A branch office in the EU has long been treated, in many companies' internal compliance mapping, as functionally equivalent to "having an EU presence." Under Regulation (EU) 2025/40 on packaging and packaging waste (PPWR), that assumption no longer holds. The European Commission's own guidance document interpreting the Regulation states plainly that a branch — because it lacks separate legal personality — cannot qualify as an "importer" or "distributor" for PPWR purposes (European Commission, 2026). For a non-EU parent company that has relied on a branch to place packaged products on the EU market, this creates a binary choice: incorporate a subsidiary, or appoint an authorised representative. There is no third option, and a VAT registration or tax presence does not change the analysis.
This distinction is only beginning to register with corporate legal and international relations teams, most of whom built their EU market-entry structures around tax and operational convenience rather than packaging-specific regulatory personality requirements. This article sets out the legal basis for the rule, the case law behind it, a textual ambiguity in the Commission's own guidance worth flagging to counsel, and a practical framework for deciding between the two available paths.
The Legal Basis: Article 3(1)(17) and "Established in the Union"
PPWR Article 3(1), point (17), defines an "importer" as any natural or legal person established within the Union that places packaging from a third country on the market. The European Commission's Guidance document for Regulation (EU) 2025/40 (C(2026) 3702), published 5 June 2026, clarifies that this definition carries two cumulative conditions: establishment in the EU, and the act of placing on the market packaging or packaged products originating outside the EU (European Commission, 2026). Both conditions must be satisfied — meeting one without the other does not create importer status.
The Commission grounds its interpretation of "established" in the definition of importer under Regulation (EU) 2019/1020 on market surveillance, read in conjunction with the Commission's "Blue Guide" on the implementation of EU product rules. Being established, in this reading, means having a registered address in a Member State — not merely operating there — for a specific reason: to ensure jurisdiction for enforcement and market surveillance, and to guarantee that a legally responsible party exists within the Union for compliance, traceability and corrective action (European Commission, 2026).
That last point is the operative logic. The requirement is not administrative box-ticking; it exists so that a national authority has an entity it can actually hold accountable — sue, fine, compel to recall packaging — without having to reach outside the Union. A branch, structurally, cannot serve that function on its own.
Why a Branch Does Not Meet the Bar
A branch is, in the ordinary case, not a separate legal entity. It operates under the legal identity of its parent company, and it does not independently assume rights or obligations — contracts entered into by a branch are legally binding on the parent, not on the branch itself (European Commission, 2026). This is not a PPWR-specific quirk; it is a basic feature of corporate law that the Commission is simply applying to a new regulatory context.
The complication is that branches are commonly treated as a "permanent establishment" for tax purposes under both EU and national tax law, and under Article 5 of the OECD Model Tax Convention. It is tempting — and, before this guidance, a reasonably common practice — to treat tax-recognized presence as regulatory presence. The Commission closes that door explicitly: having tax obligations and tax registration does not confer separate legal personality and does not change a branch's status for regulatory compliance purposes (European Commission, 2026). Two different legal systems are asking two different questions. Tax law asks where economic activity occurs; product and waste regulation asks who can be held legally accountable. A branch can answer the first question without being able to answer the second.
The Case Law the Commission Relies On
The Commission's position is not asserted in isolation. It cites two Court of Justice of the European Union judgments — both, notably, decided in a VAT context rather than a packaging or product-compliance context — as confirming that a permanent establishment is not equivalent to incorporation:
- Berlin Chemie A. Menarini SRL v Administrația Fiscală, C-333/20, judgment of 7 April 2022, EU:C:2022:291.
- Adient, C-533/22, judgment of 13 June 2024, EU:C:2024:501.
A note worth raising with counsel: both cases originate in VAT law, addressing when a foreign company's presence in a Member State constitutes a "fixed establishment" for VAT purposes. The Commission applies this reasoning by analogy to PPWR's importer definition. The CJEU has not, as of this writing, issued a ruling interpreting "established" specifically under PPWR. The analogy is sound as a matter of legal reasoning — the underlying question (does a branch have independent legal existence?) is the same regardless of the regulatory area — but it is an analogy, not a direct precedent, and legal teams building formal opinions on this point should treat it accordingly.
The Practical Consequence: Two Paths, Not Three
Given the above, the Commission's guidance is direct: a non-EU manufacturer with only a branch in the EU must either incorporate a subsidiary in the EU, or appoint an authorised representative — where required by the Member State in which it is making packaging or packaged products available for the first time (European Commission, 2026). The same reasoning extends to whether a branch can qualify as a "distributor" under Article 3(1)(18): it cannot, for the same lack-of-legal-personality reason.
There is no fourth option built around the branch itself. A branch cannot be upgraded into compliance through additional registrations, additional documentation, or additional local staff. It either becomes a subsidiary (a new legal entity, incorporated under the law of a Member State, capable of owning assets and being sued independently) or it is bypassed entirely in favor of an appointed representative.
A Textual Ambiguity Worth Flagging
Here the Commission's own text repays close reading. In stating that a branch-only manufacturer must appoint "an authorised representative as defined in Article 3(1), point (19)," the guidance cites the definition used for the Manufacturer's Authorised Representative — the Article 17 conformity role — rather than Article 3(1), point (20), which defines the EPR Authorised Representative under Article 45 and Chapter VIII.
This matters because the two roles are not interchangeable. The Article 17 Manufacturer AR is appointed by the Manufacturer, must be established somewhere in the Union, and handles conformity documentation and cooperation with market-surveillance authorities. The Article 45 EPR AR is appointed by the Producer, must be established in the specific Member State where the relevant packaging flow occurs, and handles registration, reporting and financing of packaging-waste obligations. A company holding a valid Article 17 mandate has not thereby satisfied any Article 45 EPR-representation requirement, and vice versa.
