Updated FAQs and guidelines on EUDR

On April 15, the European Commission published updated FAQs and updated guidelines on the Deforestation Regulation (Regulation (EU) 2023/1115, “EUDR”) as well as details of the public consultation regarding the new Annex I. We summarize the key clarifications and provide a brief outlook. Clarifications for packaging; still no de minimis rule. The EUDR generally applies to all relevant products listed in Annex I. This includes wooden pallets. However, wooden pallets and other relevant products made of wood or paper are not covered by the EUDR if they are used to support, protect, or carry another product. A separate levy on, for example, wooden pallets would therefore fall under the EUDR. The new FAQs clarify in this context that pallets are nevertheless not covered by the EUDR if their separate disposal takes place within the framework of a pallet exchange system (so-called “closed-loop system”). However, the EUDR does apply again if products designed to protect, support, or carry another product constitute the essential nature of that product. This would be the case, for example, with special wooden gift packaging. Furthermore, despite suggestions from industry, the EU Commission has not introduced a de minimis rule. This means that the quantity of the relevant product is irrelevant. If the product is listed in Annex I and no exception applies (e.g., waste exemptions), the EUDR is applicable. Clarification of making available on the market, in particular “distribution” Both the updated guidelines and the FAQs clarify what previous information from the Commission already indicated, namely that only a transfer of ownership of relevant products constitutes a “distribution of a relevant product in the course of a commercial activity” within the meaning of Article 2, points 16 and 18 of the EUDR. However, if company A commissions company B to manufacture a relevant product and A immediately acquires ownership of the manufactured product (e.g., based on a contractual agreement), only company A would be considered a market participant. The EU Commission emphasizes that national property law is decisive for the transfer of ownership.

New information on the "obligation to confirm" for downstream market participants and traders

According to Article 4(9) of the EUDR, market participants that are not small or medium-sized enterprises ("non-SME market participants") may refer to due diligence statement (DDS) reference numbers that have already been submitted to the information system by upstream market participants. Before making a reference, they must, according to Article 4(9) of the EUDR, confirm that the due diligence expressed in the DDS has been fulfilled in accordance with Article 4(1) of the EUDR.

The content of this obligation to confirm was previously rather vague. In FAQ No. 3.4, the European Commission clarifies that the obligation to confirm relates to the verification of the respective DDS reference number. Referring to Article 4(10) of the EUDR, the European Commission emphasizes the continuing responsibility of every market participant (and, according to Article 5(1), also of non-SME traders). Downstream market participants should proactively obtain information from their suppliers to determine whether they have an up-to-date due diligence arrangement in place. This allows you, for example, to verify the completeness and plausibility of the information provided with regard to products intended for the EU market. In addition to the EUDR information system, external sources such as publicly available reports from upstream suppliers, as provided for in Article 12(3) of the EUDR, can also be considered. Non-SME traders/market participants, in turn, must provide their downstream market participants/customers with conclusive information that due diligence has been carried out. Due to the potential risk of product recalls, and the risk particularly in complex supply chains, annual reviews of suppliers' due diligence arrangements are advisable.

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No Relief for Groups

The European Commission reaffirms that an individual group company within a group must be assessed according to the criteria of the EUDR's scope. Therefore, inter-company purchases (or gifts) continue to constitute a making available within the meaning of Article 2(18) EUDR, as long as a transfer of ownership takes place. However, the European Commission has provided some information on how groups may fulfill their EUDR obligations. A group company can authorize another group company within the group to make the DDS on its behalf as an authorized representative under Article 6. Explanations on DDS submission and additional information in the information system. The new FAQs contain several new explanations on how a DDS can and must be submitted, as well as on the technical details of the information system. It is further emphasized that bundling products and production areas in a single DDS is possible. Downstream supply chain participants can refer to upstream DDSs (see section 3). Particularly in cases of changing product ranges and producer sites, as is likely to be the case in most supply chains, new DDSs must always be submitted – a blanket annual DDS is therefore still not permitted in the majority of cases. Furthermore, the FAQ explains the data entry restrictions: A single DDS can contain a maximum of 200 lines with relevant products, with a maximum of 500 lines reserved for explanations of each product, and the total size must not exceed 25 MB. More than one country of origin can be specified if necessary. While geolocation data can be blocked by downstream market participants, the country of origin and the scientific wood designation always remain visible in the DDS, even after it has been forwarded. It is also emphasized that additional information transmitted via the information system, such as legal documents, can be forwarded to the competent authorities, but is only visible to the competent authority and not to other market participants or traders. New information on the transition period: The information on the transition period, more precisely the period until the date of entry into force of the EUDR, has been updated to reflect the new application dates in accordance with the amendment to Regulation (EU) 2024/3234. More importantly, a universal reference number for customs declarations has been published, which the European Commission will be required to provide for the export/re-import of products from stock (up to the date of application of the EUDR). Public consultations - get involved! The European Commission has also published the links for the public consultation on the products listed in Annex I. Feedback can be submitted until 13 May 2025 (EOD) via the European Commission's platform (here) and relates to a draft delegated act amending Annex I. For example, products of HS heading 1802, as well as several palm oil and wood products, are affected. Some clarifications, such as exemptions, letters of correspondence, and supporting materials, are included. We recommend reviewing the list of products and exemptions. We are happy to assist with participation in the consultation.