With the publication of EU Regulation 2023/956 in the European Official Journal on May 16, 2023, the European Union formalizes the entry into force of the Carbon Border Adjustment Mechanism (CBAM).
As of October 1, 2023, companies importing goods into Europe from outside Europe are required to comply with this mechanism, with obligations related to CO2 embedded in imported goods.
In collaboration with Tecno Vat’s team of international tax experts, we ensure that all importing companies affected by EU Regulation 2023/956 receive the necessary environmental and bureaucratic advice and support to fulfill their CBAM obligations.
What is CBAM: between CO2 calculation and payment obligations
The CBAM – Carbon Border Adjustment Mechanism – is a mechanism the European Union introduces to adjust/adjust/compensate for carbon emissions from imported goods in member territories.
Included in the “Fit for 55” program, the CBAM underscores the Union’s commitment to the 2030 GHG emission reduction and 2050 neutralization targets.
In addition, this mechanism is a measure to counter environmental dumping and the relocation of high-emission production to countries outside Europe.
What changes for companies importing products into Europe?
If the imported commodity falls under the Combined Nomenclature codes listed in Annex I of EU Regulation 2023/956 (e.g., aluminum, iron, steel, and cast iron products; cement and cement products; fertilizers; electricity and hydrogen), the importing company must first comply with reporting requirements, then obtain authorized CBAM registrant status, and finally take a number of actions including paying the amounts due for CO2 incorporated into the imported goods.
However, let us proceed in order and understand together, based on the upcoming deadlines, what needs to be done.
The transition period and the reporting requirement
From October 1, 2023 to December 31, 2025, the transitional period of the CBAM, importers are required to:
- Collect information regarding the installations of production facilities located abroad, Combined Nomenclature codes and origin of goods, CO2 emissions resulting from the production of the goods and their movement to the European border.
The cooperation of the manufacturer/supplier or operator of the production facility located in the non-EU country is essential at this stage; - Send quarterly CBAM report to the European Commission, detailing the total amount of CBAM goods incorporated, relative CO2 emissions and any costs incurred to address the emissions generated.
Authorized registrant status and the full regime of the Regulations
- calculate the CO2 incorporated in imported products, submit the measurement made to verification by an accredited third party, and keep the notions useful for calculation for the next four years;
- Pay the amounts due for CO2 embedded in imported products through the purchase of CBAM certificates.
Electronic documents purchasable by member states through platform managed by the EU Commission; - by May 31 of the year following the import, return the certificates purchased through the CBAM registry (under implementation) and submit the CBAM declaration including: total number of issues, number of certificates purchased and returned, copy of the verification document issued by the accredited body.
Measure, verify and communicate: meet CBAM constraints with us
Today, thanks to collaboration with Tecno Vat’s international tax experts, we are also able to meet the needs of companies where imports of goods with high emission levels, from third countries to EU member states, are a constant.
