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EU: Environment-related tax measures are proposed (COVID-19)

EU: Environment-related tax measures are proposed

Officials from the European Union (EU) in July 2020 agreed on a recovery package to address certain consequences of the coronavirus (COVID-19) pandemic from an environmental position and that includes related tax measures.


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Among the provisions:

  • Tax would be imposed on non-recyclable plastic in the EU as of 1 January 2021. The measure would be intended to encourage the reuse of plastic. EU Member States would be required to collect the tax, with revenue to be remitted to the European Union. The tax would be calculated on the basis of the weight of non-recyclable plastic packaging waste, at an expected rate of €0.80 per kilogram.

  • There are plans to impose a levy on carbon dioxide (CO2) at the EU level, beginning 2023. This levy would be a “border adjustment.” Currently, it is uncertain whether it would be a tax. The EU would allow for the taxation of products that are imported from countries without a climate policy. Proposed legislation is expected at the end of 2021.

  • The EU has had an emission trading system for CO2 since 2015. Heavy industry and companies in the energy and EU aviation sectors are required to buy rights for each ton of CO2 emitted. The emission trading system may be extended to maritime shipping, and the “free rights” for the aviation industry may be phased out.

Read an August 2020 report prepared by the KPMG member firm in the Netherlands

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