The most important information about EUDR

What is EUDR?

EUDR (EU Deforestation Regulation) is an abbreviation used for Regulation (EU) 2023/1115 of the European Parliament and of the Council, which establishes EU rules on selected goods and products whose production may be associated with deforestation or forest degradation, as well as human rights violations, labour violations, and corruption, among others.

The Regulation aims to ensure that products falling within its scope are only placed on or exported from the European Union market if they meet the three basic conditions set out in Article 3 of the EUDR:

1. do not cause deforestation,
2. have been manufactured in accordance with the relevant regulations of the country of production, and
3. are covered by a due diligence declaration.

This means that the trader should have data that allows to determine the origin of the product, assess the risk of its non-compliance with the EUDR and, where appropriate, submit a due diligence declaration in the EU information system.

Basic conditions for product compliance with the EUDR

The starting point for understanding the EUDR is Article 3 of the Regulation, which sets out three conditions for authorising a product to be placed on the market.

1. The first condition concerns the product's link to deforestation.

• A product meets the requirement of being 'deforestation-free' within the meaning of Article 2(13) EUDR if the relevant goods used to manufacture it were produced on land where no deforestation occurred after 31 December 2020.

 

2. The second condition relates to the legality of production.

• Compliance with the relevant regulations of the country of production includes those regulations that are relevant to the legal status of the given production area and the manufacturing process itself.
• In practice, these may include, among others, provisions regarding:
• land use rights,
• environmental protection,
• forest management,
• third party rights,
• workers' rights,
• human rights protected under international law,
• the principle of free, prior and informed consent of indigenous peoples,
• tax regulations,
• anti-corruption,
• trade and customs (if related to the product).

 

3. The third condition is of a documentary and procedural nature.

• A due diligence declaration must be submitted for a product covered by the EUDR unless in a specific case, the regulation provides for a specific simplified mechanismThe declaration is not merely a formal declaration – its submission means that the entity has conducted due diligence and takes responsibility for determining that the risk of the product not complying with the EUDR is non-existent or negligible.

All three conditions must be met together.

What goods are covered by the EUDR?

The EUDR does not apply to all goods in circulation. The regulation uses two concepts: "relevant goods" and "relevant products," meaning, in practice, the goods and products at risk of being subject to EUDR documentation.

These goods are made up of seven groups of raw materials:

1. cattle,
2. cocoa,
3. coffee,
4. oil palm,
5. soy,
6. rubber, and

EUDR products include products from the above-mentioned 7 product groups (containing these goods), were fed with them, or were manufactured using them. In practice, the scope of the EUDR must be verified by analyzing the specific product and its CN/HS code. To familiarize yourself with the product catalog and to roughly determine potential obligations, we recommend using the form available here: EUDR Form – BTTP

For example, the regulation covers not only raw cocoa, coffee and wood, but also many derived products such as chocolate products, cattle hides, tires, wooden furniture and other specified wood products.

Not every product containing traces of a given raw material automatically falls within the scope of the EUDR. Annex I is decisive. If a product does not fall within the list of relevant products, the mere indirect use of a raw material covered by the EUDR may not be sufficient to bring the entire product under the scope of the obligations. This is particularly important for complex products, such as cars, electronics, or machinery, whose parts/components may consist of products that are individually covered by the EUDR, but are not listed in the EUDR as a whole.

Who is covered by the EUDR? Business roles in the supply chain

The EUDR distinguishes the roles of supply chain participants. This is crucial because the company that first introduces a product to the EU market may have different responsibilities, a manufacturer using a product covered by a prior declaration, and a distributor or reseller may have different responsibilities.

1. "Subject” is generally a natural or legal person who, in the course of commercial activity, places EUDR products on the market or exports them.
2. "Commercial entity” is a person in the supply chain other than an entity or a further stage of the supply chain who, in the course of a commercial activity, makes EUDR products available on the market.
3. "Entity further down the supply chain” is a person who places on the market or exports products manufactured using EUDR products, all of which are already covered by either a due diligence declaration or a simplified declaration.

The Regulation also defines "placing on the market" as the first making available of a relevant good or product on the EU market. "Making available on the market" covers any supply of a relevant product for distribution, consumption or use on the EU market in the course of a commercial activity, whether in return for payment or free of charge.

The most extensive obligations usually apply to the entity that first places a product on the EU market. or exports it. They must collect the required data, assess the risks, and submit a due diligence declaration. Please note that products manufactured entirely within the EU are also are subject to the EUDR procedure before the first introduction to the market. Therefore, no imports do not mean no obligations.

Any subsequent supply chain participant who purchases a product directly from such an entity should obtain a due diligence declaration reference number or a simplified declaration identifier. Further supply chain participants should, above all, ensure product traceability, meaning they know who received it from and to whom they transferred it.

