Technology Industries of Finland (Teknologiateollisuus ry)

…1 (3) Teknologiateollisuus ry Eteläranta 10, PL 10, 00131 Helsinki Puhelin 09 192 31 www.teknologiateollisuus.fi Y-tunnus: 0215289-2 Technology Industries of Finland – Comments on the Proposal for a new Regulation on Packaging and Packaging Waste 24 April 2023 Technology Industries of Finland (TIF) supports the objectives of the proposed new Regulation on Packaging and Packaging Waste (henceforth PPWR) as an effective tool in the transition towards a circular economy. Aside from learning new ways of consuming less and more sustainably, it is commendable that attention is also paid on packaging to avoid unnecessary use of resources. However, this should be done with a life cycle thinking approach. In consideration of the objectives of the PPWR, TIF wants to highlight that the aim of a packaging is to protect the product itself.

…of the objectives of the PPWR, TIF wants to highlight that the aim of a packaging is to protect the product itself. With respect to the sustainable use of resources, reduction of waste, user safety, reduction of emissions, and other detrimental environmental impacts, it is essential that the packaging design and packaging materials chosen appropriately ensure the integrity of the product it is used for. In consideration of the above, TIF offers the following comments on the proposal adopted by the European Commission on 30 November 2022: Ensure Fully Harmonised Requirements at EU Level TIF welcomes that the European Commission has chosen to recast the Packaging and Packaging Waste Directive as a Regulation. The establishment of EU-level harmonised requirements is vital for the development of a circular economy and the functioning of the internal market.

…harmonised requirements is vital for the development of a circular economy and the functioning of the internal market. A Regulation will secure that the obligations concerning packaging and packaging waste are implemented at the same time and in the same way across all EU Member States. It also reduces the costs for companies caused by divergent requirements. TIF emphasises that it is essential that no further individual national measures on packaging and packaging waste are implemented in any EU Member States beyond those instated by the PPWR. Recognise the Complementarity of Reuse and Recycling TIF wishes to highlight that reuse and recycling should be treated as complementary solutions in the quest to establish a circular economy and reduce the environmental impacts of packaging.

…complementary solutions in the quest to establish a circular economy and reduce the environmental impacts of packaging. This would also be in alignment with the objectives of the Waste Hierarchy whose principles note that (Article 4) “the options that deliver the best overall environmental outcome” should be chosen and that “this may require specific waste streams departing from the hierarchy where this is justified by life-cycle thinking on the overall impacts of the generation and management of such waste.” Ref. Ares(2023)2873570 - 24/04/2023 Teknologiateollisuus ry 2 (3) It would be environmentally and economically beneficial if the PPWR granted economic operators the option to choose the most suitable type of packaging. The waste hierarchy should not be applied rigidly but as a guideline.

…to choose the most suitable type of packaging. The waste hierarchy should not be applied rigidly but as a guideline. Many of TIF’s industries produce machinery, devices, or components, which are unique, resource intensive, of great economic value, and occasionally very large in size. These devices may contain delicate technology and, therefore, require very specialised and unique packaging in order to remain in mint condition during transport. Such packaging is uniquely designed to protect the product or single use by nature. It is crucial that the PPWR grants the possibility for an exemption to obligations concerning reuse of transport packaging when they are impossible to fulfil.

…for an exemption to obligations concerning reuse of transport packaging when they are impossible to fulfil. Such exemptions should not solely be based on the size of the economic operator, but also on the packaging material used annually, the number of products requiring packaging, the amount of packaging used relative to the weight of the products, or the specific needs of unique packaging. TIF recommends that reuse requirements should be calculated at plant or corporate level, rather than product level. This provides companies with the necessary flexibility to reach the rate envisaged by the Commission. The association further supports the requirements to design all packaging to be recyclable. This will be important in increasing recycling rates. Support Realistic Recycled Content Targets TIF supports the targets on recycled content of packaging concerning plastics.

Realistic Recycled Content Targets TIF supports the targets on recycled content of packaging concerning plastics. However, the association recommends the evaluation of the total impact of similar requirements in other product legislation (e.g., the Ecodesign for Sustainable Product Regulation (ESPR)) to ensure that there will be adequate recycling infrastructure and availability of recycled materials. TIF recommends that the recycled content target should not be calculated based on the individual packaging unit. Measuring the target as an average of all plastic packaging placed on the market by an economic operator would give manufacturers the flexibility to allocate recycled content according to the available supply and give them a realistic chance of achieving the target.

