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Executive summary
A contribution on single-use plastic (or multi-material with plastic) packaging has been introduced in Portugal as part of the Portuguese State Budget Law for 2021 (Decree-Law no. 78/2021). This is following the European Union (EU) Single-Use Plastic Directive (2019/904) focused on the reduction of the impact of certain plastic products on the environment. The contribution applies to packaging used in to-go food regimes.
The contribution is in force as of 1 July 2022, and further guidance has been published by the Administrative Ruling (Ofício-Circulado), specifically no. 35.170. A contribution is also expected to apply on single-use packaging made of aluminum, or multi-material with aluminum as of 1 January 2023.
Detailed discussion
The postponed contribution entered into force as of 1 July 2022, and is regulated by the Government Ordinance no. 331-E/2021. The contribution is levied per package, completely or partially made of plastic (or multi-material with plastic) to be purchased in to-go food regimes. The contribution applies on single-use packaging (or multi-material with plastic) released for consumption by the taxpayers, independently of its date of production or acquisition.
The guidance aims to clarify the scope of the contribution on single-use packaging made of plastic, or multi-material with plastic which is due in mainland Portugal upon their release for consumption. It is important to note previous law and guidelines – such as technical and legal definitions – shared by the Portuguese tax authorities for both Value Added Tax (VAT) and excise duty purposes apply for this new regime.
Event and scope
The contribution is levied per package, completely or partially made of plastic (or multi-material with plastic) to be purchased in to-go food regimes. This includes ready-to-eat meals, ready-to-eat meals with take-away (including drive-in) or with home delivery, and also applies for those meals packed in the establishment or in the point-of-sale area.
The contribution applies as a result of production, importation as well as the intra-community acquisition (acquisition from another EU Member State of single-use packaging, including acquisition from the Autonomous Regions of Azores and/or Madeira).
The contribution also applies to all import operations, production, reception, storage, release for consumption, dispatch and export of single-use plastic or multi-material packaging with plastic, which are covered by the following Combined Nomenclature codes (CN code), with additional code 1852: 3923 10 90 90; 3923 30 10 00; 3923 50 90 00 and 3923 90 00 00.
Impacted economic agents
The contribution is levied on the introduction for consumption, even if irregular, of single-use packaging produced, imported or acquired in Portugal mainland. The contribution is due by:
Portuguese entities (with head office or permanent establishment in mainland Portugal) that produce or import to Portugal single-use plastic or multi-material with plastic packaging
Entities that acquire single-use packaging from suppliers with head-office or permanent establishment in Azores/Madeira/other EU Member State to Portugal
Key obligations
Authorized warehouse keeper status
With the exception of importers who have released for free circulation and for consumption, an authorized warehouse keeper status is required, being the taxable persons of this contribution and responsible for all required reporting obligations, even in relation to single-use plastic or multi-material with plastic packaging that they do not own. The production, receipt and storage of single-use plastic or multi-material with plastic packaging can only be performed within a tax warehouse, under the terms set forth in Government Ordinance no. 331-E/2021.
Authorized warehouse keeper status has a number of general obligations including registration, record and accounting of stock, audits, communication or customs procedures. New categories and codes have now been created for the contribution’s purposes.
In particular, it is worth noting tax warehouses for single-use plastic or multi-material with plastic packaging (under a contribution/tax suspension regime) which can be used for production or storage, also apply for single-use plastic or multi-material with plastic packaging coming from another EU Member State, third country (import) or from the Autonomous Regions of Azores and/or of Madeira, as well as those shipped from mainland Portugal.
Electronic declaration of release for consumption
All tax warehouses entries and exits – without release for consumption and therefore not requiring the contribution assessment as per cases foreseen in law – shall be declared by the authorized warehouse keeper through the completion of an electronic declaration of release for consumption (e-DIC). The e-DIC acts as a record document for the registration of all entries and exits from the tax warehouse without the contribution being due.
An e-DIC assessing the contribution must be processed, in the case of single-use plastic or multi-material with plastic packaging exits from the tax warehouses to acquirers who do not have the authorized warehouse keeper status. The release for consumption of single-use plastic or multi-material with plastic packaging must therefore be formalized in two ways:
Through the processing of an e-DIC with the contribution assessment
Through the customs import declaration, at the time of import, in the case of release for free circulation and consumption
In both cases, the NC codes and the additional Excise Duty code must be identified.
Portuguese Goods in Transit Regime
The circulation of single-use plastic or multi-material with plastic packaging is also subject to the Portuguese Goods in Transit Regime (approved under the annex of the Decree-Law no.147/2003, of 11 July) and even the free circulation as foreseen in the law of single-use plastic or multi-material with plastic packaging (e.g., without the mandatory assessment of the contribution) shall be mandatorily accompanied by a copy of an e-DIC mentioning the tax warehouse of destination of such packaging.
Therefore, the difference between processing an e-DIC with or without the contribution assessment/payment is of great importance. This distinction is made exclusively through the mentioned of distinct identification codes for each of these situations.
In this context, it is important to note that the instructions for completing the e-DIC have not yet been disclosed and are expected to be published shortly by the competent Services.
Assessment and payment
The e-DIC with the contribution assessment must be processed, on a quarterly basis, by the fifth day of the month following the end of each quarter of the calendar year in which the releases for consumption took place. In the case of import operations, custom’s rules for assessment, payment collection and deadlines shall apply as already provided by the applicable customs legislation.
As a general rule, the assessment of the contribution shall be notified electronically and automatically notified to the taxpayers by the 15th day of the month (following the quarterly reporting period) in the reserved area of the Excise Duties (IEC) platform on the Tax and Customs Authority's website (Portal das Finanças).
The contribution must be paid by the 15th day of the second month following the quarter of the calendar year to which the assessment relates.
Other obligations and VAT invoicing
Further points to note include:
Economic agents subject to this contribution must communicate to the Portuguese tax and customs authorities, by the end of January of the year immediately following the one to which they relate, the amount of single-use packaging produced, imported or acquired, identifying the respective type of material (currently, only plastic or multi-material with plastic) intended for consumption in Portugal mainland
The contribution of €0.30 per package must be itemized on the invoice and contain the following elements: (i) Designation: “single-use packaging”; (ii) number of units sold/made available and (iii) amount charged as a price, including the contribution
The contribution is part of the taxable basis, at the standard VAT rate, pursuant to Article 16(5)(a) of the Portuguese VAT Code
Next steps
Similarly, to other countries in Europe (see EY Global Tax Alert dated 13 July 2022 Italy’s plastic tax will enter into force on 1 January 2023 and see EY Global Tax Alert dated 13 April 2022 Spain introduces new indirect tax on non-reusable plastic packaging as of 1 January 2023) 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
Amilcar Nunes
Catarina Anjo Balona
For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.
