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Refrigerant black market costs Spain €50m

SPAIN: A leading Spanish refrigerant supplier has claimed that Illegal refrigerant imports could have cost the Spanish government as much as €50m in lost taxes. 

According to Diego García, CEO of Spanish refrigerant supplier Kimikal, more than 4.6MtCO2e of HFCs were illegally imported during 2018 and 2019, making Spain the largest importer of illegal refrigerant gases in Europe.

García was speaking at a webinar, yesterday, organised by the Spanish refrigeration association, AEFYT, and the European HFC refrigerant manufacturers’ group, EFCTC.

The imposition of a tax on HFCs by the Spanish government in 2014 in combination with the F-gas phase down and subsequent price rises is said to have made Spain an attractive market for the illegal trade. 

“The fact is that, in Spain, since the entry into force of the fluorinated gases tax and the F-gas regulation, we have not noticed the positive impact of the reduction of imports required by this regulation through the use of quotas. Instead, we have seen the emergence of a suspicious mass supply of low-priced products from other distributors,” said Diego García.

Lack of control, low penalties, and differences in the level of fines between member states are claimed to have facilitated non-compliance and tax evasion by criminal organisations. “In Spain it is estimated that the tax agency has failed to collect around €50m, due to the evasion of the tax on fluorinated gases,” García claimed.

Investigations by the EFCTC  claim that the illegal trade could have represented up to 34MtCO2e in 2018 – around 33% of the legal market.

There are concerns that the size of the black market could increase with the new quota reduction this year, if steps are not taken to stop it. 

“The total HFC share will be reduced again in 2021 with the aim of facilitating the transition to low-GWP refrigerants, but this could cause the shortage of HFC gases and, consequently, the increase in the import and trade of illegal gases,” said Murli Sukhwani, Chemours general manager EMEA Fluorochemicals and president of EFCTCs data and investigation working group.

Sukhwani also claimed that the illegal trade had an economic impact on companies throughout the value chain, including small and medium-sized companies, which due to the black market of HFCs had already lost around 80% of their business.”

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