiene reasons. In this case, therefore, the way the bag is used is important. In a situation where it is used to pack purchases, e.g. in haberdashery, a recycling fee should generally be charged.

Income tax and the recycling fee

The recycling fee will be income for the entrepreneur. This is stated in Art. 12 sec. 1 point 11 of the amended PIT Act: Revenues, subject to sec. 3 and 4 and article. 14, are in particular: (...) the recycling fee referred to in Art. 40c of the Act of June 13, 2013 on the management of packaging and packaging waste.

Therefore, the collected recycling fee will increase the store's income. However, it should be borne in mind that the entrepreneur is obliged to pay the collected recycling fee to the state budget. Then, this expense can be classified as tax deductible costs. This means that, in the end, the recycling fee will be neutral for the entrepreneur, i.e. he will not earn any income from it and will not incur any costs.

Recycling fee with a flat-rate fee - how to demonstrate?

As can be seen from the above, the recycling fee constitutes income for the taxpayer, and at the time of its payment, it may be included in the tax costs. However, how to show this fee in a flat-rate fee, which does not show costs? Does this mean that he has to show revenue without the recycling fee being included in the costs?

Well, no, a taxpayer taxed with a lump sum on recorded income has the right to reduce the income by the amount of the paid recycling fee. Due to the fact that the structure of the lump sum does not allow the tax to be reduced by tax deductible costs, the taxpayer may reduce the operating income by the value of the recycling fee paid in the month in which he pays the income tax.

Clarification issued by the Ministry of Finance on the recycling fee

A taxpayer taxed with a lump sum on recorded income will have the right to reduce the income by the amount of the paid recycling fee. It should be noted that this fee, as state budget income for income tax purposes, has no tax consequences. According to the provisions of the PIT Act, it constitutes income from business activity (Article 14 (2) (18)), and after the payment is made, it is classified as tax deductible costs (Article 22 (1aa)). This structure also applies to lump-sum taxation on recorded revenues. Due to the fact that the structure of the lump sum does not provide for a reduction in revenue by tax deductible costs, maintaining the neutrality of the solution requires that revenue be adjusted in the month in which the recycling fee was paid. This adjustment should be made in accordance with Art. 6 sec. 1 and sec. 1e of the Act on flat-rate income tax on certain revenues earned by natural persons.

Adopting a different assumption, i.e. that the revenue from the recycling fee is subject to taxation without the possibility of its correction after transferring this fee to the state budget, because it would be de facto "paying tax on state budget income", which would violate the principle of a democratic state ruled by law, as would be contrary to the systemic interpretation of the law.

Unfortunately, the Lump-sum Income Tax Act does not say what the lump-sum rate should be applied to this type of income. However, relying on the general provisions, it would seem correct to apply the 3% flat rate. The taxpayer purchases plastic bags and then resells them. However, as mentioned, this issue is not regulated by law. Therefore, in specific matters, it is best to contact your own tax office or apply for an individual interpretation that will apply to a given taxpayer.