Regulation 2023/1115 is also known as the EU Deforestation Regulation (“EUDR”). The main objective of the EUDR is to reduce the impact of European companies on deforestation and forest degradation worldwide. The EUDR imposes wide-ranging obligations on companies that manufacture or trade in forest products. Failure to comply with these obligations is subject to severe penalties.
The EUDR was originally scheduled to enter into force on 30 December 2024. However, that date has been postponed by one year because many companies need additional time to prepare for its actual implementation. Also, the precise implementation of the rules was still unclear at the end of 2024. In November 2024, the Commission therefore published guidelines for the implementation of the EUDR. It is nevertheless important for companies affected by the EUDR now already to be well informed about their obligations under the EUDR, to enable them to adapt their procedures and systems in good time. In this blog, we address the main aspects of and obligations under the EUDR.
- What does the EUDR cover?
The EUDR prohibits the placing on the EU market of products associated with deforestation and forest degradation. Deforestation means the felling of trees or clearing of forests for agriculture or livestock farming. Forest degradation means that people convert primeval forests or wild forests into planted forests or agricultural land. As a result, the rules affect a large number of products, such as palm oil, cattle and cattle products, wood, cocoa, soy, coffee, coffee beans, and rubber. Products made from these raw materials are also banned, such as leather, chocolate, paper, cardboard, furniture and car tires. A complete overview of the products covered by the EUDR can be found in Annex I to the regulation.
The EUDR applies not only to producers and processors of these products, but also to companies that import, export or trade in products or raw materials covered by the EUDR. From 30 December 2025, however, the rules will apply only to larger companies. For micro and small enterprises, the rules will not take effect until 30 June 2026.
- Obligations for companies vary depending on their size
The main obligation for companies under the EUDR is that they must be able to demonstrate that products are free from deforestation and degradation. How companies must do so depends on whether they are classified as operators or as traders. Operators are natural persons or legal entities that place products on the market in the Union or export them (from the Union) for the first time. Traders are other parties in the supply chain that supply the relevant products within the Union for distribution, consumption or use on the Union market.
The EUDR also distinguishes between large companies on the one hand and small and medium-sized enterprises (“SME operators” and “SME traders”) on the other.
In principle, operators and large traders must set up a full due diligence system. SME traders are not required to do so: they may refer to the due diligence statements of their suppliers. SME operators are also exempt from this requirement if the products that they place on the market are manufactured from products that have already been subject to due diligence by another company. SME operators must, however, carry out due diligence on those parts of the product that have not yet been subject to due diligence.
- Setting up and implementing a due diligence system (operators and large traders)
The due diligence system (DDS) must enable operators and large traders to demonstrate that the origin of the products is legal and traceable. The DDS must consist of three steps. In the first step of the DDS, companies must collect information on the origin of the products. The following information must in any event be collected:
- a description of the raw material or product, including the trade name and type;
- the quantity of the relevant products, expressed in kilograms of net mass;
- the country of production;
- the geolocation of all the plots where the relevant raw materials were produced, including the production date or production period;
- the name, postal address and email address of the companies that supplied the product;
- the name, postal address and email address of the companies or persons to which the operator/large trader has supplied the relevant products;
- information demonstrating that the products are deforestation-free; and
- information demonstrating that the products have been produced in accordance with the legislation of the country of production, including evidence that the area concerned may be used for the production of the relevant raw material.
In the second step of the DDS, companies must carry out risk assessments based on the above information. These risk assessments must establish whether there is any risk of deforestation having occurred in the production of the relevant raw material. Among other things, it must be assessed whether forests are present in the country of production and whether deforestation or forest degradation occurs there in general. The reliability of the information provided by the suppliers (e.g., in terms of corruption or lack of law enforcement) must also be taken into account. EU findings on the risk of deforestation in certain areas, which are yet to be published in an EU system, must furthermore be considered. Other aspects to be taken into account can be found in Article 10 of the EUDR.
If the second step shows that there is a risk of the products originating in whole or in part from deforested land, measures must be taken in the third step of the DDS to ensure that this risk is negligible. This may be done, for instance, by requesting additional information from the suppliers. It may also be done by carrying out additional on-site checks.
Companies must evaluate their DDS system every year and improve it if necessary. Large operators and large traders must furthermore report every year on the implementation of the DDS. Those reports must be published on the internet, among other places.
- Due diligence statement (operators and large traders)
If the DDS shows that a product meets the due diligence requirements, the company must draw up a due diligence statement. That statement must be uploaded to the EU’s Trade Control and Expert System (“TRACES”). By submitting the due diligence statement, the company declares that the product meets all the EUDR requirements. The product may not be placed on the market until the due diligence statement has been submitted.
- Obligations for SME traders and SME operators
SME traders and SME operators that use only raw materials that have already been placed on the (EU) market are not required to set up a DDS. However, these companies must keep records of the suppliers from which they purchase the products or raw materials and to which they sell them. They must furthermore pass on the reference numbers of the due diligence statements of their suppliers. Sales to private individuals do not need to be recorded.
- Documentation and retention requirements
Operators and large traders must retain all the documents collected and drawn up in the context of the due diligence assessment for a period of at least five years. This includes the risk assessments, the measures taken to mitigate risks, and a register detailing how the DDS works and has been updated. A list of the documents to be retained can be found in this overview on the NVWA website.
SME traders must collect the name and address details of the operators or traders from which they have purchased the products and to which they have delivered them. They must also collect the reference numbers of the due diligence statements associated with the products. This information must also be retained for a period of at least five years.
- Inspections by the NVWA
The NVWA has been designated in the Netherlands to check the reliability of the documentation referred to in point 6 above and to verify that the product can be traced back to the declared origin. To this end, the NVWA has been given the power to carry out inspections at importing, manufacturing and exporting companies. During such an inspection, companies must be able to hand over all the documents referred to in point 6 above and in the overview on the NVWA website. Customs furthermore have the power to check at the border whether the documentation contains the correct information.
- Companies risk a fine of up to 4% of their turnover
Violations of the EUDR are subject to serious sanctions. Fines of up to 4% of annual turnover may be imposed. The NVWA may also seize the products concerned or the income that the operator or trader has obtained from them. Companies may furthermore be excluded from tendering procedures and access to public funding, such as subsidies and concessions, for a period of up to twelve months. In the event of a serious or repeated violation, the NVWA may even impose a temporary ban on the marketing of the relevant products.
For more information on an NVWA inspection, watch the video briefing with practical tips or visit invalnvwa.nl.
- What about the European Timber Regulation?
The EUDR is a follow-up to the EU Timber Regulation (EUTR), which has been in force since 2013. Briefly stated, the EUTR prohibits the placing on the market of illegally harvested timber. The EUDR therefore goes considerably further than the EUTR, since the EUDR also covers forest products other than timber. The EUTR will continue to apply until 2027 to timber harvested before 29 June 2023 and placed on the market after 30 December 2024.
- Commission’s Guidelines for the EUDR
The Commission’s Guidelines clarify various aspects of the EUDR, such as definitions and scope, due diligence requirements, traceability and data collection, and sanctions. The Guidelines explain key concepts such as “placing on the market,” “making available on the market,” and “export.” They also specify more precisely which products and raw materials are covered by the directive. In the event of doubt about the interpretation of the EUDR, it may therefore be useful to consult the Guidelines.
More information on NVWA topics can be found at invalnvwa.nl.
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