Product-related information must be retained for at least five years. Non-SME businesses and traders may also have additional obligations, particularly registration in an information system and verification of prior due diligence when a risk of non-compliance arises.

What is due diligence?

Due diligence is a procedure that an entity should carry out before placing a product covered by the EUDR on the EU market or before exporting it from the EU, the purpose of which is to:

1. checking whether the product meets the conditions of Article 3 of the EUDR, i.e. whether it does not cause deforestation,
2. complies with the law of the country of production, and
3. may be covered by a due diligence declaration.

This procedure consists of three stages.

1. First, the entrepreneur collects information about the product, its quantity, country of production, suppliers, recipients and place of origin of the goods.

• In many cases, this means obtaining geolocation data of the plots of land on which the goods in question were produced.

2. The trader then assesses the risk that the product may be non-compliant with the EUDR. This takes into account factors such as the country of production, the risk of deforestation or forest degradation, the credibility of documents, the complexity of the supply chain, the possibility of mixing products from different origins, and information about potential violations of the law.

• If the assessment shows that the risk of non-compliance is greater than negligible, the entrepreneur should mitigate it.
• This may mean requesting additional documents from the supplier, clarifications, an audit, independent verification or changing the terms of cooperation.
• A product may only be placed on the market or exported from the EU if the risk of non-compliance is absent or insignificant.

 

3. The final step is to submit a due diligence declaration in the information system.

• Such a declaration confirms that the entity has carried out the required procedure and takes responsibility for the product's compliance with the EUDR.

Due Diligence Declaration

A due diligence declaration formally confirms that a product covered by the EUDR has been verified in accordance with the requirements of the regulation. It is submitted by the entity placing the product on or exporting it from the EU market after collecting the required information, assessing the risks, and mitigating them where necessary.

The declaration is submitted in the EU's TRACES information system. Only after submission can the product be placed on the market or exported, provided it meets the remaining EUDR requirements. Submitting the declaration has significant legal significance, as it assumes responsibility for the product's compliance with the regulation.

As a rule, if an entity does not submit a declaration, it cannot place the product on the EU market or export it.

From when do the new obligations apply?

From December 30, 2026, the new obligations will apply to large and medium-sized enterprises. On June 30, 2027, the regulation will apply to all other trading participants.

From these dates, traders will not be able to sell products covered by the regulation unless they can demonstrate that they meet the requirements of the EUDR.

What are the penalties for violating EUDR regulations?

The EUDR imposes very high penalties for non-compliance. Possible consequences include:

• fine related to environmental damage and product value - do 4% last year's turnover throughout the EU with the possibility of increasing the penalty in the event of recidivism;
• confiscation of products affected by the infringement;
• confiscation of transaction proceeds regarding non-compliant products, regardless of the amount;
• exclusion from public procurement and public financing for a period of up to 12 months, including tenders, subsidies and concessions;
• temporary ban introducing, making available on the market or exporting products covered by EUDR.

Simplified due diligence and country breakdown by risk level

EUDR provides for the possibility of applying simplified due diligence for products originating from countries or parts thereof considered low-risk countriesThe simplification primarily means that the trader does not have to carry out a full risk assessment or apply risk reduction measures if there is no information indicating a possible non-compliance of the product.

However, this does not automatically exempt them from their obligations. Traders should still gather basic information about the product and ensure there is no risk of circumvention, particularly by mixing products of different or uncertain origin. They should also retain documents proving they had grounds for applying the simplification.

The EUDR's country classification system is relevant here. The European Commission divides countries or parts thereof into three categories:

1. low risk,
2. standard risk, and
3. high risk.

The classification influences the scope of entrepreneurs’ obligations and the intensity of inspections carried out by the authorities.

Products from low-risk countries may benefit from a simplified procedure under certain conditions. Products from standard-risk countries require standard due diligence. Products from high-risk countries, on the other hand, require greater caution, a higher likelihood of inspection, and the need for particularly thorough documentation of EUDR compliance.

According to the current classification of the European Commission, low-risk countries include:

1. European Union countries,
2. Norway,
3. Switzerland,
4. Ukraine,
5. Japan,
6. China,
7. United States.

Standard risk countries include:

1. Brazil,
2. Argentina,
3. Mexico,
4. Nigeria,
5. Ivory Coast,
6. Peru,
7. Indonesia,
8. Malaysia,

High-risk countries currently include:

1. Belarus,
2. North Korea,
3. Myanmar/Burma,

How to prepare for EUDR implementation in your company?

The first step is to create a list of products the company imports, exports, produces, sells, or uses in its operations. It's then worth assigning CN/HS codes to them and checking whether they are included in Annex I of the EUDR. Only after this step can the company's role in the supply chain and the resulting responsibilities be assessed.

A good tool for initial self-diagnosis is a form that helps organize information about products and their use in business. You can use a special form prepared by our experts – available at the following link: EUDR Form – BTTP.