The EU Deforestation Regulation (EUDR) – more than the title suggests

Forests fulfill key functions for climate and species protection. They store carbon, protect biodiversity and prevent soil degradation. Deforestation and forest degradation are significant drivers of climate change and biodiversity loss. The EU therefore sees forest protection as a key component of its Green Deal and its strategies up to 2030 (European Biodiversity Strategy, new Forest Strategy). 

In terms of its objectives, the EUDR ties in with the Timber Regulation (EUTR, Regulation (EU) 995/2010). Until now, this only prohibited the placing on the market of illegally harvested timber. The EUDR goes further: firstly, it covers other forest-related raw materials and products in addition to timber. In addition to the requirement that the product must be legal, the EUDR also generally prohibits products from areas that were subject to deforestation or forest degradation after December 31, 2020. When the EUDR comes into force, the EUTR will be repealed after a transitional period. This shifts the focus from pure timber trade requirements to all supply chains that can contribute to deforestation.

The EUDR covers various relevant raw materials and products: Relevant raw materials are cattle, cocoa, coffee, oil palm, rubber, soy and wood. In addition to these raw materials, it also covers products made from them, such as chocolate made from cocoa, firewood, charcoal, palm oil or natural rubber.

 

The personal scope of the regulation covers market participants and traders. An operator within the meaning of the EUDR is anyone who (for the first time) places relevant raw materials and products on the Union market or exports them as part of their commercial activity.  In contrast, a trader within the meaning of the EUDR is anyone, with the exception of market participants, who makes relevant raw materials or products available on the Union market repeatedly and unchanged in the course of a commercial activity.

 

The EUDR links both its material due diligence obligations and the date on which they come into force to the size of a company. Companies are classified as “micro”, ‘small’, “medium-sized” or “large” in accordance with Art. 3 of the Accounting Directive (2013/34/EU): Companies are considered medium-sized companies, for example, if they are not micro or small companies and do not exceed more than two of the following thresholds on the balance sheet date - a balance sheet total of EUR 20 million, net sales of EUR 40 million and an average number of employees of 250. Micro, small and medium-sized enterprises (SMEs) are then subject to simplified mandatory programs, while the other companies (“non-SMEs”) must generally comply with the unrestricted due diligence requirements of the EUDR.

In accordance with Art. 8 EUDR, the program of obligations is divided into three successive steps:

 

First, the companies concerned must collect information, documentation and data to prove that the goods are deforestation-free and have been produced in accordance with the law of the country of origin (Art. 9 EUDR).

 

The next step is to carry out a risk assessment based on the information collected. This involves checking whether there is a risk that the goods do not comply with the EUDR requirements. Only if the analysis shows no or only a negligible risk may the products be placed on the market or exported (Art. 10 EUDR).

 

If the risk analysis reveals more than a negligible risk, the company must take appropriate measures to reduce the risk to at least negligible. These include, for example, requesting additional information or conducting independent surveys or audits (Art. 11 EUDR).

 

In accordance with Art. 4 EUDR, the companies concerned are obliged to submit a due diligence declaration to the competent authorities via an information system set up for this purpose after completing these three steps and before placing relevant raw materials and products on the market or exporting them. Companies may not place on the market or export any relevant products without first submitting a due diligence declaration. 

 

The Commission is introducing a three-tier country benchmarking system to simplify risk assessment (Art. 29 EUDR). Accordingly, countries or parts of countries are classified into the categories “low”, “normal” and “high” according to the risk of deforestation.

 

If companies can prove that all relevant raw materials and products originate exclusively from low-risk countries, a risk assessment and risk mitigation measures may be waived. In these cases, however, appropriate documentation must be submitted to the competent authority on request, showing that there is only a negligible risk (Art. 13 EUDR).

​​Control and sanction mechanisms 

The EUDR provides for a comprehensive control, correction and sanction regime. The competent national authority for the implementation and control of the EUDR is the Federal Office for Agriculture and Food (BLE). According to Art. 16 EUDR, the BLE must carry out controls, whereby it checks on a risk-based basis whether market participants and traders established in the Union fulfill the EUDR due diligence obligations.

 

In the event of infringements, the BLE can order provisional measures in accordance with Art. 23 EUDR (e.g. seizure, suspension of placing on the market, making available or export). It can also request companies to take proportionate corrective measures (such as the withdrawal of affected products) (Art. 24 EUDR).

 

At the same time, the Member States are obliged to standardize sanctions that are effective, proportionate and dissuasive. They must provide for fines of at least 4% of the total Union-wide turnover calculated in accordance with the EC Merger Regulation (Regulation (EC) No. 139/2004); in addition, relevant products and revenue generated from infringements may be confiscated and companies may be temporarily excluded from public procurement procedures or access to public financing for up to twelve months (Art. 25 para. 2 EUDR). In October 2024, the Federal Ministry of Food and Agriculture (BMEL) published a draft law on the implementation of the EU regulation for deforestation-free products, which, among other things, specifies the sanctions in the event of violations. As the draft was not introduced into the parliamentary procedure by the old federal government, it is not covered by the principle of discontinuity and therefore remains in place.

