A deposit-refund system will come into effect in Poland on January 1, 2025. Bottle vending machines or bottle collection points will become a permanent fixture in many stores.
The law introducing the deposit-refund system was published late last year. However, due to emerging concerns, a draft law amending the Packaging and Packaging Waste Management Act and certain other acts was published to address these uncertainties.
One issue that raises doubts is the VAT liability associated with collecting the deposit and later in the sale of deposit-refundable packaging. This issue is important not only for producers and grocery store owners, but for every consumer. When purchasing a beverage in a glass bottle, we pay a deposit of 1 złoty, while for a beverage in a can or plastic bottle, it's 50 groszy. If this amount increased the tax base, such a purchase would cost us more.
Current VAT regulations already regulate this issue. According to them, if goods are delivered in returnable packaging, the deposit does not increase the taxable amount. However, if the packaging is not returned, the value of the unreturned packaging must be taxed within 60 days.
The draft amendments do not repeal existing regulations in this regard. However, they introduce new solutions applicable only to packaging covered by the mandatory deposit system. The deposit for this type of packaging will not increase the tax base either, meaning VAT will not be added to the deposit collected upon purchase. Unreturned packaging will be subject to tax. Entities selling products in beverage packaging will be required to report VAT on the deposit collected and not returned after the end of the year. However, if more packaging was collected in a given year than was released into circulation, the surplus can be settled in the following year.
The VAT payers for this will be entities that introduce products in beverage packaging, i.e., manufacturers and importers. However, they will not pay the tax to the tax office. The representative entity (system operator) will assume the role of the payer. Its responsibilities include settling deposits with retail and wholesale outlets, as well as other points collecting packaging and packaging waste. According to the proposed bill, it will also be responsible for collecting and paying VAT to the tax authorities on unrefunded deposits collected by entities introducing products in beverage packaging.
In addition to declaring the correct VAT amount (the obligation of the entity introducing the beverages) and paying the tax (the obligation of the representing entity), the draft law also requires both entities to maintain detailed records for VAT settlement purposes. To facilitate audits in this regard, these records will be made available to tax authorities upon request.
The planned date of entry into force of the bill is 1 January 2025. The bill has not yet been submitted to the Sejm.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of September 16, 2024
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