Poland is introducing a deposit-refund system with effect as of 1 January 2025. The mechanism was enacted by the Act of 13 July 2023 to amend the Packaging and Packaging Waste (Management) Act and certain other legislation (Dz.U.2023.1852) (“Enabling Law”).
The system requires that a deposit be collected from the end user on sale of products in certain packaging, namely:
- single-use plastic bottles with a volume of up to 3 litres,
- reusable glass bottles with a volume of up to 1.5 litre, and
- metal cans with a volume of up to 1 litre.
The deposit is refunded on return of the packaging and no evidence of its payment is required for the refund.
Under the Enabling Law, the deposit must be collected by retailers and wholesalers. In addition to deposit collection and refund responsibilities, these traders will have to comply with a number of other statutory duties, including reporting ones. However, they may delegate the administration of such duties to a representative entity.
The deposit-refund system will be operated by authorised organisations that are not part of the government finance sector. There may be a number of such operators on the market at the same time, with each of them having an individual responsibility for ensuring that its deposit-refund system is legally compliant.
Traders falling within the ambit of mandatory deposit-refund system regulations had plenty of doubt about the Enabling Law, including about it not being aligned with the VAT Act. Therefore, work has started to amend the Enabling Law (“Amending Proposal”).
In accordance with the Amending Proposal:
- the deposit will be collected at each level of trade in the relevant products (both by those placing them on the market, i.e. manufacturers, importers and brand owners, and by retailers and wholesalers);
- the deposit for packaging falling under the mandatory system will not be part of the taxable amount for VAT purposes (regardless of the level of trade);
- VAT will be payable by the representative entity as a collecting agent who will have to pay VAT on unrefunded deposits to relevant tax office.
The Amending Proposal changes the original system specifications to a degree and may affect the VAT compliance of traders marketing products in relevant packaging, not least in terms of VAT reporting. It is therefore important to have this issue reviewed in light of the previous approach and corporate processes.
The Amending Proposal has not been transmitted to the Parliament yet. We will keep you posted on the progress of this legislation.
If this issue pertains to your business and you are interested in our assistance, please contact us.
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