EUDR - EU Deforestation Regulation explained

What is the EU Deforestation Regulation?

The EU Regulation (EU) 2023/1115 on the making available on the Union market and the export from the Union of certain commodities and products associated with deforestation and forest degradation — commonly referred to as the “EU Deforestation Regulation” (EUDR) — introduces a novel approach to ensure deforestation-free supply chains. The Regulation entered into force on 29 June 2023 and will become applicable as of 30 December 2025 for large and medium-sized enterprises, and from 30 June 2026 for micro and small enterprises.

It is embedded within broader EU policy frameworks such as the European Green Deal and the EU Biodiversity Strategy for 2030.

Under the EUDR, operators and traders must comply with due diligence obligations when placing or making available on the EU market, or exporting from the EU, the following relevant commodities: cattle, cocoa, coffee, oil palm, soya, wood, and rubber, as well as derived relevant products.

According to the Regulation, these commodities and products may only be placed on or exported from the EU market if they are demonstrably deforestation-free and produced in accordance with the relevant legislation of the country of production. This requires robust traceability systems throughout the supply chain, as well as adherence to applicable laws in the countries where the commodities originate.

For whom does the EUDR apply

EUDR applies to all European companies who deal with the relevant commodities. Large companies fall under full due diligence obligations. The EUDR provides a simplified obligation regime for all companies classified as micro, small, or medium-sized enterprises (SMEs).

A company qualifies as a SME if it meets at least two of the following three thresholds:

1. Balance sheet total: ≤ EUR 25 million
2. Net turnover: ≤ EUR 50 million
3. Average number of employees during the financial year: ≤ 250

Companies exceeding more than one threshold qualifies as large-sized undertaking and have therefore full due diligence obligations under the EUDR.

Entry into application

Extended transitional period for micro and small enterprises

Whether a company qualifies for the extended transitional period under the EUDR is determined by the thresholds for medium-sized undertakings as set out in Article 3(3) of Directive 2013/34/EU (the EU Accounting Directive).

A company is not considered a medium-sized undertaking — and may therefore benefit from the extended deadline until 30 June 2026 — if it does not exceed more than one of the following three thresholds:

1. Balance sheet total: ≤ EUR 25 million
2. Net turnover: ≤ EUR 50 million
3. Average number of employees during the financial year: ≤ 250

If a company exceeds two out of these three criteria, it qualifies as a medium-sized undertaking and must comply with the EUDR obligations as of 30 December 2025.

Important: The extended transitional period only applies if the company was classified as a micro or small enterprise on 31 December 2020, based on the size thresholds applicable in the respective Member State at that time.

Scope of the EUDR

Material scope

The EUDR defines seven commodities — referred to as “relevant commodities” — that fall within its scope: cattle, cocoa, coffee, oil palm, soya, wood, and rubber. In addition to these raw materials, their processed forms are also covered by the Regulation.

Annex I of the Regulation provides a detailed list of all relevant product categories, including their respective Combined Nomenclature (CN) codes, and links them to the seven relevant commodities.

Geographical scope

The geographical scope of the EUDR is not determined by the place of production or processing, but solely by whether a product is:

• placed on the EU market, or
• exported from the EU.

The EUDR’s core obligations

Every product falling within the scope of the EUDR that is either placed on the EU internal market or exported from the EU must meet three key requirements:

1. Deforestation-free: The product must not be associated with deforestation or forest degradation after the applicable cut-off date.
2. Compliance with relevant legislation of the country of production: This includes applicable laws on land use rights, environmental protection, labour rights, and more.
3. Submission of a due diligence statement through the EU Information System prior to placing the product on the market or exporting it.

Deforestation-free

A product is considered deforestation-free if the relevant commodities contained in it were not produced on land that was subject to deforestation after 31 December 2020. For wood and wood products, an additional requirement applies: the wood must not originate from land that was subject to forest degradation after that cut-off date.

Compliance with relevant legislation of the country of production

Products must be produced in accordance with the relevant legislation of the country of production.

For example, if wood is imported from Brazil, its harvesting must have complied with Brazilian laws on forest use and deforestation — only then can it be lawfully placed on the EU market.

Due diligence statement in the EU Information System

For each relevant product, companies (operators) must submit a digital due diligence statement via the EU Information System. This statement must include the following elements, as specified in Annex II of the EUDR:

1. Name and address of the operator
2. The HS code(s) (e.g. 4403 for roundwood, 4401 for fuel wood, 4404 for wooden stakes), the tree species (scientific name), the common/trade name(s), and the quantity (e.g. in cubic meters)
3. The geolocation of all plots of land where the relevant commodities were produced
4. A confirmation that due diligence has been exercised, through submission of the due diligence statement
5. The operator’s signature, which is provided electronically by submitting the statement

Additional requirements:

The due diligence statement must also meet the following conditions:

• It must be submitted prior to import or export
• It must be retained by the company for five years
• It must be reviewed and updated annually, unless the operator qualifies as a small or micro-enterprise, which are exempt from this requirement

There is no provision requiring that a statement be submitted, for example, once per year as a blanket declaration for all deliveries.

