SUP fee – ecology yes, but with VAT?

This year, when selling food or beverages in single-use packaging to consumers, a SUP fee they must be charged (PLN 0.20 or 0.25). The new obligation has come as a surprise to many businesses, as there is no guidance from the Ministry of Climate or the Ministry of Finance. For instance, it is not entirely clear whether VAT, which is usually charged on packaging, should be added to the fee.

The regulation of the single-use packaging fee itself (known as the SUP levy since the Single Use Plastics Directive) does not appear to be complicated. The legal act stipulates that an entrepreneur operating a retail unit, a wholesale unit or a gastronomy point in which single-use plastic cups or packaging are offered, is obliged to collect a fee from the end user purchasing these products or beverages or food in these products.

The questions raised by HoReCa businesses at the end of 2023 indicated that, in relation to the SUP fee, at least the following issues need urgent resolution:

• which types of disposable beverage cups and food packaging should be charged – it requires detailed analyses of their composition and function,
• whether VAT will be added to the amount of the fee or whether the amount charged already includes it,
• what VAT rate should be applied,
• whether and how the SUP fee should be indicated on a receipt or invoice,
• whether and how consumers should be informed about the amount of the fee.

Unfortunately, the lack of any guidelines gave a result that many businesses adopted different approaches to new regulations.

The SUP fee is a good example. Although it is supposed to be collected and remitted to the public authorities and, in the case of arrears, can be collected like other public law receivables, the provisions of the VAT Act are in favour of their taxation. Article 29a(6)(2) of the VAT Act indicates that packaging costs are included in the tax base. Therefore, a significant number of entrepreneurs have adopted a safe solution, according to which they will add 23% VAT to the amount of the fee and, in order to save on the cash register software update, they will show it as the sale of packaging in a new item on the receipt.

However, there are many reasons to state that the fee is levied on the sale of a drink in a cup, or food in a ‘takeaway’ pack, then the packaging is an ancillary item and should be taxed at the same rate as the drink or food.

Because the SUP fee is to be charged not only in grocery shops, but also in gastronomy point (cafés, restaurants, but also bars in cinemas, or employee canteens selling takeaways, or catering companies) and in sales in vending machines, it has become necessary for the Ministry of Finance to provide clear guidelines in this regard as soon as possible. Such guidelines, in addition to precisely resolving practical doubts about whether or not VAT should be taken into account when collecting the SUP fee, should also have a proper legal form (general interpretation or tax explanations), instead of being just a message on the Ministry of Finance website as in the case of the recycling fee covering plastic bags.