In April 2025, the EU Commission updated its guidance documents and FAQs published on the EUDR. The Commission emphasizes that the intention is to reduce the administrative burden by around 30% without diluting the objectives of the regulation. In addition, the scope of application is to be clarified and simplified by means of a delegated act.  A public consultation on this was open until 13.05.2025.

 

On the one hand, the Commission provides new information on the “identification obligation” for downstream market participants and traders. According to Art. 4 (9) EUDR, non-SME market participants may base their own due diligence declaration on due diligence declarations already filed in the information system by upstream market participants, provided that they have previously “established” that the due diligence obligations under Art. 4 (1) have been fulfilled for the goods concerned. The Commission specifies the hitherto undefined scope of this obligation to establish in FAQ No. 3.4, according to which it is sufficient for the downstream market participant to obtain the DDS reference numbers of its suppliers and check their validity. Despite the reference to an upstream declaration, the downstream non-SME market participant remains fully responsible for compliance with the due diligence obligations in accordance with Art. 4 para. 10 (and Art. 5 para. 1 for traders). For this reason, companies can carry out additional plausibility checks (e.g. on quantities, country of manufacture or geographical location) and use external sources of information such as the country benchmarking list pursuant to Art. 29, publicly accessible annual reports of suppliers pursuant to Art. 12 para. 3 or audit reports pursuant to Art. 11 para. 2 lit. b.

With regard to Art. 6 (1) EUDR, the Commission has now also clarified that an authorized representative can also be appointed by several market participants and traders, i.e. also by several companies in a group of companies. In this case, the EUDR is also linked to the individual company and not to any parent or group companies.

 

In future, companies will also have the option of submitting a due diligence declaration for several physical batches or deliveries of several different relevant products under certain conditions. According to Art. 4 para. 2 EUDR, a due diligence declaration must be submitted by the company concerned before placing a relevant product on the market or exporting it. The principle of a collective DDS is specified in the updated FAQs: A single due diligence declaration may cover several physical batches or deliveries of several different products as long as the business operator concerned has carried out full due diligence for all the goods listed therein and has identified no or only a negligible risk. However, a due diligence declaration should not relate to batches over a period of more than one year from the date of submission of the declaration. It is further clarified that this collective DDS must be deposited in the information system at the latest before the first delivery it is intended to cover, because its reference number must already be indicated in the customs declaration.

 

According to the FAQ, a due diligence declaration may be submitted at the earliest when all information - in particular quantities - is available and the due diligence check has actually been completed.

 

In addition, the new FAQs contain clarifications regarding packaging and auxiliary material. In principle, the EUDR covers all goods listed in Annex I and therefore also wooden pallets. However, according to FAQ point 2.5, if a product or article is only used as packaging to support, protect or carry another product, it does not fall within the scope of the EUDR. However, as soon as the packaging or auxiliary material - such as a wooden pallet - is placed on the market or exported as an independent product, the due diligence obligations of the regulation apply.

 

Finally, the latest FAQs contain important clarifications on composite products. If a composite product consists of several different relevant raw materials or products - the FAQs give the example of a chocolate bar with cocoa and palm oil - the market participant only has to carry out the due diligence for those raw materials that are listed in the left-hand column of Annex I and qualify as the main raw material in the specific case; in the case of the chocolate mentioned, this would therefore be cocoa.

The country benchmarking system to be introduced by the EU Commission for the purpose of risk classification in accordance with Art. 29 EUDR has now been implemented with the publication of Implementing Regulation (EU) 2025/1093 of 22.05.2025. The system is designed to be regularly reviewed and updated. According to Art. 29 para. 2 EUDR, the country list is to be reviewed “as often as necessary” on the basis of new findings. The European Commission has already announced that it will carry out an initial review of the classifications in 2026. 

In the coalition agreement between the CDU, CSU and SPD, the new federal government is also calling for the introduction of a “zero-risk variant”, which would mean that the EUDR would not apply to countries in this category. This proposal is rejected by environmental associations and NGOs, as it would undermine the risk-based approach of the EUDR.

In May 2025, 11 EU member states (including Austria, Italy and Finland) also sent a communiqué to the European Union in which they criticized the high compliance costs and urged further simplifications. They call for a new “very low risk” category for the complete exemption of controls for products from certain countries that are considered to be very low risk. This demand is justified by the considerable burden on the companies concerned and the economic disadvantages for farmers and foresters. 

The German Institute of Development and Sustainability (IDOS), on the other hand, warns against a softening of the EUDR - a signal against the EU's credibility in global environmental protection. 

Criticism is also coming from non-European countries. For example, exporters of agricultural products - Malaysia and Indonesia - criticize the risk classifications, unclear due diligence regulations and accuse the EU of using outdated data.