EUDR Regulation – new obligations for entrepreneurs

What is EUDR?

The EUDR (European Union Deforestation Regulation) is the abbreviation for Regulation (EU) 2023/1115 of the European Parliament and of the Council of 31 May 2023 (link). The regulation aims to reduce deforestation and forest degradation by controlling trade in goods whose production involves forest clearing. The EUDR replaces previous regulations (including Regulation No. 995/2010 on timber) and is part of the EU's broader efforts to protect the climate and biodiversity.

The new law entered into force on June 29, 2023, but its key obligations will be applied gradually. The main idea behind the EUDR is to prevent products resulting from deforestation after a certain cut-off date (December 31, 2020) or that do not comply with the regulations of the country of origin from entering the EU market. In practice, this aims to eliminate contributions to forest destruction from the EU supply chain — both through illegal and legal commercial logging — and ensure that European demand does not fuel environmental degradation. The EUDR therefore establishes binding requirements for companies to ensure that products entering or leaving the EU market are deforestation-free and comply with the local laws of the producer's country.

What products and entities are subject to EUDR?

The EUDR covers a specific list of raw materials and products. The so-called "relevant goods" listed in the regulation currently include: cattle, cocoa, coffee, palm oil, soybeans, rubber, and timber, as well as all products made from or containing these raw materials (link to the list of goods). This means that the EUDR covers, among other, the following products:

• beef, leather and leather products from cattle,
• cocoa beans and chocolate, coffee beans,
• palm oil and products containing it, e.g. food, cosmetics,
• soybeans, soybean meal and oil,
• natural rubber and rubber products, e.g. tires, gloves, and
• wood and all wooden products – e.g. lumber, furniture,
• paper and books.

This list may be expanded in the future to include additional commodities that impact deforestation, if necessary.

Entities covered by the EUDR regulations include all businesses, regardless of industry, which engage in trade in the goods listed above. The regulation applies to all businesses (including sole proprietors) which, as part of their business activities:

1. place goods and products covered by the EUDR on the market within the EU,
2. make them available on the internal market, or
3. export them outside the EU.

Importantly, the regulations apply regardless of the scale of operations or company size – even micro and small businesses must comply with the EUDR if they trade in covered goods (although some simplifications are provided for SMEs). In other words, the industry or size does not matter – what matters is the fact that products linked to deforestation are traded.

The new obligations will therefore cover a broad spectrum of businesses. For example, an importer importing cocoa beans from abroad, a food producer in Poland using palm oil in food production, or an exporter of wooden furniture shipping outside the EU – all are subject to the EUDR .

The regulation also applies to the so-called traders, i.e., companies that do not import or produce these goods themselves, but make them available on the market (e.g., large retail chains, wholesalers, retailers). For example, a supermarket selling chocolate or coffee must also ensure that its products comply with the EUDR – otherwise, they face consequences.

In summary, every company involved in the supply chain of the above-mentioned raw materials must become familiar with the new regulations and adapt its operations to the requirements of the EUDR.

What obligations does the EUDR impose?

A key obligation introduced by the EUDR is the establishment of a due diligence process for covered products. Before a company places a product on the EU market (or exports it from the EU), it must carry out a series of activities to ensure that the product complies with the regulation. In practice, the due diligence process involves three stages:

1. Gathering information – the entrepreneur must gather detailed data and documentation regarding the product, as required by Article 9 of the Regulation. This means, among other things, obtaining the geolocation of all plots where the product was produced, information confirming that production did not contribute to deforestation (after the cut-off date of December 31, 2020), and evidence that the relevant laws of the country of production were complied with (e.g., land use, environmental protection, workers' rights, human rights, tax, customs regulations, etc.). In other words, the company must know the exact origin of the raw material (e.g., farm or plantation) and have documentation proving the legality and sustainability of its production.
2. Risk assessment – with the information gathered, the company is required to conduct a risk analysis to determine whether a given product is non-compliant with the EUDR. It must be assessed whether there is a risk of the product originating from deforested areas or violating the law. The regulation specifies a number of risk assessment criteria, including country-of-origin risk (e.g., the level of deforestation in the region, corruption levels, reliability of documentation), potential mixing of raw materials from unknown sources, and comments from non-governmental organizations. If the analysis indicates that the risk is not zero or negligible, the company must take remedial measures before selling the product. Such risk mitigation measures include obtaining additional information or certificates from the supplier, conducting an independent audit, switching to a more reliable supplier, etc. The goal is to reduce the risk to a level of "zero or negligible" – only then can the next step be taken. If, despite all efforts, the risk cannot be reduced to an acceptable level, the product cannot be placed on the market.
3. Due diligence declaration – before a product is placed on the EU market or exported, the company must submit a formal declaration confirming that due diligence has been exercised and that there is no more than a negligible risk of non-compliance with the EUDR. This declaration is submitted via a dedicated IT system established by the European Commission. In practice, the company will send a declaration to the competent authority containing, among other things, its details, a product description (CN code, quantity), country of origin with geolocation of crops, and a clause stating: "due diligence has been exercised and there is no, or only a negligible, risk that the product is non-compliant with Article 3(a) or (b) of the Regulation." Submitting this declaration is a condition for the product being released for free circulation – without it, import or sale will be illegal. The company must retain a copy of the declaration for at least five years from its submission.

