Today, the Packaging and Packaging Waste Regulation enters into force with new measures to further tackle the environmental challenges caused by excessive packaging. It will significantly cut greenhouse gas emissions, water use and environmental costs in the packaging industry.

In parallel, the regulation will create opportunities for recycling and sustainability sectors. It is an important step towards a more competitive, sustainable and circular economy for the EU.

The new measures aim to develop a single market for waste, secondary and reusable materials; promote recycling; and reduce dependency on primary resources. They include promoting reuse and refill as alternatives to single-use packaging and improving consumer information. Packaging will be more sustainable and enable consumers to reuse and sort their packaging waste more effectively, with solutions customised to the specific needs of Member States and businesses. The regulation will thus enhance resource efficiency and boost the circular use of materials.

By offering new business opportunities, the regulation will generate jobs and drive innovation in packaging solutions. It will also increase efficiency in the recycling sector. Additionally, restrictions on certain hazardous substances will protect consumer health and the environment.

The Commission will now focus on the implementation of the new regulation.

On Wednesday, Parliament’s plenary approved the changes to the rules that member states indicated in November they wished to make to the VAT Directive. MEPs approved the rules with 589 votes in favour, 42 against and 10 abstentions.

These changes will require that by 2030 online platforms must pay VAT for services provided through them in most of the cases where the individual service providers do not charge VAT. This will put an end to a distortion of the market because similar services provided in the traditional economy are already subject to VAT. This distortion has been most significant in the short-term accommodation rental sector and the road passenger transport sector. Member states will have the possibility of exempting SMEs from this rule, an idea which Parliament had also pushed.

The update will also fully digitalise VAT reporting obligations for cross-border transactions by 2030 with businesses issuing e-invoices for cross-border business-to-business transactions and automatically reporting the data to their tax administration. With this, tax authorities should be in a better position to tackle VAT fraud.

To simplify the administrative burden for businesses, the rules beef-up online VAT one-stop-shops so that even more businesses with cross-border activity will be able to meet their VAT obligations through a single online portal and in one language.

Background

This update to the VAT rules has been over two years in the making. On 8 December 2022, the Commission presented the ‘VAT in the digital age’ package (ViDA package) which consisted of three proposals. One of these was the update to the VAT directive of 2006.

The Commission has calculated that Member States will recoup up to €11 billion in lost VAT

revenues every year for the next 10 years. Businesses will save €4.1 billion a year over the next 10 years in compliance costs, and €8.7 billion in registration and administrative costs over a ten year period.