Sweden Proposes Taxation on Chemicals in Clothing and Footwear

The Swedish Government has appointed an Inquiry Commission to analyze and submit a proposal on the design of a new taxation scheme for harmful chemicals in clothing and footwear products. The proposed act is still at the report stage and no draft legislation has yet been published.

On 1 April 2020, the Commission published a report laying down the main characteristics of the new taxation scheme foreseen by the Government. The taxation aims to reduce the spread and risks of exposure to hazardous substances that are known to be harmful to the environment and human health. At first glance, the tax would only target substances that fulfill, or are deemed able to fulfill, criteria for substances of very high concern under the REACH Regulation. This includes carcinogenic and mutagenic substances, as well as substances that are known to be toxic for reproduction (CMR substances). However, the following hazardous substances would also fall in the scope of the proposal:

• substances with sensitizing properties
• substances with characteristics rendering them persistent, liable to bioaccumulate, and toxic
• substances that are very persistent and very liable to bioaccumulate (PBT/vPvB substances), and
• endocrine disrupting substances

The Inquiry Commission has proposed to phase out antimicrobial substances based on the grounds that the use of biocides may accelerate the incidence and spread of antibiotic resistance. In addition, the Commission mentions that the products will be classified using the Common Customs Tariff’s subdivisions into combined nomenclature (CN) codes.

At this stage, the proposed tax rate is SEK 40 per kilogram for all clothing and footwear placed on the Swedish market, with the possibility of tax deductions of up to 95% for products that do not contain specific hazardous substances and biocides that are commonly found in clothing and footwear.

Under the proposal, an additional tax of SEK 19 per kilogram may be imposed on products that are completely or partially made of soft polyvinyl chloride, polyurethane or rubber, with an additional SEK 19 per kilogram for all-weather products. Tax deductions of 100% will apply to products that do not contain these chemicals.

Manufacturers of clothing and footwear, as well as importers of these products from another EU-countries, will be liable for this tax. For sales made outside the EU, the Inquiry has proposed that parties liable to pay customs duty would also be liable to pay the tax on chemicals in clothing and footwear.

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