Germany’s Pfand system is one of the most effective deposit-return programs in the world, with strict regulations designed to promote recycling and sustainability. Shopify merchants selling beverages in Germany are legally required to charge refundable bottle deposits. Failure to comply can lead to fines of up to €100,000 per incident.
In this guide, I’ll break down exactly how the Pfand system works, what your obligations are as a merchant, and how you can easily set up and manage these fees on your Shopify store. This article will help you stay compliant and build trust with your customers.
What is Pfand and How Does It Work in Germany?
Pfand is Germany’s bottle deposit system, which operates under the administration of Deutsche Pfandsystem GmbH (DPG). Under this program, a small deposit is added to the price of eligible beverages. Distributors charge this deposit to merchants, who then pass the cost to consumers at the point of sale.
The program and its fees are outlined in the German Packaging Act (VerpackG). There are two types of fees:
1. One-way deposit, also known as Einwegpfand
€0.25 per container
These containers are not reused. They are recycled after being returned.
The following single-serve containers are considered a one-way deposit if they are between 0.1 and 3 litres:
- Water and soda
- Beer and mixed beer drinks
- Fruit juices and vegetable juices
- Smoothies and other non-alcoholic beverages
- Milk cartons, dairy beverages, and drinkable milk products
- Single-use wine bottles and spirits are generally excluded
If the container is not single-serve, e.g. reusable beer bottles, then it is not classified as an einwegpfand.
2. Reusable deposit, also known as Mehrwegpfand
€0.08 to €0.15 per container
These containers are designed for multiple uses. After being returned, they are cleaned and refilled, then put back into circulation.
Here are the deposit fees for mehrwegpfand containers:
- Reusable glass beer bottle (all sizes)…€0.08
- Reusable beer bottle with swing top…€0.15
- Reusable mineral water bottle (glass or PET)…€0.15
- Reusable bottles for juice or soft drinks…€0.15
Obligations of Merchants and First Distributors
If you’re a merchant sourcing drinks from a German distributor or manufacturer, then you are responsible for charging the correct Pfand fees and ensuing your process complies with the German Packaging Act.
However, if you are importing beverages into Germany or manufacturing drinks locally, then you are considered the ‘First Distributor’ and you have some additional legal obligations such as:
- Registering with the LUCID Packaging Register so they can track who is placing packaging on the market for the first time.
- Print DPG-Approved Labels which can be easily read by machines during returns and differentiate between Einwegpfand (one-way) and Mehrwegpfand (reusable) containers.
- Enter a System Participation Agreement with a dual system provider for waste collection, sorting, and recycling of the packaging.
- Report packaging volume to the Deutsche Pfandsystem GmbH (DPG).
It’s also worth nothing that under Germany’s Verpackungsgesetz (Packaging Act), merchants are legally required to provide a way for customers to return containers eligible for a deposit refund. This includes online stores.
Shopify store owners are legally required to provide a return mailing address and, in many cases, are expected to cover the cost of return shipping to ensure the process is accessible to customers. While most customers may still prefer returning their bottles at local vending machines or collection centers for convenience, it is often advisable for online stores to provide prepaid shipping labels for customers who wish to return bottles via mail.
Failure to Comply Can Result in Fines of Thousands of Euros
In February 2024, an online retailer in Germany failed to properly label imported beverages with the correct Pfand label and failed to charge the €0.25 deposit per item. The merchant was fined a 5-figure penalty by the environmental agency in their state.
German consumers are accustomed to seeing Pfand fees listed as separate line items and expect proper labeling on products. Failure to meet these expectations can lead to consumer complaints, which can lead to investigations by enforcement agencies.
Failure to comply with the deposit obligation is punishable with a fine of up to €100,000 per incident.
Fines of this size can be devastating for an online business. Merchants and distributors must prioritize their processes to ensure that fees are properly charged and that they are compliant.
How to Add Pfand Fees to Your Shopify Store
Merchants need a way to add fees to their Shopify store that are displayed as a separate line item, are clearly labelled, and are easily tracked for reporting and tax purposes.
Shopify doesn’t have great ways to add fees to your store natively:
- You could build a fee into calculated shipping rates, but this won’t adapt to the quantity which may lead to undercharging.
