What form will the deposit-refund scheme take?
The act introducing the deposit-refund scheme in Poland came into force on 13 October 2023. Companies were given a little more than a year to prepare for their new obligations, as the scheme is set to go live on 1 January 2025. But for several months the new government has been announcing changes to the act. The final wording the provisions when the scheme is launched remains an open question.
The current regulation
The legal framework for operation of the deposit-refund scheme in Poland was set by the Act of 13 July 2023 Amending the Act on Packaging and Packaging Waste Management and Certain Other Laws. At this point, it is the provisions of this law, enacted by the previous parliament, that set the new obligations to take effect on 1 January 2025. We explained in detail how the deposit-refund scheme should work in this form in a study available on the In Principle portal.
But the act in force raises a number of questions. Among other things, companies and local governments said they had too little time to prepare. They also anticipated problems with VAT on deposits and the types of packaging covered by the deposit-refund scheme. There were intense discussions of changes to the existing regulation in the first quarter of 2024.
The answer to these doubts was to be an amendment to the provisions developed after consultations, but work on it has been continually delayed. At the time of writing this article, this work is still at the consultation stage within the Government Legislation Centre. This means that the bill has yet to reach parliament.
What is to change?
The current wording of the draft of the amending act calls for far-reaching changes to the deposit-refund scheme. Here are the most important ones:
- Milk and dairy product packaging is to be excluded from the deposit-refund scheme.
- The representing entity will have to provide at least one stationary collection point in each commune for end-users of packaging and packaging waste covered by the deposit-refund scheme.
- Companies operating a retail or wholesale unit with a sales area of no more than 200 m2 where beverages in packages covered by the deposit-refund scheme are offered to end users will have to participate in the scheme, at least in collecting and returning deposits and collecting empty packaging for reusable glass bottles of up to one and a half litres.
- A closed deposit-refund circulation system is to be introduced (the deposit will be collected throughout the distribution chain).
- Waste collecting entities covered by the deposit-refund scheme will not have to obtain a permit to collect waste from non-professional waste collectors.
- A new label design is to be introduced indicating that the packaging is covered by the deposit-refund scheme and specifying the amount of the deposit (with a grace period—the existing design can be used until the end of 2025).
- There will be new rules on accounting for VAT on deposits.
- There will be new rules for licences to operate a deposit-refund scheme.
How to prepare for launch of the deposit-refund scheme?
It is difficult to give a clear answer to this question. However, it should be remembered that the provisions establishing a deposit-refund scheme in Poland are already in effect. This means that regardless of the planned amendments, the obligations related to operation of the deposit-refund scheme will be binding on businesses starting next year.
Therefore, it can now be assumed that the deposit-refund scheme will begin operating as it has been established so far, i.e. in accordance with the provisions adopted by the previous parliament. Thus companies should be prepared in particular to collect dairy packaging and collect deposits only from end users. Companies’ doubts regarding VAT settlements also remain valid, due to the lack of clear statutory regulation and lack of clarification from the relevant public authorities.
Preparing for the rules on functioning of the deposit-refund scheme as proposed in the amendment is extremely risky. The proposal is still being worked on in the Council of Ministers. It cannot be ruled out that further amendments will be introduced.
The next step in the legislative process is passage of the bill through parliament. In practice, this means that the members of the Sejm and the Senate will work on the government proposal. At this point, it is impossible to assess the shape the act to be adopted by parliament. It is also impossible to foresee the course of work in the Senate, or how any amendments introduced by the Senate will be addressed by the Sejm. But in any event, parliamentary work takes time, and the deposit-refund scheme is only three months away from going live.
The last entity involved in the legislative process is the President. In the current political situation, the President comes from a party in opposition to the government. Therefore, it cannot be ruled out that he will decide to exercise his veto power (referring the law to the parliament for reconsideration with a reasoned motion under Art. 122(5) of the Constitution). However, to override a presidential veto, it is necessary for the parliament to adopt the act again, by a 3/5 majority in the presence of at least half of the statutory number of members of parliament. The current ruling coalition does not hold such a majority.
In addition to the veto power, the President also has other powers that can influence the final shape of the law. This is primarily the power to refer the act to the Constitutional Tribunal for a ruling on its constitutionality (Constitution Art. 122(3)). The constitutional review procedure can take up to several years.
The President may also delay signing the act. Pursuant to Art. 122(2) of the Constitution, the President of Poland shall sign an act within 21 days of presentation and order its publication in the Journal of Laws. Even if the President signs the act, it is difficult to assess when he will do so, or when he will order publication of the act.
Regardless of the time spent working on the proposal in the Council of Ministers and the parliament, the waiting time for the President’s signature may be almost a month. Under these circumstances, it is doubtful that work on the act can be completed within the next three months. On the other hand, since the amending act will probably not be adopted and published before the end of the year, only the provisions already in effect will apply. And violation of these regulations will result in legal liability.
Conclusion
An effectively operating deposit-refund scheme is needed in Poland, and the experience from other EU countries shows that this method can achieve the levels of collection of particular types of packaging waste required by the EU.
However, the method of drafting the current provisions and how the amendments to these provisions are currently being processed must be judged harshly. The current version of the provisions leaves many loopholes. This is primarily a result of the lack of consultation with the packaging industry and local governments, and the desire to adopt the act before the end of the parliamentary term.
It is a good sign that all stakeholders are working on amending the act introducing the deposit-refund scheme in Poland. However, the pace of the work on the changes is questionable in light of the launch date of the scheme. Indeed, participants in the scheme can hardly be expected to prepare for launch of the scheme when work is still underway on significant changes to operation of the scheme.
Paulina Piekarska, adwokat, Karol Maćkowiak, Environment practice, Wardyński & Partners
