Why the new EU packaging law is a paperwork trap

The EU's new Packaging and Packaging Waste Regulation (PPWR), which took full effect last week, was designed to address a real problem: packaging accounts for 40% of all plastics used in the bloc and is responsible for half of Europe's marine litter. 

Brussels wants to curb virgin material use and put the industry on a path to climate neutrality — banning certain single-use plastics, restricting hazardous substances in food-contact wrapping, and promoting sustainable alternatives. While the environmental goals have been praised, PPWR poses a tricky compliance barrier for startups and small businesses.

Beyond fees, PPWR requires manufacturers to keep certain heavy metals and PFAS out of packaging — restricted mainly for health reasons — and to make packaging recyclable by 2030. Compliance is proven through a due diligence process resulting in a Declaration of Conformity (DoC), documentation showing a product's packaging meets the regulation's design and material rules

The hard part starts with reporting volume 

Kostantinos Kouzelis, CEO of Coolset — a compliance platform for sustainability obligations — admits PPWR is fueling his company's growth. 

"In a sense, we're helping companies deal with a complexity that shouldn't really exist," Kouzelis says. "The EU should take a hard look at itself and ask why an entire secondary market has emerged just to help companies comply with the complexity of its own regulation." 

Intricacies start with volume. Under PPWR, a company has to report on every product it places on the EU market. Kouzelis uses a boxed tea product as an illustration: the tea bag itself, its label, the inner wrapper, a separator insert, the outer box, and the plastic film around the case. That's six or seven separate packaging components, each requiring its own reporting line.

“Multiply that across a hundred-plus suppliers, and you can end up tracking 20,000 to 40,000 packaging layers. It's not a one-person job — it can occupy several people full-time. That volume is what's most daunting,” he explains. 

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Kostantinos Kouzelis

CEO of Coolset

Coolset helps companies measure and report their environmental impact.

And then comes the EPR

The other part of the picture is funding recycling — governed by the Extended Producer Responsibility (EPR), which shifts the cost of end-of-life disposal and recycling of goods in the market from consumers to producers.

EPR applies to whichever company first makes packaging available in its own EU country, or first makes it available to end users elsewhere in the EU — typically the brand or seller, not the manufacturer or retailer.

The catch for small e-commerce sellers is that this single-party rule resets at every border. A company selling directly to consumers in all 27 EU countries is, itself, the liable party in each of those 27 national markets — meaning 27 separate registrations, fee schedules, and declarations, even though only one entity is responsible in any given country. For a small business, catching up with all of that is a heavy, time-consuming burden in its own right, layered on top of the due diligence work described above.

EPR itself is administered country by country — in the Netherlands, for instance, via the national scheme Verpact — meaning even basic details like fee-exemption thresholds for small businesses vary from one EU market to the next.

A data problem, not just a packaging one

Purvi Sankhla is a business strategy consultant who advises startups on compliance, and sees PPWR less as a packaging rule than as a data-management problem in disguise.

"It feels more like a data problem rather than a packaging problem," Sankhla says. Her point: PPWR sets thresholds meant to spare very small operators from full reporting obligations, but even businesses below those thresholds still have to track their packaging data continuously, in case — or the moment — they cross the line. "No one is telling us, like, 'oh, you don't have to do anything, you're small,'" she says. "You have to keep track, because you don't know when you'll hit it."

That ambiguity extends beyond thresholds to definitions. Sankhla describes fielding questions from founders who genuinely don't know whether a product counts as packaging at all. Her go-to example: a pen with a paper wrapper. Is the wrapper packaging, part of the product, or something else entirely? "It's created a lot of confusion," she says. "You have to look at your own case" — there's no simple checklist for every new material founders try.  Keeping track of data is, in her view, the way to navigate this uncertainty. 

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Purvi Sankhla

Business strategy consultant

She advises small businesses and startups on compliance procedures.

The intricacies of PPWR practicalities 

Jasper Arnou is the co-founder of Finify, a company that automates VAT filing for companies selling physical goods across Europe. The startup began life as a spreadsheet Arnou built to manage his own e-commerce company's VAT filings before he realized other businesses needed the same tool. He hears the same complaints from clients about PPWR, particularly around the reporting and administrative burden created by fragmented national EPR systems.

“Our customers often tell me how they don’t mind contributing to the cost of recycling, but are concerned about the complexity of the system around it,” he says. 

Practical mechanics make it worse. EPR reporting typically requires companies to report packaging quantities by weight and category for each relevant national market. For e-commerce businesses, that can be surprisingly difficult to calculate. The same product might be shipped on its own in a small carton, or as part of a larger order in a bigger box.

“One of my customers sells in all 27 EU member states, but three of them make up 90% of their profit. In many of the remaining markets, even a small number of sales can still create separate packaging EPR obligations. The requirements differ by country, but can include registration, reporting and EPR fees,” he highlights. 

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Jasper Arnou

Co-founder of Finify

After years of operating his e-commerce platform, he launched Finify to help other companies manage VAT filings.

How can PPWR be fixed? 

Arnou and  Kouzelis call for harmonizing reporting. "An EPR reporting [system] is fine," Kouzelis says, "but please make it one central place, and then divide it out to the countries. It shouldn't be on the entrepreneur, on the business, to distribute that out to 27 markets." 

He'd also like to see reporting frequency relaxed to an annual cadence for packaging already on the market, and small businesses exempted outright — "they're not the ones placing huge volumes of packaging on the market," he says.

Arnou points to the EU's VAT One Stop Shop as a model: instead of filing separately in each country, a seller reports all their EU VAT — calculated per customer location — through a single portal. “It would be great if EPR moved towards the same model,” he says. “It would save companies a lot of time and hassle while filing their declarations.”

Sankhla agrees with harmonizaition and adds one more argument for why it matters most for startups rather than small businesses generally — funding. Compliance costs that a larger company can absorb as a rounding error, she argues, can force an early-stage founder into an impossible position: going back to investors mid-round to ask for money specifically to cover new compliance overhead. "It doesn't make sense," she says. Applied without adjustment for company size, she warns, the regulation risks "undermining the whole sustainability and motivation" that leads founders to build sustainably in the first place.

Small merchants call for revisions 

PPWR's rollout isn't over — more requirements phase in through 2029. Small business owners from across the bloc launched a petition to ask the Commission to revise the regulation, asking it to simplify compliance. The call has over 70,000 signatories. Whether that revision arrives before more small businesses quietly stop shipping to their neighbors is, for now, an open question.