November 21, 2019
Italy to introduce proportional tax on plastic items
Italy’s draft Budget Law for FY 2020 provides for the introduction of a proportional tax of 1 €/kg on manufactured products in plastic for single use (also called “MACSI”), aimed at reducing the production and consumption of plastic.
Among others, products subject to tax are bottles, bags and food containers in polyethylene, tetra pack containers, packaging in expanded polystyrene, rolls of pluri-ball plastic and caps in plastic.
This measure is causing a wide debate due to the fact that it will lead not only to additional tax costs and fulfillments but also to a decrease in the competitiveness of the companies subject to tax. In this respect, a reduction of the amount of the tax to 0.80 €/kg is currently being discussed.
According to the draft Budget Law, plastic tax rules will be effective as from the first day of the second month subsequent to the publication date of the implementing provision to be issued by the Italian Tax Authority and Italian Customs within February 2020 (therefore, at the latest from 1 April 2020).
The draft Budget Law must be approved before the end of 2019.
Taxpayers should closely monitor developments in this area in order to be compliant with the new provisions and consider the new tax in their pricing policies.
Persons obliged to comply with the new tax are:
Products subject to tax
The new tax is applicable to all single use plastic items (MACSI) composed totally or partially of organic polymers of synthetic origin which have (or are meant to have) the function of containment, protection, manipulation or delivery of goods or foodstuffs.
According to the current draft of the provision, the scope of the tax also includes: (i) items made of plastic materials, which allow the closure (e.g., caps), the sale and the presentation (e.g., labels) of the so-called MACSI or of other goods composed of different materials; and (ii) semi-finished products made through the use of plastic used for the production of “MACSI.”
No tax is due on compostable MACSI (according to UNI EN 13432 provisions), and on syringes classified as medical devices.
Therefore, by way of example, products subject to tax are bottles, bags, food containers in polyethylene, tetra pack containers, packaging in expanded polystyrene, rolls of pluri-ball plastic, caps and similar items. Conversely, no tax is due on cans and buckets for liquids characterized as for long-lasting use.
The relevant tax obligation arises in connection to the production or the import of plastic goods and the respective tax point is identified with the moment of the release into consumption of the single good in the Italian territory.
No obligation is provided by the draft of Budget Law with respect to:
Amount of tax
Under the scope of application described above, the “plastic tax” is due at 1€ per each kilo of plastic included in the single item.
However, the measure of application of the plastic tax is still under review by the Italian Parliament and might be amended (a reduction to 0.80€ per kilo is currently being discussed).
Plastic tax return and payment of the tax
The amount of plastic tax due will be determined based on the filing of quarterly tax returns reporting all the elements necessary to determine the payable amount, to be submitted by the end of the month following the respective quarter.
The relevant deadline for each payment – to be carried out through the F24 payment forms, and also allowing the offset of the plastic tax due with other tax credits - the same provided for the filing of the quarterly tax returns.
The omitted payment of the plastic tax implies the application of a penalty ranging from 2 to 10 times the unpaid tax, with a minimum of €500.
In the event of late payment, an administrative penalty will be levied, equal to 30% of the tax due, with a minimum of €250.
The late filing of the relevant quarterly returns leads to the application of a penalty ranging from €500 to 5,000.
Audit activities will be performed by the Revenue Agency, Customs Agency and the Tax Police.
In addition to the plastic tax, the provision to be introduced in 2020 also sets a tax credit to be granted to companies active in the plastic industry and producing MACSI for the purpose of containment, protection, manipulation or delivery of goods or foodstuffs.
The tax credit is equal to 10% of the expenses incurred from 1 January 2020 to 31 December 2020 in order to adapt - under a technologic viewpoint - the factory and business facilities to be used for the production of compostable and biodegradables items under the standard EN 13432 2002 and cannot exceed €20,000.
Entry into force
Plastic tax rules will be effective from the first day of the second month subsequent to the publication of the implementing provision to be issued by the Italian Revenue Agency and Italian Customs within February 2020 (therefore, at the latest from 1 April 2020).
For additional information with respect to this Alert, please contact the following:
Studio Legale Tributario, Rome
Studio Legale Tributario, Milan
Studio Legale Tributario, Treviso
Studio Legale Tributario, Turin