…allocate recycled content according to the available supply and give them a realistic chance of achieving the target. TIF suggests increasing the amount of recycled plastic available on the market by considering chemically recycled plastics in addition to mechanically recycled plastic. Grant Sufficient Transition Time & Exemptions Where Needed The recycling and reuse requirements in the proposed PPWR are set at an ambitious level. TIF recommends granting sufficient transition time to allow the industry to meet the new standards on recycling and reuse, including with view to transporting products between company sites, between sites of linked companies, and to national customers. The implementation deadline for the reuse targets of transport packaging is very difficult to fulfil and will require exemptions.

…deadline for the reuse targets of transport packaging is very difficult to fulfil and will require exemptions. To secure the environmental benefits that the PPWR is aiming for, exemptions should be provided based on an overall impact assessment. In packaging, there are no “one-size- Teknologiateollisuus ry 3 (3) fits-all” solutions and companies should be free to choose the packaging type which serves their purposes best from an environmental and economic perspective. Avoid Unnecessary Administrative Burdens TIF questions the necessity of a Declaration of Conformity for packaging. In the association’s point of view, this requirement does not necessarily add any environmental value but will require companies to dedicate significant resources to administration tasks.

…add any environmental value but will require companies to dedicate significant resources to administration tasks. Due to the relatively short lifespan of packaging, the ten-year storage time for the technical documentation of packaging material is not practical. Technology Industries of Finland supports any other comments to the PPWR offered by Orgalim, the association of Europe’s technology industries. Inquiries: Leena Virkki (Advisor, Sustainable Development) Tel. +358 50 467 7888 / [email protected] Henrique Laitenberger (Head of EU Affairs) Tel. +358 40 353 1326 / [email protected] EU Transparency Register ID: 39705603497-38 --- Technology Industries of Finland (TIF) represents Finnish technology industries and counts over 1,800 member companies, ranging from SMEs and start-ups to world leading MNEs.

…technology industries and counts over 1,800 member companies, ranging from SMEs and start-ups to world leading MNEs. The technology industry is comprised of five subsectors: electronics and the electrotechnical industry, mechanical engineering, the metals industry, consulting engineering, and information technology. Technology industry is the most important export industry of Finland, with operations constituting over 50 % of all Finnish exports and accounting for 70 % of all private investments.

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…1 (8) 3 April 2023 Technology Industries of Finland Eteläranta 10, P.O.Box 10, FI-00131 Helsinki Telephone +358 9 192 31 www.techind.fi Business ID: 0215289-2 Technology Industries of Finland’s submission to the public consultation: VAT in the Digital Age directive proposal (ViDA) The European Commission (EC) has requested comments regarding the VAT in the Digital Age (ViDA) directive proposal and package. According to the EC the purpose of the proposal is to modernise VAT reporting obligations and facilitate e-invoicing, update the VAT rules for the platform economy and move to having a single VAT registration in the EU. In the directive proposal, three areas have been highlighted:

…and move to having a single VAT registration in the EU. In the directive proposal, three areas have been highlighted: 1. Digital reporting requirements, including e-invoicing. Uncoordinated growth in tax reporting obligations creates substantial new compliance burdens for businesses operating in different Member States and increases the risk of fragmentation, hindering the operation of the single market. The current rules do also not allow for the mandatory use of e-invoicing. 2. VAT treatment of the platform economy 3. Single VAT registration in the EU. The 2021 introduced OSS (one-stop-shop) allows businesses to avoid multiple VAT registrations in the EU for cross-border transactions. However, specific types of cross-border transactions still fall outside of its remit.

EU for cross-border transactions. However, specific types of cross-border transactions still fall outside of its remit. Improvements to the IOSS (import one-stop shop) are also needed to further strengthen VAT compliance in relation to imported goods. Technology Industries of Finland (TIF) warmly welcomes the opportunity to comment the ViDA initiative. 1 Summary of TIF’s recommendations TIF supports the ViDA package’s aims. Tax reporting and registration should be as easy and administrative cost efficient as possible, as these factors impact how well functioning the EU is as a single market and as a business environment for companies.  TIF strongly supports the development of VAT reporting by utilizing e-invoicing and that in e-invoicing, a member country must always accept an e-invoice, if it fulfills the EU e-invoice standard, even if the country has its own different model in use.

…accept an e-invoice, if it fulfills the EU e-invoice standard, even if the country has its own different model in use. This makes it easier for companies and quickly aligns the system. E-invoicing enables a more efficient transition towards digital reporting and Real-Time Economy on a wider scale.  The overall schedule given in the directive proposal is 2028. However, TIF suggests the use of voluntary means to support and incentivize e-invoicing before the mandatory entry into force, so that the transition is as easy as possible for companies.  In order for the transition to electronic, transaction-specific VAT reporting to be successful in 2028, it is important that a binding agreement is reached on the legislation during 2023.