- You could create products for fees, and then instruct customers to select or add these manually – but this can lead to a clunky user experience. Customers could also avoid paying fees altogether.
- You could hire someone to create a custom solution for your Shopify store to add fees as separate line items, but this is very expensive and likely not worthwhile.
Using an app is the best way to add Bottle Deposit Fees
The best way to add Pfand fees to your store is to use an app. It makes adding and managing fees simple with a quick-and-easy setup that usually requires no coding experience. If you run into any issues, the developers will usually provide you with the support you need to get up and running.
I once worked with a store in Frankfurt that wanted to use a subscription app alongside a fees app to manage Pfand charges, however the two apps conflicted. Fortunately, I was able to loop in the app developers from Magical Product Fees to resolve the issue and ensure both apps worked seamlessly together. Conflicts like this are hard to predict, but this incident highlights the importance of having a reliable app and supportive team ready to help you overcome unexpected bumps in the road.
In Germany, displaying Pfand fees clearly as a separate line item is required as per the German Packaging Act (VerpackG). Apps are built to do this, so by using an app you’ll be compliant with this requirement.
Using an app will also provide you with better reporting methods to easily track your bottle deposit fees, so you can track how much has been charged over a period. Reporting fees is an important part of the process for tax purposes, so charging fees as separate products will give you a method of calculating total fees charged in any given period.
We’ve compared some of the top product fee apps for Shopify and found Magical Product Fees was the best app for charging Pfand fees on your Shopify store.
The app allows you to set up multiple fixed fees which can be excluded from taxes. Since they are product fees, it is easy to generate reports from your Shopify admin to track how much was charged.
Failing to properly charge Pfand fees can result in fines of up to €100,000 per incident. Using an app like Magical Product Fees ensures your store stays compliant.
Displaying Pfand Fees to Customers
Fees should be displayed on the product screen, cart, and checkout screens so the customer is aware of the fees at every stage of the transaction. This also ensures that customers won’t be surprised by additional charges at checkout.
Here is an example of how your fees should be displayed at checkout:
Should I Charge Tax on Pfand Fees in Germany?
Yes. According to the DPG, the deposit is subject to VAT so merchants should be charging tax on the fee.
When using an app like Magical Product Fees, you can easily make the fee taxable so you are charging the correct amount.
When customers return bottles and you provide a refund, you should refund only the flat deposit amount (e.g., €0.25) without VAT. This is because the deposit refund is not considered a taxable transaction.
Do I have to accept returns on my online store?
Yes, Pfand fees are refundable to customers when they return eligible empty containers. As a German merchant, you are legally required to provide a way for customers to return eligible containers and get their deposits refunded. For online stores, this means providing a mailing address for customers to return containers.
You are required to accept the return of containers that match the type and material of the products you sell. So if you sell energy drinks in aluminum cans, then you are required to accept any kind of eligible container made of aluminum.
Merchants are generally expected to cover the cost of return shipping for empty containers to ensure compliance with Germany’s Packaging Act. The best way to facilitate returns for an online store is to use an app like AfterShip Returns & Exchanges to generate prepaid shipping labels, which can then be provided upon request to customers who wish to return eligible Pfand containers.
Using an app like Magical Product Fees simplifies the process of tracking and refunding deposits when customers return bottles. Without an app, managing these returns and processing refunds can become significantly more challenging.
Conclusion
Germany’s sophisticated Pfand system has yielded some incredible results and now services as a global leader with one of the best beverage container recovery rates in the world. As a Shopify merchant, it’s crucial to ensure compliance with this system to avoid hefty fines and maintain trust with your customers.
For most stores, using an app is the best way for to charge fees on your online store or Shopify POS. It simplifies fee calculation, provides a way to track fees accurately, and makes handling returns seamless. This all provides a better shopping experience for your customers, too!
Don’t risk non-compliance. The fines are too great to justify a poor setup for charging fees. Equip your store with the right tools to charge Pfand fees by using an app like Magical Product Fees.
Further Reading
DPG – Overview of Beverages Subject to Deposit (Einwegpfand)
Beverage manufacturers and importers (First Distributors)
Zentrale Stelle Verpackungsregister
Magical Product Fees
The Magical Product Fees app is a fast and easy way to build, customize, and attach fees to products or entire orders.