A&G Newsletter Q2 2022

I. EU to Harmonize Certification of Organic Farming

On March 31st, the new European Commission ‘Organic Action Plan’ was approved by the European Parliament for implementation. In this new legislation, the EU puts emphasis on the further development of the organic farming sector. The new plan builds on the achievements of the prior 2014-2020 action plan and reinforced the commitment of the European Union to achieve the Farm to Fork Strategy’s target of 25% organically farmed land by 2030.

Importantly, the new action plan also seeks to widen the certification of organic farming, looking to cover the entire value chain of organic productions. According to EU analysis, this would drastically improve the recognition and consumption of organic products, thus also encouraging the increase in organic farming. Specifically, the new action plan aims to enhance transparency and traceability in the organic production value chain, not only enhancing oversight, but also consumer trust.

Overall, the new Organic Action Plan rests on the successful achievements of the past organic strategies, which have successfully increased the area under organic production by 66% in the last 10 years and led to improved biodiversity in organically farmed land by close to 30%. Public consultation on the action plan saw the widespread recognition of the issues surrounding organic farming and the threats posed by lack of traceability and in non-harmonized certification, such as the competition of the EU organic production label with private label products.

Alber & Geiger’s expert team can help you make sense of the rules and overcome hurdles to your business.

II. EU to revise Cosmetics Product Regulation

As part of the European Union’s flagship chemical strategy for sustainability, the European Commission now opened the public consultation on the ‘Cosmetics Product Regulation’, aiming to revise the regulation and boost innovation for safe and sustainable chemicals and address the environmental and health concerns caused by harmful chemicals. The consultation seeks the public’s opinion on multiple topics, such as expanding the range of prohibited chemicals in cosmetics, updating labelling requirements on cosmetics and increasing risk assessment requirements.

The updates to the cosmetics product regulation have three aims overall, largest of which is to improve effectiveness, efficiency and coherence of safety assessments across EU legislation. Here, the European Commission is considering merging the current regulatory body, the Scientific Committee on Consumer Safety, with a centralized European agency, such as the European Chemicals Agency. This would improve efficiency, transparency and consistency of chemical safety.
Another regulatory improvement considered by the EC is concerned with the definitions of nanomaterials found in cosmetics, usually as a means of efficient substance carriers or skin penetration. Here, the aim is to update the definitions to be coherent across chemical sectors and update the transparency requirements on nanomaterials.

Further, improvements are aimed at the labelling requirements of the cosmetics sector. While the essence of the practice won’t change, and manufacturers will still be obliged to provide detailed ingredient lists, the European Commission is looking to increase consumer understanding and avoid overloading the product packages with information. Here, specifics on the direction the European Commission will go are likely to result from the public consultation.

Overall, as part of the chemical strategy for sustainability, the updates to the cosmetics product regulations are aimed at consumer protection and coherence among EU legislation. With the current consultation ending in June 2022, the earliest adoption of a draft legislation could be seen towards the very end of 2022, albeit delays being a possibility.

Our experienced team can help you maximize the impact of your position in the European decision-making process and represent your interests in ensuing legislative process.

III.EU to accelerate Solar energy adoption

The European Green Deal has been the centre of EU policymaking in recent years. Renewable energy deployment lays at the heart of the Green Deal and its acceleration will have large positive impact on achieving the goals set out by the leading EU policy. With the recent conclusion of the consultation period on the ‘EU solar energy strategy’, the European Commission has come closer to decreasing EU dependence on fossil fuels and lowering energy prices.

2020 has been the largest year for solar energy so far, supplying 5% of the European Union’s electricity. As part of the European Green deal and especially in light of the recent geopolitical developments, the EU has made several pledges to increase that number. The new EU solar energy strategy reflects these efforts, aiming to tackle the most common problems with solar adoptions such as tendering procedures, financial support, permitting and grid connections. Further, the plan aims to increase market availability of solar products by driving the prices down through support for competition in the sector, while maintaining high standards of production and sustainability requirements.

The public consultation has overall received good support for the accelerated strategy, heavily criticising European dependence on third country fossil fuels. Overall, the strategy came at the right time to further incentivize member states to coordinate an accelerated approach to the energy transition. This is further supported by widespread calls in the European Parliament of raising the renewable energy targets from 32% to 45%, with some MEPs even suggesting higher numbers. While specific policy options have not been set out yet, the widespread support will likely yield an early adoption of the strategy in the second quarter of 2022.

Our team has extensive experience in the technology and energy sectors and can offer advice and services to grow your company.