Due diligence obligations and their scope

The due diligence obligations under the EUDR vary depending on whether the actor is an operator or a trader, and whether the entity qualifies as an SME.

Operator

According to Article 2(15) of the EUDR, an operator is a natural or legal person who:

• acts in the course of a commercial activity, and
• places relevant products on the EU market for the first time or exports them from the EU

This typically refers to primary producers, importers, and exporters.

Trader

According to Article 2(16) of the EUDR, a trader is defined as:

“Any natural or legal person in the supply chain who, in the course of a commercial activity, makes relevant products available on the Union market.”

Distinction from an operator:

• An operator places products on the EU market for the first time (e.g. as a manufacturer or importer).
• A trader makes products already placed on the market available, meaning they sell or distribute them further along the supply chain.

Due diligence obligations by operator, trader and SME

Due diligence obligations in detail

he EUDR establishes binding due diligence obligations for operators who place, make available, or export relevant commodities and relevant products on or from the EU market. As a general rule, operators (as well as traders who are not SMEs) must establish and maintain a due diligence system in accordance with Article 12 of the EUDR.

1. Information gathering
   In the first step, companies must collect the information specified in Article 9 of the Regulation. This includes, among other things:
   • The commodity or product to be placed on the market (or, in the case of non-SME traders, made available) or exported from the EU
   • Quantity
   • Supplier
   • Country of production
   • Geolocation of all plots of land where the relevant commodities were produced
   • Evidence of legality of harvest
   If a company fails to collect the full set of information required under Article 9, the product may not be placed on or exported from the EU market. Otherwise, this constitutes a breach of the Regulation, subject to penalties.
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2. Risk assessment
   In the second step of the due diligence process, the information collected in step one — such as geolocation data, supplier information, country of production, and quantities — must be incorporated into the risk assessment component of the company’s due diligence system.The objective is to determine whether there is a risk that non-compliant products may enter the supply chain. The country of production plays a key role in this evaluation — the depth and intensity of the risk assessment depends largely on the risk status of the country in question.
   The company must transparently document the following:
   • Which criteria were examined (in line with Article 10 of the EUDR)
   • How the risk assessment was carried out
   • How the final risk level was determined (e.g. negligible or non-negligible)
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3. Risk mitigation
   ‍If, during the risk assessment, a company determines that a risk is not negligible, it must, as the third step, take appropriate and proportionate risk mitigation measures.
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   What constitutes a negligible risk?
   ‍A negligible risk exists when, after thoroughly assessing all relevant information related to a product, the company can conclude with sufficient certainty that the product does not breach the core requirements of the EUDR. This applies in particular to:
   • Article 3(a): The product is not deforestation-free, or
   • Article 3(b): The product was not produced in compliance with the relevant legislation of the country of production

Risk classification of countries

To facilitate the effective implementation of the EUDR, the Regulation provides for a risk classification of countries of production (Article 28). This classification is intended to help both competent authorities and companies adjust the scope and intensity of due diligence obligations based on risk. Depending on whether a country is classified as low-risk, standard-risk, or high-risk, different requirements apply to the assessment and documentation of supply chain compliance.

Enforcement & sanctions

Compliance with the EUDR is monitored by the competent authorities of the individual EU Member States. These authorities are responsible for ensuring that companies fulfil their due diligence obligations.

In Germany, the competent authority is the Federal Office for Agriculture and Food (Bundesanstalt für Landwirtschaft und Ernährung – BLE).

BLE’s inspections include, among other things:

1. Review of due diligence obligations, including the company’s risk assessment and risk mitigation procedures, along with the supporting documentation
2. Examination of records and evidence demonstrating that a specific product complies with the Regulation — including the associated due diligence statements

Violations of the Regulation may be subject to administrative fines or criminal penalties.

The specific penalties are defined and enforced at the national level.

EUDR and the coalition agreement

In their joint coalition agreement, the CDU, CSU, and SPD announced their intention to advocate at the European level for a pragmatic implementation of the EUDR. They particularly emphasize the importance of a low-bureaucracy approach for domestic forestry and the timber industry.

A central element of this position is the so-called “zero-risk option”. This proposal would allow companies operating in countries with very low or no deforestation risk to be exempt from certain due diligence and documentation requirements under the EUDR. The aim is to reduce the regulatory burden, especially for Germany’s forestry sector. At the European level, efforts are currently underway to formally anchor this risk categorization, so that the EUDR would not apply in such cases.