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CBAM import duty: are you well prepared as an importer?

On 14 July 2021, the European Commission took an important step in the fight against climate change with the introduction of the ‘Fit for 55’ package. This ambitious plan aims to reduce greenhouse gas emissions by 55% compared to 1990, with the ultimate goal of a climate-neutral Europe by 2050. A key element in this package is the Carbon Border Adjustment Mechanism (CBAM), a price adjustment system for CO2-intensive products from non-EU countries.

Objective, functioning and scope of the CBAM

The CBAM is designed to create a level playing field between EU producers, who must comply with the regulations of the EU Emissions Trading System (EU ETS) rules, and importers from non-EU countries, which may be subject to lower environmental standards. This mechanism aims to prevent carbon leakage – the transfer of production to countries with less stringent climate policies – and to limit imports of products with a high carbon footprint.

The CBAM will apply to several categories of designated goods such as cement, iron and steel, aluminium, fertilisers, chemicals, and electricity, including related intermediate goods. An interesting exception within this mechanism concerns e-commerce products with a value below €150 per shipment, which are exempt from the levy.

Implications for importers: transitional phase and future

A transitional period has been running since 1 October 2023, during which importers should adapt to the new procedures but do not yet have to buy and surrender certificates. This transitional period is a reporting period in which importers must record and report the quantity and greenhouse gas emissions of imported goods.

From January 2026, the import of certain goods will be linked to the procurement of CBAM certificates corresponding to the amount of CO2 emissions related to the products. The price of these certificates will be linked to that of emission allowances within the EU ETS, which will no longer be free of charge.

Prepare for changes under the CBAM

CBAM poses new challenges to entrepreneurs and importers, but also offers opportunities to contribute to a more sustainable world. A proactive, multidisciplinary approach is crucial for a smooth transition to these new regulations. Timely adaptation of information systems and administrative processes is essential to comply with CBAM obligations and ensure a sustainable future for European trade and industry.

Would you like to have the tax implications of the CBAM import duty mapped out for your company? Then get in touch with us, one of our experienced advisers will be happy to assist you.

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ArticlesCBAM import duty: are you well prepared as an importer?