IV. EU to revamp VAT for the digital age

After 30 years, the Value Added Tax (VAT) system in the European Union is getting an update. The new proposal aims to bring the system into the digital age and reduce both fraud and burden on businesses and governments. Now in its public consultation stage, the ‘VAT in the digital age’ legislative proposal is indicated for European Commission adoption in the third quarter of 2022.

With an increasingly digital economy, the European Union has been in dire need of an update to the outdated VAT legislation, considering cross-border sales of goods and services across EU member states. Currently, national instruments are not sufficient in tackling cross border and e-commerce fraud, as indicated by a large discrepancy between expected VAT and collected VAT on a European level. The new VAT proposal aims to solve this issue by simplification and harmonization of current rules and their modernization to help businesses benefit from the potentials of the single market. The plan includes different objectives, such as making VAT compliance easier for EU businesses operating in the digital space, creating a harmonized framework to combat tax fraud and prevent market fragmentation and ensuring the fair treatment of regular and platform economies.

The European Commission is currently looking at different policy options, ranging from the introduction of digital invoicing and reporting obligations to a single VAT registration platform across all member states. With the current consultation in progress, it is likely that there will be changes made to the policy options in question. The public consultation has already received heavy criticism on the introduction of digital taxation from EU citizens, and we are yet to see how companies react to the proposed changes of VAT procedures.

Alber & Geiger can use its extensive experience and network in the European Union to represent your business interests and propose amendments to maintain the viability of your e-commerce projects.

V. EU to revise food packaging information

With the ‘Farm to Fork’ strategy, the European Commission has recently focused its effort on creating a more fair, healthy, and environmentally friendly food system. An important addition to that is a revision of the current food labelling practices such as standardized front-of-pack nutritional labelling, origin information and date markings.

The revision proposal stems from multiple studies conducted by the European Commission on consumer behaviour and expectation in regard to food packaging. Most importantly, the lack of harmonization on nutritional labelling, along with current abuse of nutritional and health claims on products can impact consumer health. Currently, there are no regulations on what kind of product is allowed to bear nutrient or health claims. The proposal aims to change that by restricting such practices on products that are excessively high on e.g., sugars or saturated fats.

Further, the new proposal aims to unify origin information practices. With growing demand on origin information, EU member states have enacted mandatory labelling nationally, and the proposal aims to unify these laws Union wide. The last issue the revision seeks to fix is the common misunderstanding of date markings. According to studies, misunderstanding of date markings cause up to 10% of EU wide food waste; a problem that the Farm to Fork strategy looks to mitigate.

It is expected that this reform will have great impact on achieving the objectives set out in the overarching Farm to Fork strategy. The new measures would help consumers make better choices, as well as level the playing field between food business operators, some of which use misleading tactics in order to promote a ‘healthier’ product. It is also expected that the bill will lead to more sustainable consumer consumption, driven by demand for more sustainable products and less waste.

Overall, the public consultation shows a positive response for the harmonization of food labelling and the other measures, with some concerns for the implementing costs on business sides by participating representative organizations. After the release of the official summary of the consultation, it is expected that this revision will likely come into effect in the last quarter of 2022.

Alber & Geiger can put its distinguished policy team at your disposal to help you further understand and influence the current and future state of food regulations.

VI. EU to revise Alcohol Tax

As part of the revision of the tax structures on alcohol and alcoholic beverages that came into effect in January of 2022, the EU is now looking to update excise duty rates on alcohol. The last changes made to excise duty rates were in 1992, and along with the European Union’s general push for tax harmonization on alcohol, the excise duties are now under review.

Current legislation on excise duties on alcohol specify the minimum rates of duty on different alcoholic products such as beer, wine, fermented beverages, intermediate products, and ethyl alcohols. While member states can set duties according to national preferences, they are required to be above the minimum EU level.

The revision of excise duties on alcohol products does not only stem from the harmonization efforts by the European Union. Both the ‘Europe’s Beating Cancer Plan’ and ‘United Nations Sustainable Development Goals’ specify the societal cost of alcohol and harmful consumption. The current review of the excise duties thus will seek to measure the impact of alcohol consumption against these economic and social costs and utilize taxation as a levelling instrument to combat harmful consumption.

Currently, the rates and structures of excise duty on alcohol and alcoholic beverages are under evaluation, supported by the open public consultation session till July 2022. While a previous proposal in 2006 did not get adopted, it is likely that the new proposal will pass in the Commission. As of now, planned adoption of the new excise duty structures are planned for mid 2023.

Our expert team can help protect the industry and utilize their experience to advocate on your behalf.