The "EU Green Deal" is a comprehensive set of policy initiatives introduced by the European Commission to transform the economy and society to be climate-neutral and sustainable by 2050. This article provides an overview of the tax-related aspects of the EU Green Deal, particularly focusing on measures related to plastic taxation.

THIS ARTICLE IS WRITTEN BY SEFA GECIKLI ([email protected]) AND IMAN ZALINYAN ([email protected]). SEFA AND IMAN ARE BOTH PART OF RSM NETHERLANDS BUSINESS CONSULTING SERVICES WITH A SPECIFIC FOCUS ON SUSTAINABILITY AND STRATEGY.  

Overview of the EU Green Deal 

The EU Green Deal encompasses several policy areas, including: 

  • Reduction of greenhouse gas emissions 
  • Decarbonization of the energy sector 
  • Advancement of a circular economy 

A key aspect of the circular economy is a regenerative production and consumption model designed to minimize waste and maximize resource use.

Plastic Taxation Measures 

The EU has introduced several measures to promote a circular economy and address the environmental impact of plastic waste. To this end, the EU has introduced a "plastic levy/tax" as part of the EU recovery package necessitated by COVID-19-related expenditures. This levy is essentially a contribution from member states to the EU budget, based on the weight of non-recycled plastic packaging waste, calculated at EUR 0.80 per kilogram. This levy's purpose is to reduce non-recycled plastic waste and to fund the 2021–2027 EU budget. 

Moreover, Directive 2019/904 bans using certain single-use plastic products, such as drinking straws, stirrers, and expanded polystyrene (EPS) containers for take-away meals. Producers are responsible for covering the costs of cleaning up litter from single-use plastic products and the subsequent transport and treatment of that litter, as stipulated under Article 8 of the SUP Directive. This has led some member states to introduce the so-called “littering levy/tax.” 

Various member states have implemented or are planning to implement specific plastic taxation measures, as some examples included below: 

  • Germany: The Single-Use Plastics Fund Act ("EWKFondsG") was enacted on 11 May 2023 and will apply from 1 January 2024, with the first payments due in 2025. The EWKFondsG targets single-use plastic products, especially in the food sector, and includes all market participants involved in providing or selling these products. 
  • Netherlands: According to the recent Dutch coalition agreement, a circular tax on plastic will be introduced starting in 2028. 
  • Italy: Effective 1 July 2026, Italy will impose a tax on products consisting partially or completely of synthetic organic polymers intended for single-use, such as bottles, bags, and food containers. There are some discussions about postponing the duties.
  • Bulgaria: A new product fee for certain single-use plastic products has been introduced as part of the Extended Producer Responsibility (EPR). Producers must file yearly reports, with the first report due on 31 March 2024. 
  • Denmark: The excise duty on carrier bags and disposable tableware was increased in January 2024. 
  • Latvia: Differentiated tax rates for foam polymer and polystyrene foam have been established under the natural resources tax. 
  • Lithuania: Changes to pollution tax rates and exemptions will take effect from 1 January 2025. 

Forward Thinking

Implementing plastic taxation and levies as part of the EU Green Deal will significantly impact businesses across various sectors, especially those heavily reliant on plastic in their products and packaging. Due to the plastic levy, businesses will face increased operational costs. This cost increase will likely be passed on to consumers through higher prices but could also compress profit margins, particularly for small to medium enterprises (SMEs) that may not have the scale to absorb such hikes effectively.

Companies will need to revisit and potentially restructure their supply chains. This might involve sourcing alternative materials less harmful to the environment or more easily recycled. Transitioning to such alternatives could require significant upfront investment in new technologies and processes. The ban on certain single-use plastics will necessitate product redesigns for many businesses. This could be an opportunity to innovate with eco-friendly materials, but it also poses challenges in maintaining product functionality and customer satisfaction.

While it comes with compliance burdens, businesses that adapt effectively to these regulations can differentiate themselves in the market. Companies promoting sustainable practices might find favour with increasingly environmentally conscious consumers, potentially gaining market share against less adaptive competitors.

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