…reporting to be successful in 2028, it is important that a binding agreement is reached on the legislation during 2023. Once the legislation is final and binding, there needs to be a transition period for changes to software and ERP system updates, business process alterations and testing for both business and tax authorities. Thus, TIF suggests that there will be a minimum transition period of 12-18 months before the first steps come into force, calculated from the approval date of the ViDA directive. Ref. Ares(2023)2442515 - 04/04/2023 2 (8) Technology Industries of Finland Eteläranta 10, P.O.Box 10, FI-00131 Helsinki Telephone +358 9 192 31 www.techind.fi Business ID: 0215289-2  The two-day timeline is in practice impossible to be met especially concerning purchase invoices.

ID: 0215289-2  The two-day timeline is in practice impossible to be met especially concerning purchase invoices. This requirement will lead to a situation where companies would report purchase invoices to tax authorities before internal invoice review process has taken place and many corrective transactions would take place.  Sanctions for small delays in reporting should be kept to a minimum during a transition period and tax audits focus only on whether the reporting infrastructure exists and functions correctly.  It is unclear whether the two-day timeline would be calculated from the same date both for the seller and buyer. This should be clarified.  Summary invoicing should be accepted, and the concept clarified.  It is important that the proposal has sought to set clear definitions for using and storing data and maintain data privacy.

…important that the proposal has sought to set clear definitions for using and storing data and maintain data privacy.  It should be possible to choose the OSS system in some Member States and VAT registration in other Member States, when necessary. If this approach is not accepted, this will dilute the main idea of the reform.  The OSS does not have the possibility to include input VAT deductions. The long-term goal must be, that OSS would include the deductions process.  The Single VAT Registration package is important and TIF highly supports it. The single VAT registration is an effective mean to simplify VAT compliance and to reduce administrative burden. The long-term goal should be that the OSS system would be eligible also for e.g. movements of retail inventory across EU countries for storage and onward sale of storage.

…be eligible also for e.g. movements of retail inventory across EU countries for storage and onward sale of storage. 2 The ViDA package improves the business environment in the EU Tax reporting and registration should be as easy and administrative cost efficient as possible, as these factors impact how well functioning the EU is as a single market and as a business environment for companies. In recent years, the amount of duplicate tax reporting has been increasing heavily. Companies fulfilling their tax obligations have to spend a lot of time and money to meet the different reporting obligations in each country. Fulfilling tax obligations should be easy and simple so that companies can focus on their own business and governments can collect their tax revenue correctly and efficiently.

…that companies can focus on their own business and governments can collect their tax revenue correctly and efficiently. A majority of EU Member States have already introduced or are planning to introduce their own digital reporting requirements in an attempt to increase VAT collection and combating VAT fraud. Complying with the different requirements set by several EU members states means increasing investments for businesses operating in many EU countries. Member States should critically evaluate the benefits of implementing complex digital reporting requirements which differ significantly from each other and the costs landed to businesses trying to comply with these requirements.

…which differ significantly from each other and the costs landed to businesses trying to comply with these requirements. 3 (8) Technology Industries of Finland Eteläranta 10, P.O.Box 10, FI-00131 Helsinki Telephone +358 9 192 31 www.techind.fi Business ID: 0215289-2 Although the VAT deficit in Finland is small, it is important to carry out the reforms together with the EU countries in a uniform manner. By making the changes as harmonized as possible, and without national deviations, companies have the opportunity to benefit from the changes more widely. Unnecessary national deviations should be avoided. According to Article 263 of the draft directive, member states are responsible for providing companies with the necessary electronic tools for reporting transaction-specific data.

…are responsible for providing companies with the necessary electronic tools for reporting transaction-specific data. Compatibility with other countries must also be taken into account in the technical implementation, so that the software tools purchased by companies and the automation of reporting work together as seamlessly as possible in all member countries. The need for manual work in reporting should be minimized. 3 We support modernization of VAT reporting based on e-invoicing TIF strongly supports the development of VAT reporting by utilizing e-invoicing and that in e- invoicing, a member country must always accept an e-invoice, if it fulfills the EU e-invoice standard, even if the country has its own different model in use. This makes it easier for companies and quickly aligns the system.

…if the country has its own different model in use. This makes it easier for companies and quickly aligns the system. Nowadays, the member countries have had to request approval if they want to make e-invoicing mandatory. This has limited the use of e-invoicing. The obligation to accept an EU standard e- invoice will cause a huge leap in the use of e-invoicing. In Finland, e-invoicing has already spread widely. Up to 80-90% of the total volume of B2B invoices are e-invoices. This is due to the fact that the public sector has required e-invoicing and large companies have adopted it, also pushing smaller companies in their subcontracting chain to become e-invoicing users. However, mandatory legislation is necessary in order to obtain clear, uniform rules and a binding timetable for the transition throughout the EU.

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