Why I can't [or won't] ship to Germany in 2019. A Guide to the New German Packaging Law
I've been selling online for over 10 years now on multiple Etsy platforms, Amazon, and now our website, (which you are on right now). In those years I've received an order from Germany a total of 22 times. That is an average of just over 2 orders PER YEAR to this country. Out of 44,000+ sales, if just 22 have come from Germany, it seems that may not be my target market.
The last couple weeks my attention was drawn to a concerning Facebook post about parcels that did not get delivered to their destination in Germany. I filed this away in my memory banks but a few days ago, order number 22 arrived with an address in Germany. I googled, crowd-sourced, and searched for info about the new German Packaging Act, but mostly found people saying "I won't ship to Germany anymore" - "It's not worth the hassle" - "It's not worth the money".
I wanted to see for myself how much it would cost and what I found wasn't pretty...
What is the New German Law about?
On January 1st, the Packaging Act (German: VerpackG) replaces the Packaging Ordinance that had already been in effect since 1991. Both laws specify the product recycling responsibility for packaging materials. The idea behind is that packaging sellers must ensure in advance that the packaging they put into circulation is correctly disposed of, whether used for product protection, marketing purposes or shipment packaging. In summary: Manufacturers need to pay a yearly recycling fee depending on the packaging amounts they sell to the German end-consumer market.
What is changing and why is a new Packaging Law needed?
Until now, you already had to get your packaging materials licensed by a so-called “system partner”. A system partner is a company to which you pay the licensing fee for your materials. But due to the absence of state surveillance and control, there have been many manufacturers that have not complied to the law and neglected their product responsibilities in the past. And those who fulfilled them and have complied with the law have helped paying for the others’ recycling duties. The legislator considered this freeloader behavior as no longer tolerable and created the Foundation Central Agency Packaging Register (Central Agency) with the aim to:
- Increase transparency
- Increase surveillance and control over the compliance with product responsibility regulations
Since 1/1/19, every company will be obliged to register at the Central Agency. Every registered company will receive a registration number.
Who is affected by the new regulation?
Anyone who sells product to the German economy/customer/end user.
In the FAQ there is a "Are there special rules regarding small quantities of packaging" - and the answer is, "there is no minimum quantity with regard to system participation requirement"
From the FAQ section of the verpapckung website:
A quote from this website:
“The country’s pending VerpackG legislation will affect all manufacturers, importers, distributors and online retailers placing goods for sale on the German market,” said Michelle Carvell, COO of Lorax Compliance. “Packaging waste reduction will be even more on the country’s radar following the publication of these surprising UBA figures, with Germany keen to show it is taking action to shrink its environmental footprint.”
Many have mused that this is only applicable to large pallet large scale businesses. From my research it seems it applies to any business, including online retailers who send any amount of packaging into the German economy. This screenshot is from a quote I got for paying licensing fees to one of the main system partners for just 1kg (approx 2lbs) of cardboard packaging per year (I send things in small new cardboard boxes).
Verpackung ohne Marken-Logo - is packaging without your logo (unbranded brown boxes)
Papier/Pappe/Karton = paper/cardboard/paperboard
11,67Euro = $13.14US
*The star led to a phrase in fine print below that when translated to English read "price per month for 24 months"
What exactly are the Central Agency and LUCID?
The agency acts as federal authority. It has been entrusted with sovereign tasks which are specified in §26 of the Packaging Act.
The Central Agency is responsible for the registration of manufacturers as well as the reception and verification of data reports from manufacturers and systems. To sum it up: it is responsible for monitoring compliance and system participation by the manufacturers. At the same time, the Central Agency informs all those with legal obligations of these obligations and ensure that that they can fulfill them with as little administrative burden as possible. For this purpose, the Central Agency has set up the packaging register “LUCID”, which name stands for transparency.
LUCID is a public register and makes it possible for everyone to see which manufacturer is registered for which trademarks/brands. With the registration, however, the manufacturer confirms that he has correctly fulfilled his product responsibility. If a manufacturer has not registered correctly, the packaging materials with these brands will be subject to a distribution ban, meaning that they may not be marketed at any trade level in Germany.
So be careful: Since the register is open and accessible by anyone, it is easy for the authorities and your competitors to check if you comply with the law.
What are the Consequences of Non-Compliance with the New German Packaging Law?
Your products are not allowed to be offered for sale if the registration at the central agency and the licensing of the packaging material has not taken place:
- Your existing products will be banned from the German market by law, meaning that they are no longer allowed to be sold – neither by you, nor by any other distributor.
- In the event of non-registration or distribution of goods for which the manufacturer has not properly registered the brands it markets, a fine of up to €100,000 per case may be imposed.
- Not participating in the system may be punished with a fine of up to €200,000. It is conceivable that competitors will enforce the distribution ban by civil law.
It doesn’t matter where your company is based – if you want to sell to the German market, you need to go through registration and licensing!
How can you register?
To avoid getting banned from the market or facing tremendous fees, you should register your company. You can simply register your brands on the Lucid Website. If you have no brand, adding your company name is sufficient.
During the registration I used my EIN number in the "tax number" field and my seller's permit number in the "National Identification number" field.
But don't stop there: At the end of the application I was given these options. The "Take-Back obligations" with reference to "participating in a system" is a huge flag here. What does this mean? Read on.
Before shipping to Germany, you need to license your packaging materials using a system partner. A list of permitted system partners are listed on the VerpackG website. When licensing to your system partner, you need to sign with your registration number provided by the Central Agency. After the submission at your system partner, you need to immediately report your data to your LUCID account. The problem is, cost. I checked out several of the system partners and they were quoting anywhere from $55USD to $100+USD PER YEAR to license packaging products, even if I only inserted that I was sending 1kg of cardboard per year.
- The Packaging Act became effective on January 1st 2019
- Every company planning to ship to Germany must register at the Central Agency via the LUCID website. Every registered company will receive a registration number
- The Central Agency is responsible for monitoring compliance and system participation by the manufacturers
- If you don’t register and/or don’t carry out system participation for your packaging materials, your products can be banned from the German market. Non-registration will be punished with a fine with up to €100,000, not participating in the system with a fine up to €200,000
- Before shipping anything to Germany, register on lucid.verpackungsregister.org AND register with a system partner.
Please PLEASE drop me a comment if you have a suggestion that could help me. Perhaps I don't understand this fully. Is there a loophole I have missed? I cannot afford to spend $55-$100 per year paying license fees to a German recycling company just so I can ship maybe 1-2 orders to that country annually.