August 19, 2022
Portugal issues clarifications and further details on the contribution on single-use packaging made of plastic or multi-material with plastic in Portugal
Portugal’s Department of Excise Duties and Vehicle Taxes (the Department) has published further details regarding the application of the contribution on single-use packaging made of plastic or multi-material with plastic (for background, see EY Global Tax Alert, Portugal publishes guidance on contribution for single-use packaging made of plastic or multi-material with plastic in Portugal, dated 14 July 2022).
The new details seek to answer a number of frequently asked questions regarding the scope, declarations and obligations required. The scope of the clarifications further substantiates the aim of the contribution itself, e.g., to ensure the transition to a circular economy, promoting a reduction in the consumption of single-use packaging made of plastic or multi-material with plastic and its respective waste.
In addition, the Department has also recently published the procedures and formalities in relation to the necessary compliance obligations. Procedures disclosed in Administrative Ruling no. 35.170, of 1 July were revised and updated by Administrative Ruling no. 35.174, of 10 August. The key provisions are summarized below.
The contribution applies to single-use packaging made of plastic or multi-material with plastic, regardless of the production or acquisition date, when released for consumption through its sale by taxable persons to non-taxable economic operators. It is applicable to any type of plastic, regardless of its origin (biological or fossil) and its recyclability, provided it is for single-use purposes.
The introduction into release for consumption occurs with the sale of the single-use packaging made of plastic or multi-material with plastic packaging to economic operators not subject to the contribution, even if it is recyclable, biological, vegetable or fossil plastic.
New Combined Nomenclature (CN) codes
Under the Administrative Ruling no. 35.174, of 10 August, new CN codes are available for the declaration of plastic packaging, as of 8 August 2022 onwards. CN codes are now included within Chapter 48 - Paper and cardboard, representing a difference from the initial approach whereby the contribution was only applicable to some CN codes within Chapter 39 - Plastics and articles.
Current rules therefore apply to all import, production, reception (e.g., the entry into the tax warehouse of single-use packaging from a place of importation, from another Member State of the European Union or from the Autonomous Regions of Madeira or Azores), storage, release for consumption, dispatch and export operations of single-use packaging made of plastic or multi-material with plastics under the following combined CN codes:
The definition of packaging is set out under Article 3(1)(r) of Decree-Law nr. 152-D/2017, of 11 December whereby packaging is defined as: (...) any product made of materials of any nature (...), e.g., urban packaging used in domestic, commercial, or service sectors as well as other packaging, employed for industrial or other purposes. Further categorization is set out in Annex II of the aforementioned Decree-Law:
Obligations and reporting
With the exception of importers who release for free circulation and consumption, taxpayers must obtain an authorized warehouse keeper status. They will be liable for complying with necessary reporting obligations – see below – even in the case of single-use packaging made of plastic or multi-material with plastic, which does not belong to them.
Electronic declaration of release for consumption (e-DIC)
The instructions for filling and issuing the e-DIC aggregate a set of necessary procedures, including the constitution of a tax warehouse and, consequently, obtaining the status of authorized warehouse keeper. For the purpose of registering new authorized warehouse keepers and collecting the contribution, the following have been set up:
Access and delivery of the e-DIC is available electronically through the customs area of the Portuguese Tax Authority website. If an authorized warehouse keeper chooses to not directly access to the customs area of the Portuguese Tax Authority for the fulfillment and delivery of the e-DIC, it can appoint a representative through power of attorney in the competent customs office (which shall be the customs office in whose jurisdiction the tax warehouse of the taxpayer of the contribution is located).
Collection and invoicing obligations
As set out under the Portuguese Government Ordinance nr. 331-E/2021, of 31 December, the contribution amount must be included in the amount charged as the price of the packaging and it must be indicated that the amount includes the contribution, whenever applicable.
The amount of the contribution due (€0.30) must be itemized on the invoice and shall contain the following elements:
A general management system is anticipated whereby packers and importers submit either to an individual system or an integrated system as to take care of the responsibility for the management, treatment, or recovery of the waste, in this particular, made of single-use packaging made of plastic or multi-material with plastic.
Operators should keep separate stocks of sales relating to single-use packaging made of plastic or multi-material with plastic, for which the contribution is due or not due, throughout the entire supply chain. Rules under the aforementioned Government Ordinance do not apply for sales whereby the packaging contribution doesn’t apply.
It should be noted that the following are excluded from the contribution:
It is also clarified that stock articles of packaging acquired by companies before 1 July 2022 are not subject to the contribution, being only payable in respect of packaging sold by taxpayers from 1 July 2022 onwards.
Considering that the economic agents (including catering and beverage companies) must pass on the charge generated by the contribution on single-use packaging, along the supply chain, up to the final consumer, the contribution is not considered a deductible expense for the purposes of computing the taxable profit or taxable income of the entities.
Similarly, to other countries in Europe (see EY Global Tax Alert, Italy’s plastic tax will enter into force on 1 January 2023, dated 14 July 2022 and see EY Global Tax Alert, Spain introduces new indirect tax on non-reusable plastic packaging as of 1 January 2023, dated 13 April 2022) and the UK plastic packaging tax which has been in effect since 1 April 2022, the attention to plastic taxes is increasing in Portugal as well. Consequently, businesses should take the necessary steps to be prepared to understand and comply with the new requirements.
For additional information with respect to this Alert, please contact the following:
Ernst & Young, S.A., Lisbon