CBAM is a new method of setting charges for carbon-intensive imported goods. Under the Regulation adopted by the European Parliament, the entering of certain goods into the area of the EU will require the purchase of emission certificates and the submission of additional declarations.
Learn more about CBAM: CBAM – the customs revolution in Europe
According to the European Parliament and Council Regulation (EU) 2023/956 of 10 May 2023, a part of the CBAM obligations will enter into force on 1 October 2023 (the "Regulation"). Under the Regulation, the transitional period will last until 31 December 2025. Over two years, businesses are expected to adapt to the new obligations.
During the transitional period, all businesses will be required to periodically declare information on goods entering the EU. This applies in particular to companies importing:
Traders importing goods from the aforementioned groups will be required to submit CBAM quarterly declarations starting from 1 October 2023. CBAM declarations should be submitted by the end of the month following the quarter in which the goods required to be reported were imported. The first CBAM declaration should be submitted for Q4 2023 by the end of January 2024. In principle, these declarations are to be submitted via the electronic CBAM portal created by the European Commission. However, the portal is not currently available.
The form of the CBAM declaration is also unknown until today. According to the European Commission's clarifications, the declarations' minimum data scope will include:
Subject of reporting
Goods covered by CBAM
Ton of goods
Embedded greenhouse gases
CO2 and nitrous oxide
CO2 + PFC
Emission coverage during the transitional period
Direct and indirect
Emissions coverage after the transitional period
Direct subject to verification
Determination of direct embedded emissions
Based on actual emissions, unless they cannot be adequately determined
Based on default values, unless other conditions are met
Determination of indirect embedded emissions
According to the draft Commission Implementing Regulation (EC) of 17 August 2023 (EUR-Lex - C(2023)5512 - EN - EUR-Lex (europa.eu)), apart from greenhouse gas data, notifiers will also be required to indicate, inter alia:
Obtaining some of the aforementioned data can be problematic for businesses. In principle, information on direct and indirect emissions should come from the third-country supplier. If such information cannot be obtained, the importer will be able to use default values published by the relevant institutions. Failure to verify the embedded emission values may lead to an increase in the value of the levies imposed.
At the same time, EU Member States are to designate authorities responsible for handling the CBAM system and declarations. So far, it is not certain which body will be responsible for handling the reporting in Poland.
See the full list of goods and greenhouse gases covered by the CBAM reporting obligation - Annex 1 to Regulation PE 2023/956 of May 10, 2023.
It may be a surprise to traders if a customs representative refuses to file a CBAM declaration. However, according to the Regulation, a CBAM declaration is only to be submitted by:
It should be noted that under customs legislation, a trader may be represented by a third party by way of direct or indirect representation. As a general rule, indirect customs representation involves joint and several liability of the representative for the importer's customs debt. For this reason, customs agencies most often offer their clients cooperation on the basis of direct representation. A direct representative is subject to far lower risks than an indirect representative.
As a result, companies benefiting from the services of customs agencies on the basis of direct representation will be forced to submit CBAM declarations on their own.
The Executive Regulation proposed by the European Commission provides for the possibility to audit CBAM declarations and the traders. As a general rule, the EC will inform Member States about traders who do not fulfil their CBAM reporting obligations. Also, if companies submit a declaration incorrectly or present incorrect or incomplete data, the EC is obliged to inform the competent authority of the Member State of the irregularities detected.
The national public administrations responsible for CBAM shall also be able to carry out inspections with regard to the implementation of the obligations related to the CBAM Regulation.
Moreover, during the transitional period, traders may be fined for not submitting a CBAM declaration. In the preamble to the Regulation, the EU legislator suggests the application of fines set out for failure to comply with the obligations referred to in Directive 2003/87/EC establishing a scheme (ETS) for greenhouse gas emission allowance trading within the Community. The target administrative fines in the CBAM system for non-reporting could therefore reach up to PLN 50 000.
At present, under the proposed Executive Regulation, the fines for a failure to report emissions under the CBAM scheme are to range from €10 to €50 per tonne of emissions.
The fines are to be indexed for inflation. It is to be expected that, in addition to the administrative fines indicated in the CBAM Executive Regulation, the regulations of the Criminal Fiscal Code will probably apply.
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