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Executive summary

Under Italy's Budget Law for fiscal year (FY) 2024, the plastic tax enters into force on 1 July 2024. The tax was originally introduced by the Budget Law for FY 2020 and subsequently postponed several times.

In line with the European Union (EU) strategy for plastic, the plastic tax aims to reduce the production and consumption of single-use plastic products (so-called MACSI) as well as to promote circular economy principles.

Implementing rules, issued by Italian Customs and Revenue Agencies, will be published in the Official Gazette by year-end.

Detailed discussion

Taxable persons

Depending on the country where the MACSI are produced or from which they are shipped, persons subject to the new tax differ according to where the MACSI are manufactured or shipped:

• For MACSI manufactured in Italy: manufacturers or residents/nonresidents intending to sell MACSI, obtained on their behalf in a production plant, to Italian residents
• For MACSI shipped from other EU Member States: either the purchaser or the seller, depending on whether the MACSI are purchased for the purpose of an economic activity
• For MACSI shipped from non-EU countries: the importer

Products subject to tax

The new tax applies to MACSI composed totally or partially of organic polymers of synthetic origin that have (or are meant to have) the function of containment, protection, manipulation or delivery of goods or foodstuffs, and are not designed to be used repeatedly.

The plastic tax is thus intended to apply to a wide range of plastic products, including bottles, bags, food containers, tetra pack containers, packaging, rolls of pluri-ball plastic (i.e., bubble wrap), caps and similar items that are made with the use, even partial, of plastic materials consisting of organic polymers of synthetic origin.

Conversely, the tax does not apply to MACSI designed with long-lasting use or in specific cases and circumstances.

Taxable event

The relevant tax obligation arises in connection with MASCI production, importation or introduction from the EU, and the tax is due at the moment of release into consumption of the single good in the Italian territory, as defined by the law.

Amount of tax

Under the scope of application described above, plastic tax is due at 0.45 €/kg of virgin plastic included in the MACSI.

Plastic tax compliance

Depending which entity is liable for paying the plastic tax and its supply chain, different obligations may have to be met, including registering, making accounting entries, filing quarterly tax returns, making payments, and separately storing MASCI.

Any non-established entity will have to appoint a tax representative who will share joint and several liability with the entity.

For MACSI coming from non-EU countries, the tax is assessed and collected at the time of importation directly by the Italian customs authorities, who are also in charge of any audit activities for all the other MACSI subject to plastic tax.

If the amount of plastic tax due does not exceed €25, no plastic tax return is required and the relevant payment due is zero.

Taxpayers should timely prepare to avoid penalties, client complaints, and goods being blocked at Italian customs.

Penalties

Failure to pay the plastic tax will result in a penalty ranging from two to five times the unpaid tax, with a minimum of €250.

In the event of late payment, an administrative penalty will be levied, equal to 25% of the tax due, with a minimum of €150.

The late filing of the relevant quarterly returns is subject to a penalty ranging from €250 to €2,500.

Refunds

Depending on the supply chain, plastic tax is not due or can be reimbursed for MACSI that are transferred for consumption in other EU countries or for export, if certain requirements are met.

For this purpose, businesses must ensure full traceability of all the subjects involved in the supply chain and the plastic tax actually paid.

A refund is allowed for amounts higher then €10.

Next steps

Although the plastic tax has been delayed several times, it will now be in force as of 1 July 2024. Further delay is unlikely, especially now that other tax authorities have approved similar taxes.

Thus, it is fundamental that businesses prepare in time to meet the 1 July date. The plastic tax is one of the most complex indirect taxes in Italy and it is under the purview of Italian customs, which generally applies substantial scrutiny prior to finalizing the registration process and for any audit activity.

Furthermore, wholesale clients and distributors may prefer purchasing from suppliers able to guarantee full traceability of MACSI and correct tax compliance to avoid goods being blocked at the Italian borders or to recover plastic tax already paid on goods that are then consumed outside of Italy.

Finally, economic operators should consider this new tax in their pricing policies, supply chains and processes, to minimize the relevant impacts as much as possible.