Whether Section 4 of the guidance is using "authorised representative" loosely to describe the general concept, or specifically pointing to the conformity role in that particular sentence, is not fully resolved by the text. In practice, this means a branch-structured company should not treat "we appointed an authorised representative" as a self-evidently complete answer. The operative question is: representative of whom, for which obligation, established where? A structure that resolves the Manufacturer's conformity exposure does not automatically resolve the Producer's EPR exposure in the Member State where the packaging becomes waste — those are separate legal questions requiring separate mandates where both apply.
Decision Framework: Subsidiary or Authorised Representative
For legal and international relations teams evaluating which path fits a given market, the relevant variables are control, cost structure, tax exposure and time horizon rather than any inherent superiority of one option.
Incorporating an EU subsidiary gives the company a fully controlled legal entity: it can act as Manufacturer, Importer, Distributor and Producer in its own right, hold assets, sign contracts directly, and centralize decision-making without a third-party mandate. The trade-offs are the ones familiar from any market-entry decision — incorporation costs, ongoing corporate governance and filing obligations, and, importantly, a materially higher likelihood of creating a taxable presence in that Member State, which is a question for tax counsel to evaluate separately from the packaging-compliance analysis.
Appointing an authorised representative — whether under Article 17, Article 45, or both, depending on which obligations actually arise — avoids creating a new legal entity and is typically faster to put in place and easier to wind down if the company exits a market. It does not, however, transfer away every obligation: national implementation rules determine which duties remain personal to the Manufacturer or Producer even after a representative is appointed, and the Commission's guidance on Article 17 is explicit that certain core obligations — such as the duty to place only compliant packaging on the market — cannot be delegated through the mandate at all.
Neither path is a way to avoid EU regulatory exposure altogether. Both make the company answerable in the EU; they differ in whether that answerability runs through a fully owned entity or a contractually mandated one.
Practical Steps for Legal and International Relations Teams
Audit the EU footprint by legal form, not by market presence. A country-by-country list of "where we sell" is not the same as a list of "where we are established." Flag every Member State where the only local presence is a branch, representative office, or VAT registration without incorporation.
Do not rely on VAT or tax registration as evidence of PPWR establishment. The Commission has directly rejected this equivalence: arguing that VAT registration alone equals establishment for EPR purposes would conflict with the harmonised definition of importer, and Member States cannot impose additional requirements that undermine that harmonisation (European Commission, 2026). A registration that satisfies a tax authority will not, on its own, satisfy a packaging-waste enforcement authority.
Treat each Member State separately. There is no EU-wide authorised representative appointment, and a subsidiary incorporated in one Member State does not extend importer or distributor status to packaging placed on the market in another. Where a company operates branches in several Member States, each one needs its own analysis and, where a gap exists, its own remedy.
Distinguish the conformity question from the EPR question before appointing anyone. Confirm separately whether the company needs an Article 17 Manufacturer AR, an Article 45 EPR AR, or both, in each relevant Member State, and make sure the written mandate says so explicitly rather than using "authorised representative" as an undifferentiated label.
Revisit structures set up before PPWR's application date. PPWR has applied generally since 12 August 2026. Branch structures established years earlier for administrative or tax convenience were not built with this personality requirement in mind, and a structure that was entirely adequate under the previous Packaging and Packaging Waste Directive regime may now leave a genuine compliance gap that has not yet been tested by enforcement.
Frequently Asked Questions
Can a branch of a non-EU company ever qualify as an importer under PPWR? No. A branch lacks separate legal personality, and the Commission's guidance treats "established" as requiring incorporation, not merely a registered branch office (European Commission, 2026).
Does having a VAT registration in an EU Member State satisfy the establishment requirement? No. The Commission has explicitly stated that VAT registration alone does not equal establishment for PPWR purposes.
If we appoint an authorised representative for our branch, are we fully covered? Not necessarily. You need to confirm which role applies — the Article 17 Manufacturer's Authorised Representative or the Article 45 EPR Authorised Representative — since they cover different obligations and, in the case of the EPR AR, apply on a Member State-by-Member State basis.
Is the Berlin Chemie / Adient case law specific to PPWR? No. Both cases were decided in a VAT context. The Commission applies their reasoning on permanent establishment by analogy; there is not yet a PPWR-specific CJEU ruling on this exact point.
Is incorporating a subsidiary always the safer option? Not automatically. It resolves the legal-personality question but introduces its own tax, governance and cost considerations that should be assessed independently, in coordination with tax counsel.
Beyoğlu Professional's PPWR-EPR compliance services help legal and international relations teams map their actual EU establishment status — branch by branch, Member State by Member State — and determine whether a subsidiary, an authorised representative, or both, is the right structure. Check your EU scope to see where this distinction applies to your business.
References
European Commission. (2026). Guidance document for Regulation (EU) 2025/40 on packaging and packaging waste (C(2026) 3702 final). Retrieved from EUR-Lex.
European Parliament & Council of the European Union. (2025). Regulation (EU) 2025/40 of the European Parliament and of the Council of 19 December 2024 on packaging and packaging waste, amending Regulation (EU) 2019/1020 and Directive (EU) 2019/904, and repealing Directive 94/62/EC. Retrieved from EUR-Lex.
Court of Justice of the European Union. (2022). Berlin Chemie A. Menarini SRL v Administrația Fiscală (Case C-333/20), judgment of 7 April 2022, EU:C:2022:291.
Court of Justice of the European Union. (2024). Adient (Case C-533/22), judgment of 13 June 2024, EU:C:2024:501.
European Commission. (n.d.). The "Blue Guide" on the implementation of EU product rules 2022. Retrieved from EUR-Lex.
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