Basically, green tax – for the most part – will be abolished

The green tax system has been operating in Hungary since 1995 and has undergone several minor and major updates over the years. The regulatory and supervisory authorities for this product fee have also changed frequently, and due to a lack of compliance, businesses have long faced a much stricter penalty system compared to regular taxation. The year 2025 marks another significant (perhaps the most important) milestone in the life of the green tax: this type of tax will practically cease to exist for most businesses.

Looking at the current (and past) regulatory framework for the green tax, it is easy to see that most companies encountered the green tax mainly due to packaging materials: simply unpacking a product purchased from abroad triggered the green tax obligation.

The introduction of the EPR system nearly a year and a half ago brought significant changes to the green tax, as both systems have since operated in parallel. First, the EPR obligation shall be determined, which can then be deducted from the green tax obligation. However, as the EPR fee is in most cases higher than the green tax, the green tax obligation has effectively dropped to zero in declarations, which significantly reduced related budget revenues, making it expendable for the state (as known, the EPR fee must be paid to the concession company, MOL MOHU). However, since last summer, taxpayers have still had to administer the processes and submit nil green tax returns.

The legislature recognized that it was unnecessary to maintain the green tax system in parallel with the EPR, and based on the draft bill submitted to the Parliament, from January 2025, it will eliminate the green tax obligation for products that are also subject to EPR. This means that the green tax will not be entirely abolished; its applicability will merely narrow to non-EPR-liable products, such as other petroleum products (lubricants), other plastic products (e.g., artificial flowers), and other chemical products (various cosmetics).

Among packaging materials, one product will still remain subject to the green tax under the proposal: plastic carrier bags. The legislature intends to continue imposing a high tax burden on these items to prevent the environmental damage caused by their waste.

In summary, the new restructuring of the environmental product fee will bring significant changes for businesses. The elimination of the obligation will simplify administration and thereby reduce the burden on companies. The new regulation is set to take effect in January 2025, so businesses should prepare in advance for the changes and review year-end tasks related to this.

For any questions, Andersen’s green tax and EPR experts are ready to assist regarding the above.