In addition to the above due diligence elements, the EUDR introduces additional administrative requirements. Companies must maintain documentation demonstrating product compliance with Article 3 of the Regulation and make it available to regulatory authorities upon request. Due diligence documents (information, analyses, evidence) must also be archived for a minimum of five years. Furthermore, companies are required to periodically review their due diligence procedures – it is recommended that the due diligence system be reviewed at least annually and updated, as necessary.

Large companies (other than SMEs) will also be required to publish an annual report on their due diligence systems. This report should be publicly available (e.g., on the company's website) and include a description of the actions taken to ensure EUDR compliance. This will provide stakeholders and regulators with insight into how the company is managing its EUDR obligations.

If any irregularities are detected or new information is obtained that calls into question the compliance of a product already placed on the market, the company is obliged to immediately inform the relevant national authorities and its contractors (recipients of the product). The EUDR emphasizes transparency in the supply chain – companies must pass on all necessary information demonstrating due diligence (including the reference number of the submitted declaration) so that any subsequent entity can easily verify the compliance of the products.

Dates of entry into force of the EUDR provisions

The European Union has given companies time to implement the new requirements. The deadlines for implementing the EUDR depend on the size of the company:

• Large and medium-sized companies – from 30 December 2025 (originally the regulations were to apply from 2024, but a one-year postponement was decided).
• Small and micro-enterprises – from 30 June 2026 (an additional six months is provided for the smallest entities).
• Entities subject to the obligations of Regulation No 995/2010 must apply the provisions of the EUDR today.

What are the sanctions for non-compliance?

The EUDR regulations impose severe consequences on companies that fail to comply with the new requirements. The regulation stipulates that a product that does not meet the EUDR criteria cannot be placed on the market. However, if the risk assessment reveals non-compliance or an excessively high risk, the product must be excluded from sale. If significant information about non-compliance with the requirements is discovered after the product has been placed on the market, the company is obligated to notify the authorities and consumers, and the supervisory authority may order the product to be withdrawn from the market.

National authorities will supervise compliance with the EUDR (in Poland, the relevant institutions will be designated by the act implementing the regulation). The Ministry of Climate and Environment has proposed designating several competent authorities to perform inspections and other activities specified in the EUDR with respect to individual goods. These will be:

1. Environmental Protection Inspectorate – in the field of wood and products derived from this commodity;
2. Trade Inspection – in the field of rubber and products derived from this commodity;
3. Inspection of the Commercial Quality of Agricultural and Food Products – in the field of cocoa, coffee, oil palm, soy and products derived from these goods;
4. Veterinary Inspection – in the field of cattle and products derived from this commodity.

These authorities will gain the right to inspect businesses and request all documentation confirming due diligence. If violations are identified, corrective measures may be taken, for example:

• immediate suspension of the product's marketing or export,
• an order to remove any formal deficiencies found,
• in extreme cases, an order to withdraw or destroy a batch of goods.

These actions aim to remove non-EUDR-compliant products from the market as quickly as possible and prevent further infringements.

The EUDR Regulation requires EU Member States to establish effective, proportionate, and dissuasive penalties. Article 25 of the EUDR lists examples of sanctions that should be included in national legislation. The list of penalties includes:

• monetary fines,
• confiscation of products or income earned,
• temporary suspension of the right to trade in given goods,
• exclusion from public procurement for companies that break the regulations,
• deprivation of the right to use certain simplifications resulting from the provisions of the EUDR.

According to EU guidelines, maximum fines are to amount to at least 4% of the business's annual turnover in the EU for the previous financial year. For large companies, this could mean multi-million fines, comparable in scale to the sanctions known under the GDPR. Furthermore, serious or persistent violations may result in a temporary ban on operating the affected goods on the EU market.

How can we help?

Implementing EUDR in a company is a multi-step and demanding process – fulfilling all the obligations will be a significant challenge for many companies. It is necessary to analyse sometimes complex supply chains, establish cooperation with suppliers in distant countries, and collect and verify a lot of data.

Despite the postponed implementation date, there is little time for preparation, and the risk of sanctions is high. Enlisting the help of an experienced advisor can significantly ease the implementation process and protect your business from sanctions.

As part of our EUDR support, we offer, among others:

• Supply chain analysis and mapping – we will help identify whether and which goods your company operates are subject to EUDR. We will analyse suppliers and products for deforestation-related risks (e.g., identify raw materials' countries of origin and verify certifications). This will help your company understand potential risks and what to focus on.
• Due diligence implementation – we will develop customized due diligence procedures for your company. This will include establishing standards for collecting required information from suppliers (geolocation, legal documents, etc.), risk assessment procedures (e.g., a methodology for classifying supplier risk by country and product), and instructions for dealing with identified risks (what corrective actions to take). We will also help establish an internal compliance system, ensuring that EUDR becomes part of daily processes rather than a one-off event.
• Preparation of documentation and reports – we support the preparation of all necessary documents, including due diligence declarations ready for submission to the system (we assist in completing the information required by the regulation, ensuring nothing is missing). We advise on what evidence and attachments are worth collecting to solidly document due diligence in the event of an audit. We also assist in the preparation of due diligence reports to ensure they meet the requirements of Article 12 of the EUDR and provide added value to the company.
• Support in contacts with authorities – in the event of an inspection or inquiry from supervisory authorities, we provide assistance as representatives or advisors. We help prepare responses and provide complete explanations and documentation.

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