2025 is the final year of the transitional phase under the CBAM (Carbon Border Adjustment Mechanism). CBAM is the mechanism established by the EU to counter so-called “carbon leakage”, i.e. the relocation of the production of particularly energy-intensive products to a third country with lower energy prices. Such relocation is intended to be prevented by requiring certificates to be purchased in the future upon import for emissions generated and embedded during production.
Since the beginning of the transitional phase on 1 October 2023, importers of goods pursuant to Annex I to Regulation (EU) 2023/956 (CBAM Regulation), i.e. goods from the sectors of cement, electricity, fertilisers, iron and steel, aluminium or chemicals, have been required to report quarterly on the CO2 emissions generated and embedded in the production of the imported goods concerned. Since the submission of the fourth report on 31 October 2024, there has been an obligation to report actual emissions data, which remains extremely difficult for many importers.
As CBAM, alongside other sustainability obligations, poses major challenges for European companies, the European Commission has responded by adopting various simplifications under the so-called Omnibus Initiative. We reported on this in our last Schlagbaum (Issue 02/2025). The proposals are now being coordinated between the Commission, the European Council and the European Parliament under the so-called trilogue procedure. In its FAQs on the Omnibus Package, the European Commission makes clear that importers of small quantities of CBAM goods are intended to benefit from the amendments. A new threshold is intended to exempt around 90% of importers from CBAM obligations, while nevertheless preserving the environmental objective of the system, as more than 99% of the total emissions from the imports concerned are still intended to remain within the scope of the system. According to the European Commission’s proposal under Omnibus Package I, the threshold is to be set at 50 tonnes of net mass per importer per calendar year, calculated cumulatively for goods listed in Annex I to the CBAM Regulation, with the exception of electricity and hydrogen (new paragraph 3a in Article 2 of the CBAM Regulation). The Commission assumes that this threshold corresponds on average to approximately 80 tonnes of CO2 equivalent per importer. By July of each calendar year, the Commission will assess, on the basis of import data for a reference period of 12 months preceding the month of that assessment, whether the value resulting from the prescribed methodology deviates from the established threshold by more than 5 tonnes.
For importing companies to which the CBAM mechanism continues to apply, simplifications or relief are envisaged with regard to the authorisation of declarants, the calculation of emissions, reporting obligations and financial liabilities.
Authorisation as a CBAM Declarant – Application
With the beginning of the definitive phase on 1 January 2026, goods may only be imported into the customs territory of the Union by an authorised CBAM declarant. This applies to companies that will continue to be subject to the CBAM Regulation from 2026 onwards. They must be authorised as CBAM declarants before importing the goods concerned. Which importers will ultimately remain subject to CBAM obligations once the legislative procedure has been completed is currently difficult to predict, as the negotiations between the Council and the European Parliament may still result in amendments to the European Commission’s proposal.
Implementing Regulation (EU) 2025/486, published in the Official Journal of the EU on 18 March 2025, lays down the conditions and procedures relating to the status of authorised CBAM declarant. It has applied since 28 March 2025. The German Emissions Trading Authority (DEHSt) states on its information page that applications can be submitted from 31 March 2025.
Pursuant to Article 1(1) of the Regulation, the procedures for applying for the status are conducted via the CBAM Registry. The DEHSt also explains on its website how access to the Registry is obtained. The criteria that a CBAM declarant must fulfil (Article 17 of the CBAM Regulation) and the information that an applicant must provide in this regard are quite extensive and resemble the authorisation criteria for an Authorised Economic Operator (AEO) under customs law. In addition to the usual contact details, the following information must be provided as part of the application:
- A certificate from the tax authority in the Member State in which the applicant is established confirming that the applicant is not subject to an outstanding recovery order for national tax debts;
- A declaration of honour that, during the five years preceding the year of the application, the applicant has not been involved in any serious or repeated infringements of customs legislation, taxation rules or market abuse rules and has no record of serious criminal offences relating to its economic activity;
- Information necessary to demonstrate the applicant’s financial and operational capacity to fulfil its obligations under the Regulation and, where the competent authority so decides on the basis of a risk assessment, supporting documents for that information, such as the profit and loss account and balance sheet for up to the last three financial years for which the accounts were closed;
- The estimated monetary value and volume of imports of goods into the customs territory of the Union, by type of goods, for the calendar year in which the application is submitted and for the following calendar year.
The competent authority has 120 calendar days to assess the application (Article 4(1) of Regulation (EU) 2025/486) and may request additional information that it requires in order to assess compliance with the authorisation criteria. For applications submitted before 15 June 2025, the authority has 180 calendar days to assess the application (paragraph 5).
Like AEO status, CBAM status is also subject to monitoring, i.e. the competent authority carries out a reassessment at regular intervals or where it has information indicating that the authorisation criteria are no longer fulfilled. Where an applicant has not been continuously established during the two financial years preceding the year in which the application is submitted, the authority may require the provision of a guarantee. Decisions on applications for authorisation are recorded in the CBAM Registry, as are appeals lodged against such decisions and the decisions on those appeals.
Recommendation
Companies intending to import CBAM goods from 2026 onwards and which remain within the scope of the Regulation should address the application process at an early stage, given the fairly extensive requirements and the four- or six-month period available to the authority for assessing applications. It is unfortunate that it will only become definitively clear which companies will continue to be affected by CBAM once the trilogue negotiations have been concluded. It is currently impossible to predict which companies will require authorisation as CBAM declarants. The threshold-based exemption can only be claimed by the importer. Indirect representatives acting as CBAM declarants must be authorised as CBAM declarants.
Depending on a company’s risk appetite, consideration may be given to assessing the “risk” of remaining subject to CBAM by reference to the threshold of 50 tonnes of net mass per importer per year proposed by the Commission (see above), and deciding on that basis whether it will be necessary to address the application process. This recommendation can also be inferred from the European Commission’s proposal, according to which the new Article 5(1a) of the CBAM Regulation is to read as follows:
“(1a) An importer shall submit an application for authorisation in accordance with paragraph 1 if the importer expects to exceed the threshold set out in point 1 of Annex VII.”
When assessing their current exposure, companies should always bear in mind that the threshold may ultimately be lower, that a different criterion may be established, that no agreement may be reached between the EU institutions involved, or that the amendments may not enter into force in time for 1 January 2026. The DEHSt points out this uncertain situation on the aforementioned website.
Anyone who considers it possible that they will continue to fall within the scope of the CBAM rules should therefore address the authorisation criteria at an early stage, given the lengthy assessment periods available to the authorities.
Addressing the matter at an early stage includes communicating and reviewing the criteria internally within the company. It must be clarified whether there are any ongoing or previous proceedings that could impede an application. What constitutes serious or repeated infringements is defined in greater detail in Article 9. It is surprising that the provision allows the competent authority to request a criminal record certificate not only for the beneficial owner of the applicant company (legal person) and its managing director, but also for the natural person submitting the application for authorisation. Against this background, it is advisable for the application for authorisation to be submitted directly by the managing director, who may in any event be required under Article 9(3)(b) of Regulation (EU) 2025/486 to provide a criminal record certificate.
We will monitor the further progress of the negotiations on the European Commission’s proposals under the Omnibus Initiative and endeavour to keep you informed in a timely manner. If you have any questions on this topic in the meantime, please do not hesitate to contact us.
