EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.
New legislation
European Commission proposal to ensure timely implementation of EUDR
On the 21st of October 2025 the European Commission has proposed targeted solutions to support the implementation of the EU Deforestation Regulation (EUDR), aimed at combating deforestation and forest degradation. The proposal focuses on simplifying reporting obligations for companies while ensuring a robust IT system for compliance.
Key Measures
1. Simplified Reporting Obligations:
- Downstream Operators and Traders: No longer required to submit due diligence statements after products are placed on the EU market. Only one submission at the market entry point is needed for the entire supply chain.
- Micro and Small Primary Operators: Will only need to submit a simple, one-off declaration in the EUDR IT system, reducing the previous requirement for regular submissions.
2. Transitional Periods:
- The EUDR will apply from 30 December 2026 for micro and small enterprises, while large and medium companies will still adhere to the 30 December 2025 deadline but will have a six-month grace period for checks and enforcement.
3. IT System Readiness:
- The Commission has been developing the IT system since December 2024, anticipating a higher load than initially projected. The new timelines and simplifications aim to ensure the system can handle the expected volume of due diligence statements.
4. Contingency Plans:
- The Commission is preparing contingency measures to ensure compliance if the proposal is not adopted in time, which would maintain the original application date of 30 December 2025.
Next Steps: The European Parliament and the Council will discuss the proposal, which must be formally adopted for the amendments to take effect. The Commission urges swift adoption by the end of 2025.
Simplifications CBAM published in the Official Journal of the European Union
On the 20th of October 2025 the European Commission has officially published amendments to the Carbon Border Adjustment Mechanism (CBAM) in the Official Journal, marking the completion of the formal adoption process by the European Parliament and the Council. This initiative is part of the “Omnibus I” legislative package aimed at creating a competitive and sustainable business environment while addressing climate change effectively.
Key Features of the Amendments
1. New Exemption Threshold:
- A threshold of 50 tonnes has been established, exempting companies that import less than this amount of CBAM goods annually from compliance obligations. This change is expected to benefit approximately 182,000 importers, primarily small and medium-sized enterprises (SMEs) and individuals, while still ensuring that over 99% of emissions remain covered under the mechanism.
2. Enhanced Compliance Measures:
- For importers still subject to CBAM, the amendments will simplify compliance with reporting requirements, streamline the authorization process for declarants, and ease the calculation of emissions and financial liabilities. These adjustments aim to significantly reduce regulatory and administrative burdens, particularly for SMEs.
3. Future Carbon Pricing for Third Countries:
- Starting in 2027, the European Commission may establish default carbon prices for third countries with existing carbon pricing rules. This information will be made available in the CBAM registry, along with the methodology for calculating these prices.
Conclusion: These simplifications are a significant step towards enhancing the effectiveness of the CBAM in preventing carbon leakage while minimizing the impact on smaller importers and exporters. The changes are expected to foster a more sustainable trade environment, supporting the EU's climate objectives.