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High new EPR fees announced

On 2 June 2023, the Extended Producer Responsibility (EPR fee) rates were published in Hungary. As expected, the EPR fees payable by companies are significantly higher than the previously established environmental product charges for the same and similar product streams.

Hungarian EPR fee: Much higher than the environmental product charge!

The product charge and EPR treatment of packaging materials and packaging is not the same: while the environmental product charge on paper and cardboard was HUF 19 per kilo, the EPR fee is HUF 173, and instead of the HUF 57 for screens and monitors, the EPR fee payable is HUF 362. However, there are product streams where the increase will be smaller, such as large appliances, where the HUF 57 product charge will only increase to HUF 124 in the EPR system.  There is also a significant increase for small IT equipment, where the product charge of HUF 57 will be replaced by an EPR fee of HUF 261. 

The explanation for the high rates now published may be in the difference between the theoretical and practical basis and purpose of the EPR and the environmental product charge. Given that the product streams subject to the EPR obligation overlap to a great extent with the product streams subject to the product charge, the product charge payment is almost completely eliminated.

Environmental product charge: the registration obligation remains 

However, despite the above, the obligations imposed by the product charge regulation will not cease to apply, because although companies will pay an EPR fee instead of an environmental product charge for a product stream in the future, the obligation to register and declare the product charge will remain an active administrative obligation for businesses. 

For identical product streams, the EPR and the environmental product charge administration will co-exist, probably until the product charge is phased out.  Given that the EPR fee is higher than the product charge for all product streams, the calculations applied to the product charge have been simplified to avoid double charging for the same product streams.

What happens to the environmental product charges?

In order to avoid double payment, the legislator provides for the EPR fee to be deducted from the product charge for identical product streams and the remaining product charge to be paid into the central budget.  However, as the EPR fee is higher, the balance outlined above will result in no product charge being paid to the budget for the same product streams.  

Effect of the EPR fee on Hungarian consumer prices        

Looking at the EPR fees, it is difficult to say what effect the increase in charges relative to the product charge will have on the increase in consumer prices of the products concerned, as it is not the same whether the product or its packaging is affected by the EPR fee. In addition, the EPR effect may be cumulative in the consumer price of a product: a product subject to an EPR fee may also have packaging, which also results in an EPR liability.  In any case, a decrease in the consumer price is not to be expected, on the contrary, if a producer includes the charge in the price of the product, it should increase.

The fees currently set are valid for 2023, as the regulation provides for the publication of the fees for the coming year at the end of each year so that companies can prepare.

What to expect in the new EPR system?

The proof of the pudding is in the eating, and this saying could be very true for the EPR scheme and its rates.  It is expected that the setting of the fee for the year 2024 will be influenced by the extent to which all the companies concerned have been successfully included in the EPR scheme and the extent to which the fee collected can contribute to the waste management tasks undertaken by MOHU. 

If there are many "stowaways" in the system, i.e. many companies who do not comply and do not appear in the system as payers despite being affected, this could have a significant impact on the EPR fees for the following year.

What should companies affected by the EPR fee do?

A new system is always very difficult to implement, and this is also true for the EPR system.  Even though the deadlines for MOHU registration and OHH registration have already expired, obligations can still be met on both portals.

It is in the interest of all companies concerned to check their involvement in the EPR system and, if necessary, to comply with the MOHU registration and OHH registration obligations.

However, as a consultant following the process of implementation of the system and dealing with the countless questions from clients, we would not consider it appropriate to impose any sanctions for late registration.  A moratorium on penalties for a short period of time would have been appropriate, as deadlines were tight and numerous technical and legal issues arose which were sometimes successfully addressed and sometimes not within a short timeframe.

It is of utmost importance that those who have not yet registered do so as soon as possible, because the method for recording and  filing is still to be developed, which is not easy to do, as it is not clear yet how the previously used filing document of the product charge change and how the EPR filing will look like. What is certain is that the EPR fee will be paid to MOHU against an invoice issued by MOHU, probably in the month following the third quarter.   

One period of the introduction of extended producer responsibility seems to have come to an end, and the fees can be calculated on the basis of the information available.  The scope for optimisation is much narrower than under the product charge regulation, but there is still some room for manoeuvre, which is worth exploring with an expert.  

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