New Packaging Tax Becomes Effective in the Netherlands on ...

Alert <strong>Tax</strong> November 2007
The consequences for companies
On <strong>the</strong> basis of <strong>the</strong> current proposal for <strong>the</strong> <strong>Packag<strong>in</strong>g</strong> <strong>Tax</strong>, we foresee various (practical) issues
related to its <strong>in</strong>troduction. For example, it seems necessary for every company to check
whe<strong>the</strong>r its supplier should be considered a "manufacturer" under <strong>the</strong> <strong>Packag<strong>in</strong>g</strong> <strong>Tax</strong>
legislation. In <strong>in</strong>stances where a product is sourced from outside <strong>the</strong> Ne<strong>the</strong>rlands, <strong>the</strong>
<strong>Packag<strong>in</strong>g</strong> <strong>Tax</strong> is due if <strong>the</strong> dest<strong>in</strong>ation of <strong>the</strong> product is with<strong>in</strong> <strong>the</strong> Ne<strong>the</strong>rlands. But how about
when <strong>the</strong> products come from outside <strong>the</strong> Ne<strong>the</strong>rlands, but are <strong>in</strong>voiced by a Dutch company?
Companies will also be obligated to determ<strong>in</strong>e how much <strong>Packag<strong>in</strong>g</strong> <strong>Tax</strong> is due, tak<strong>in</strong>g <strong>in</strong>to
account <strong>the</strong> supplier 3 , <strong>the</strong> weight of <strong>the</strong> packag<strong>in</strong>g and <strong>the</strong> dest<strong>in</strong>ation of <strong>the</strong> products. For
example, take a company trad<strong>in</strong>g <strong>in</strong> televisions. A television is shipped <strong>in</strong>side a box. The box
conta<strong>in</strong>s several smaller boxes and/or plastic bags conta<strong>in</strong><strong>in</strong>g accessories. How should <strong>the</strong>
company track and record <strong>the</strong> exact weight of <strong>the</strong> packag<strong>in</strong>g? And what if <strong>the</strong> packag<strong>in</strong>g is
replaced dur<strong>in</strong>g transport or storage?
It is also <strong>in</strong>terest<strong>in</strong>g to exam<strong>in</strong>e <strong>the</strong> position of logistical service providers and packag<strong>in</strong>g
companies. If <strong>the</strong>y are <strong>the</strong> ones packag<strong>in</strong>g <strong>the</strong> product, <strong>the</strong>n who pays <strong>the</strong> <strong>Packag<strong>in</strong>g</strong> <strong>Tax</strong>? And
what if a foreign company delivers goods to a Dutch consumer, e.g., sales via <strong>the</strong> Internet.
Most probably, <strong>the</strong> foreign company, if not exempted, will have to pay <strong>the</strong> <strong>Packag<strong>in</strong>g</strong> <strong>Tax</strong>. How
will <strong>the</strong> Dutch authorities review whe<strong>the</strong>r <strong>the</strong> foreign company complies with <strong>the</strong>
adm<strong>in</strong>istrative obligations?
Potential <strong>in</strong>fr<strong>in</strong>gement of EC law
Tak<strong>in</strong>g <strong>in</strong>to consideration <strong>the</strong> aforementioned issues and o<strong>the</strong>r possible (practical) problems,
Dutch companies may be persuaded to switch from foreign to domestic suppliers. The reason
be<strong>in</strong>g that this ensures that <strong>the</strong> supplier will already have handled much of <strong>the</strong> adm<strong>in</strong>istrative
burden and <strong>the</strong> f<strong>in</strong>ancial obligations. From this po<strong>in</strong>t of view, <strong>the</strong> <strong>Packag<strong>in</strong>g</strong> <strong>Tax</strong> could result <strong>in</strong>
a restriction of free trade with<strong>in</strong> <strong>the</strong> EU.
Because of <strong>the</strong>se and o<strong>the</strong>r concerns, <strong>the</strong> Dutch Council of State has concluded that <strong>the</strong>
<strong>Packag<strong>in</strong>g</strong> <strong>Tax</strong> may <strong>in</strong> fact be a violation of EC law. If an <strong>in</strong>fr<strong>in</strong>gement of EC law is confirmed by
a court 4 , such <strong>in</strong>fr<strong>in</strong>gement could result <strong>in</strong> a situation where <strong>the</strong> paid <strong>Packag<strong>in</strong>g</strong> <strong>Tax</strong> will have
to be refunded to companies and <strong>the</strong> legislation amended. In so far as <strong>the</strong> presumed
<strong>in</strong>fr<strong>in</strong>gement is confirmed, companies cannot automatically make a claim for remission. This
can only be done when an adm<strong>in</strong>istrative objection has been filed <strong>in</strong> a timely manner <strong>in</strong>
advance.
Conclusions
It is important that companies prepare for <strong>the</strong> <strong>Packag<strong>in</strong>g</strong> <strong>Tax</strong> that will be implemented on
January 1, 2008. We advise companies to review at least <strong>the</strong> follow<strong>in</strong>g aspects:
• Will <strong>the</strong> company be subject to taxation?
• How can <strong>the</strong> amount of <strong>Packag<strong>in</strong>g</strong> <strong>Tax</strong> due be determ<strong>in</strong>ed?
• Can <strong>the</strong> <strong>Packag<strong>in</strong>g</strong> <strong>Tax</strong> be passed on to Dutch customers?
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