51 (146) 2021

Green for Glasgow, Green for Good

Green taxes

By Monika Marta Dziedzic, tax advisor, legal advisor, partner and leader of International Tax Law and Green Taxation teams at MDDP Michalik Dłuska Dziedzic & Partners
Header 1

The EU wants to achieve climate neutrality by 2050. At the 2021 Green Taxation Event with Paolo Gentiloni, EU Commissioner for Economic and Financial Affairs, the EU indicated that it wants tax changes to support climate protection. What are green taxes? These form a whole system of public statutory obligations that burden activities which have a negative impact on the environment, and provide incentives to promote sustainable solutions. Together they form a group of tools  from different areas of tax law and other public obligations aimed at reaching climate and environmental goals. What areas and spheres of economic and civic life are they intended to address?

Plastics and waste management

The first group of green taxes may include obligations related to waste management and reducing the environmental impact of plastics. In Poland, legislative work is underway to transpose the EU Directive 2019/904 (SUP - Single Use Plastics) into Polish law. The proposed regulations will impose an additional fee charged by the seller on single-use plastic meal packaging and beverage cups made of plastic, a ban on the marketing of selected types of single-use products, as well as additional documentation obligations for businesses. The Directive also foresees the introduction of a system fee and an education fee on certain products made of plastics.

Work is also underway on the Extended Producer Responsibility (EPR) system. There are plans to introduce a packaging charge for selling products with packaging – not only plastic – intended for households, and to impose an obligation on businesses to ensure a certain proportion of recycled material in PET bottles. This system also involves linking the JPK_VAT (SAF-T) database to the Waste Data Base.

An issue related to plastics taxation is the so-called plastic tax, a levy paid by each EU member state for every tonne of plastic not recycled in a year. In practice, this is an additional contribution from the member states to the EU budget and is intended to be a direct burden on the budget.

The new regulations may encourage greater use of reusable packaging, including returnable packaging.


Emissions tax covers greenhouse gas emissions (CO2 as well as other gases such as nitrous oxide, methane and fluorinated greenhouse gases) from the production of goods and services.

At EU level, the EU Emissions Trading Scheme (EU ETS) operates as one form of emission reduction. It is based on placing limits on the total emissions of various gases. The system applies to the energy sector, manufacturing industry and flights between countries that are part of the system. The Fit for 55 package proposes extending the ETS to maritime and road transport and construction. Emission limits within the EU ETS have been successively reduced, which consequently leads businesses to look for alternative low-carbon technologies.

The effect of the ETS is the declining competitiveness of European entities, resulting from increased costs in relation to suppliers from outside the EU, as well as the phenomenon of carbon leakage, caused by businesses moving to countries which do not have restrictive climate regulations.

The Fit for 55 package is intended to respond to these problems by introducing the so-called Carbon Border Adjustment Mechanism (CBAM), which will cover imports of iron, steel, cement, aluminium, fertilisers and electricity, imported into the EU from countries with less-stringent climate policies. As a result, those bringing these goods into the EU will have to buy certificates, the value of which will depend on the price of EU CO2 certificates. Their price may be reduced by the amount of carbon tax paid in the country of origin. As a result, goods from outside the EU will be subject to the same climate change levy as those produced within the EU.


Electricity production accounts for the largest share of greenhouse gas emissions in the EU. Minimum tax rates for electricity are set out in the EU Directive 2003/96/EC of 2003.

The proposal to amend the Directive – proposed by the European Commission as part of the Fit for 55 package – assumes that certain exemptions for energy products contained in the Directive will be eliminated. This primarily concerns exemptions for energy used in the refining of raw materials, or preferential rates for gas used in agriculture and domestic heating. From 2023, the rules for calculating excise duty, which is to be differentiated depending on the energy efficiency of the fuel, are also to be changed. Changes in the taxation of traditional energy products are to encourage the use of renewable energy sources (RES). At present, EU countries apply solutions aimed at promoting RES, including above all the possibility to exempt energy generated from excise duty.

Water retention restrictions

Developing land on which vegetation is growing, by concreting it over thus harms the land’s water retention capacity, is to be charged with additional fees (a so-called rain tax).

Sustainable investments

Climate action is not just about reducing the damage caused by current activities. Above all, sustainable investments are required to meet climate targets.

Tax breaks and subsidies that provide economic incentives for sustainable investments are an important element in stimulating sustainable development. These include the above-mentioned exemptions for renewable energy sources, the popular thermo-modernisation allowance or the possibility of applying R&D allowances to eco-innovations.

At the EU level, however, it was decided to regulate the principles of taxonomy. Taxonomy is a tool that makes it possible to assess to what extent a given activity supports climate and environmental goals. The taxonomy is aimed primarily at directing investments towards sustainable activities, while limiting the phenomenon of greenwashing – marketing activities aimed at presenting a good or service as ecological, despite the lack of objective reasons for such classification. The taxonomy is not in itself a tax as such, but it cannot be ruled out that in future it will be supplemented with such an aspect – in the form of making new tax preferences dependent on fulfilling the criteria it contains.

Due to the importance of green taxes for businesses and consumers, it is necessary to follow new regulations in this respect and the resulting opportunities and fiscal challenges in the climate area.

More in Green for Glasgow, Green for Good:

EU poised to issue sweeping new due diligence Directive

By Randy Mott JD, director for EAME, CHWMEG Inc.

Earlier this year, the European Parliament approved a sweeping new Directive requiring due diligence on supply chains for every company operating in the EU with more than 250 employees1. The proposal is expected to be finalised this month and may be modified somewhat due to strong business opposition.

Helping the region’s cities develop sustainably

Warsaw is the first city in Poland to have joined the European Bank for Reconstruction and Development’s Green Cities programme. As such, Poland’s capital and largest city is currently finalising a tailor-made strategic action plan, which will help it in its journey towards becoming climate neutral by 2050.

Tackling the climate emergency: SEGRO’s responsible strategy for a lower carbon future

By Waldemar Witczak, regional director, SEGRO

The real-estate sector is a significant contributor to carbon emissions through the construction and operation of buildings. So responsible development and decarbonisation could be a real game-changer to help address global climate change. In line with this idea, one of the largest players in the European warehousing industry, SEGRO, has included long-term sustainability targets in the latest review of its business strategy. The company also set itself the goal to become net-zero carbon by 2030. In addition to achieving and maintaining the lowest CO2 footprint possible, its Responsible SEGRO framework also outlines how the company will invest in local communities and nurture talent to ensure it can be a force for societal and environmental good.

The BPCC Sustainability Interest Group

By Jan J. Kluk OBE, KCPR, FRSA

Because of the publicity around the COP26 conference hosted by the UK government, in Glasgow, the use of the word ‘sustainability’ has increased in frequency. But ‘Sustainability’ must surely be much more than a buzzword. More than just ‘greenwashing’.