The guarantee-return system for non-reusable primary packaging comes into effect on November 30, 2023

In Romania, the guarantee-return system (GRS) is set to become operational as per legal provisions starting from November 30, 2023. From this date, consumers will pay a guarantee fee of 0.50 RON when purchasing a bottled beverage. After emptying the container, consumers can return it to designated points organized by retailers to receive the initially paid guarantee value.

By Georgiana Iancu, Partner, Leader of Indirect Taxes Practice, EY Romania; Daniela Neagoe, Senior Manager, Indirect Taxes – International Trade, EY Romania; and Adriana Nedelescu, Senior Manager, Indirect Taxes – International Trade, EY Romania

According to accepted definitions at the European and international levels, the GRS for non-reusable primary packaging aims to encourage recycling and efficient management of packaging waste by both the population and companies. It promotes responsible behavior towards the environment, aiming to reduce negative environmental impact.

The system primarily applies to non-reusable primary packaging used to protect individual products. It is applicable to non-reusable primary packaging made of glass, plastic, or metal, with volumes ranging from 0.1 liters to 3 liters, including packaging for beer, alcoholic beverages, cider, other fermented beverages, juices, nectars, soft drinks, mineral water, and any other kind of bottled water, wines, and spirits. These must be labeled with a specific mark.

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Legislatively, manufacturers and distributors of packaged products are required to participate in a collection and recycling system for non-reusable primary packaging. This system sets quantitative recycling objectives.

It is detailed in Government Decision no. 1074/2021 regarding the establishment of the GRS for non-reusable primary packaging (published in Official Gazette 955/06.10.2021). This decision lays down the necessary rules for implementing the GRS for non-reusable primary packaging for products manufactured domestically, imported, or acquired within the European Union.

A draft order has recently been published on the Ministry of Environment’s website to amend Government Emergency Ordinance no. 196/2005 regarding the Environmental Fund, starting January 1, 2024. This amendment introduces a contribution for economic operators introducing non-reusable primary packaging subject to the GRS on the market.

For each unit of non-reusable packaging for which the minimum annual return objectives have not been met, the contribution is 0.5 lei for metal packaging and 1 lei for glass and/or plastic packaging.

The contributions mentioned above will be paid annually for the difference between the quantities of non-reusable primary packaging corresponding to the minimum annual return objectives (65% for the year 2024) and the actual quantities of non-reusable packaging returned.

There are at least eight aspects that companies should consider when establishing the internal procedures necessary for GRS implementation:

1. The flow of the guarantee process and packaging subject to GRS.
2. Managing losses/destruction of GRS packaging.
3. Labelling of products subject to GRS in accordance with new requirements (e.g., pictogram and EAN code).
4. Accounting records related to guarantees, administration fees, and management fees.
5. Tax treatment of the guarantee, its highlighting on invoices in various situations (e.g., complimentary products).
6. Identifying products subject to GRS, which can be challenging, especially for composite packaging.
7. Preparing waste collection points for GRS packaging.
8. Compliance with waste regulations.

Given the multiple implications of this new legislative package in terms of tax, accounting, logistics, environment, etc., companies need to thoroughly analyze the impact and implications of these provisions on both current and future business activities to adequately prepare for the implementation date of November 30, 2023.

Regarding obligations and responsibilities, companies involved in the supply chain are required to take measures to collect and recycle non-reusable primary packaging produced or used by them. They also need to provide recycling information to consumers, organize selective collection systems, or collaborate with authorities and third parties for recycling.

The GRS involves the establishment of collection and recycling centers for non-reusable primary packaging at various locations across the country, allowing consumers to return packaging after use for proper recycling.

On the other hand, consumers also have a role to play and are encouraged to actively participate in the selective collection of packaging and bring them to designated recycling centers. Their involvement contributes to waste reduction and increased recycling rates.

By implementing the GRS for non-reusable primary packaging, the environmental impact of waste is reduced, and circular economy principles are promoted by reintroducing recycled materials into the production process. Ultimately, this entails responsible waste management and environmental protection, requiring collaboration between authorities, industry, and consumers to ensure the effectiveness of this system.

Continuing with the aforementioned Government Decision:

• Manufacturers and traders introducing the aforementioned packaged products to the national market are obliged to register within the GRS.
• The value of the guarantee has been set at 0.50 RON for each package, paid by the end consumer at the time of purchasing a product in GRS packaging. This amount will be fully refunded to the end consumer upon returning the GRS packaging to a return point.
• The return point for GRS packaging is established within the retailer’s sales structure or in its immediate vicinity, not exceeding a distance of 150 meters from the sales structure. It should operate with at least the same operating hours as the retailer.
• Retailers with sales structures smaller than 200 sqm that do not establish their own return points can fulfill their obligations by partnering with other retailers with sales structures smaller than 200 sqm or through partnerships with local authorities/intercommunity development associations.
• GRS packaging can be returned at any designated return point in Romania, regardless of the place where the product was purchased, without the need for presenting a fiscal receipt for the guarantee refund.
• Non-compliant packaging stocks (e.g., not marked with the GRS symbol) can be sold until December 31, 2024, after which their sale is prohibited within national territory.
• GRS does not apply to exported products, items sold in duty-free shops, and those sold in international transport.
• Traders exclusively selling through online platforms, as well as those in the HORECA sector, are not obligated to establish return points for GRS packaging.

The Decision also includes significant penalties, up to 50,000 RON, for all involved parties (producers, traders, GRS administrators) for failure to comply with obligations related to non-reusable primary packaging management.