From 1 July 2023, businesses will no longer be allowed to provide single-use plastic packaging free of charge. How should the charge be treated for VAT purposes?
Separate delivery
Businesses that provide their customers with disposable cups or containers containing plastic must, from 1 July 2023, charge a surcharge for these, which must be shown separately on the bill. Government guidelines state that the surcharge for a disposable cup may be €0.25. For a plastic container, a charge of €0.40 could be applied.
We previously reported that VAT must be paid on this payment at the standard VAT rate (21%). According to a publication on the website Information from the Tax and Customs Administration shows that this is incorrect. The VAT payable on the packaging surcharge must be calculated using the rate applicable to the product contained within the packaging. If that product is food or drink, on which the reduced VAT rate (9%) is payable, VAT at the reduced rate must also be paid on the packaging surcharge.
Deduction
The answer to the theoretically interesting question of whether the supply of a disposable cup or tray falls under the statutory prohibition on the deduction of “hospitality VAT” will therefore also turn out differently. As the packaging is regarded as part of the product supplied, the VAT levied on it naturally qualifies as non-deductible “hospitality VAT”.