Which products may generate EWKF charges and be subject to reporting in DIVID?

With the entry into force of the German Single-Use Plastics Fund Act (Einwegkunststofffondsgesetz, EWKFondsG), many companies selling products on the German market have been faced with a new question: “Are our products subject to reporting in the DIVID system and, consequently, can they generate an obligation to pay contributions to the EWK fund?”

This is a highly relevant concern. Unfortunately, in practice, the answer is not always straightforward. Auditors conducting annual DIVID declaration audits very often encounter businesses that assume that because they sell plastic-packaged products to Germany, they automatically fall within the scope of the new obligations. Equally common, however, is the opposite assumption, namely that because a company produces food products, the issue does not concern it. So how does it actually work? As is often the case, the truth lies somewhere in between.

What exactly is the EWKF charge?

The German EWKF system was established to ensure that the costs associated with cleaning up waste generated by single-use products are not borne solely by municipalities and taxpayers. In line with the “polluter pays” principle, these costs are to be borne by producers of certain single-use products containing plastic.

In practice, businesses report data concerning products placed on the market through the DIVID platform operated by the governmental agency Umweltbundesamt (UBA). The amount payable to the EWK fund is then calculated on the basis of the quantities of products reported.

Therefore, when complying with obligations imposed under EWKFondsG, the first question should not be “How much will we have to pay?”, but rather: “Do our products fall within the scope of the regulation at all?”

Why is it worth determining in advance which products fall within the scope of DIVID?

Businesses selling products in Germany very often focus on the registration requirement itself, overlooking a far more important aspect – identifying the products covered by the regulation. Yet it is the correct determination of the scope of relevant products that ultimately affects the accuracy of reporting and the amount of the EWKF charge.

Incorrect classification can result both in underestimating reporting obligations and in unnecessarily increasing costs incurred by the business.

How does product classification affect the amount of the EWKF charge?

Unlike many reporting obligations, the correct classification of products in DIVID has a direct impact on the costs incurred by businesses selling products in Germany. The EWKF charge is calculated on the basis of the reported product categories and their weight. This means that every incorrect classification decision may affect the amount payable to the German regulator.

When classifying a product, attention should therefore be paid to factors such as:

• whether the product is ready for use or consumption,
• whether it requires additional preparation,
• whether it is consumed directly from the packaging,
• whether it is intended for “on-the-go” consumption.

Two real-life examples – similar packaging, different classifications

The challenges involved in correctly classifying products subject to reporting are best illustrated through practical examples. Many products are sold in very similar plastic packaging and yet are treated entirely differently for DIVID purposes. 

The differing classification of seemingly similar products arises because, under EWKFondsG, the decisive factor is not the packaging material itself, but rather how the product is used by the consumer and what it is intended for.

A grab-and-go sandwich vs packaged slices of ham

Let us begin with a textbook example of a product subject to reporting in the DIVID system. A ready-made sandwich purchased at a petrol station, railway station or convenience store is intended for immediate consumption. Consumers typically buy it to eat straight away, often away from home. This type of product is a classic example of “on-the-go” food that may generate litter in public spaces.

The situation is entirely different in the case of packaged slices of ham. Although the product is also sold in plastic packaging and is ready to eat, it is not usually consumed immediately after purchase. Most often, it is stored in a refrigerator and used as an ingredient in sandwiches or other meals prepared at home. 

As a result, the two products may be classified differently despite their apparently similar packaging.

A grab-and-go salad vs a potato salad intended for consumption at home

Another good example of a situation in which a business may be unsure whether it is required to submit data to DIVID involves products that appear very similar and are often sold in almost identical packaging. 

A ready-made grab-and-go salad sold in a small plastic container in a shop or at a petrol station is intended for immediate consumption. Consumers purchase it specifically to eat it straight away, often away from home or from the place of purchase, which means that placing such a product on the German market should be reported to the relevant authorities.

A large potato salad or vegetable salad sold in similar plastic packaging in a supermarket serves an entirely different purpose. It is usually taken home and forms part of a larger meal consumed at a later time. Therefore, despite very similar packaging – and a similar product category – the way consumers use the product is completely different.

This clearly demonstrates that when assessing obligations related to DIVID, it is not enough to consider either the type of packaging or the product itself. The following are equally important: 

• the context in which the product is used,
• the manner of consumption, 
• whether the product is intended for immediate consumption and whether it may potentially generate litter in public spaces.

Can multi-material products also be subject to reporting in the DIVID system?

Yes.

The question of what happens when packaging consists of different materials – such as paper and plastic – is one of the issues most frequently raised with statutory auditors examining DIVID declarations.

According to the definition set out in EWKFondsG, a product made partially of plastic may still be regarded as a product covered by the regulation. This means that the presence of paper, cardboard or other materials does not automatically exempt a business from the obligation to report products placed on the German market.

However, this is not an absolute rule – each case requires individual analysis in order to obtain certainty.

When is a DIVID declaration audit required?

If a business has placed more than 100 kg of products covered by the regulation on the market, the annual report submitted under EWKFondsG must be verified by an authorised auditor. In such cases, the DIVID system must receive not only the report itself, but also the audit report and the auditor’s confirmation.

It is worth remembering that staying below the 100 kg threshold does not mean that organisations can treat compliance less seriously. Entities that place DIVID-relevant products on the German market in quantities below this threshold may, in certain circumstances, still be requested by UBA to provide additional explanations or documentation.

What determines the amount of the German environmental charge?

The amount payable under the DIVID system is directly linked to the quantity of products reported.

The greater the weight of products classified within the relevant EWKF categories, the higher the charge may be. For this reason, the correct classification of products is important not only from a regulatory perspective, but also from a financial one.

Incorrect classification may lead either to an underestimation or to unnecessary overstatement of reported quantities.

What should businesses keep in mind with regard to EWKFondsG?

When selling products on the German market, businesses should first verify as early as possible whether their products fall within the scope of EWKFondsG. What matters is not only whether the product contains plastic – its function, intended use and the typical manner in which consumers use it are equally important.

In practice, most challenges arise precisely at the product-classification stage. This is where incorrect assumptions are most likely to occur, subsequently leading to inaccurate DIVID reporting and either overstated or understated contributions to the EWK fund.

It should also be remembered that obligations arising from EWKFondsG are not limited solely to submitting a report in DIVID. The foundation of compliance is the correct determination of whether products fall within the scope of the regulation, followed by the proper identification of their category and weight. It is therefore advisable to treat the assessment of EWKF obligations as part of a broader compliance process conducted in relation to activities on the German market alongside existing obligations under the VerpackG Act and registration in the LUCID system.

Taking all these factors into account, before concluding either that the issue does not apply to your business or, conversely, that all plastic-containing products must be reported, it is worth seeking expert support and carrying out a thorough review of products exported to Germany. In many cases, the actual scope of obligations proves to be entirely different from what an organisation initially assumed.