Hungarian parliament introduces “Obligatory Donation” in retail commerce

On Monday, December 12, Deputy Prime Minister Zsolt Semjén has proposed an amendment to the legislation regulating retail commerce which the National Assembly later passed with majority.

According to the amended XLVI of 2008 and XLV of 2020 Acts, large retail chains with an annual net profit of over €270.9 million will now be legally obliged to donate to the state their food products that are approaching expiration, starting February 2022. These donations must go to the government-owned Food Saving Center (ÉMK).

The amendments will enter into force on February 1, 2022. Grocery retail chains that are subject to the new legislation will be obliged to hand over all foodstuffs that are within 48 hours of their best-by dates, with the exception of items with a shelf-life under 48 hours, e.g. fresh bakery products.

Moreover, these companies will also be obliged to create new food waste reduction plans, the first versions of which they will have to submit to the authorities by May 31, 2022. Companies who fail to submit these plans or whose food waste exceeds 2% will be penalized with fines.

The amended legislative framework will apply to large retail companies, including Aldi, Auchan, Lidl, Penny Market, Tesco and Spar. Smaller companies, for example CBA  (ones that are to a larger extent Hungarian-owned, as opposed to the large chains that are international) will not be affected with their annual profit usually remaining under the €270.9 million cut-off line.

The government’s argument for the introduction of the new legislation is that food waste is responsible for 8% of humanity’s greenhouse gas emissions, and that the new amendments are in line with the EU’s 2030 goal of reducing food waste by 50%. Furthermore, the new legislation lays down plans for the new Food Saving Center to coordinate with charity organizations.

Critics brought up a number of counter-arguments however. Stakeholders brought to attention the fact that in the past, large retail companies have not been in the habit of discarding large amounts of food, and that actually these retail chains have already been donating food closing its expiration to charity – Just not to a government-run one but rather, the non-profit Hungarian Food Bank Association.

The new “obligatory donation” and the food waste reduction plan obligation are not the only two new changes in the legal framework of retail commerce that apply to large retail companies. The amendment also raised the retail commerce tax ceiling for large retail chains from 2.5% to 2.7%.

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