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20 March 2025 European Commission sets conditions and procedures for authorized CBAM declarants
On 18 March 2025, the Commission Implementing Regulation (EU) 2025/486, which lays out the rules for applying for the status of authorized Carbon Border Adjustment Mechanism (CBAM) declarant, was published in the Official Journal of the European Union. According to the currently applicable Regulation (EU) 2023/956 (the CBAM Regulation), the European Union's CBAM is planned to apply from 1 January 2026. On 26 February 2025, the European Commission (Commission), in its first Omnibus Package, proposed fundamental changes to the CBAM. Most notably, the CBAM would have a new de minimis threshold, intended to address the current disproportionate administrative costs of the current emissions threshold. The new proposed threshold would exempt 90% of the current importers of CBAM-covered goods. According to the Commission's press release, approximately 182,000 importers would be exempt. Importantly, those remaining in scope would cover approximately 99% of embedded emissions in CBAM-covered goods. At the beginning, importers (customs declarants) of CBAM goods up to 50 tons of mass should be exempt from CBAM obligations, while indirect customs representatives will have CBAM obligations, such as the requirement for the authorized CBAM declarant authorization, from the first import. The proposed changes are currently in the trialogue procedure by the three EU institutions (Commission, Parliament and Council), which could also entail a general discussion if the start of CBAM obligations remains at 1 January 2026. Once CBAM is fully in force, the CBAM declarants would have to submit an annual declaration and CBAM certificates must be purchased and surrendered to the authorities. Under current legislation, the first CBAM declaration must be submitted by 31 May 2027; however, under the Commission's proposal, this deadline would be extended to 31 August 2027. The first Omnibus Package does not seem to have implications for the planned work program of multiple implementing and delegated acts of CBAM legislation. (For details, see EY Global Tax Alert, European Commission releases Omnibus Package I proposal to simplify EU Carbon Border Adjustment Mechanism regulation, dated 3 March 2025.) The CBAM Regulation contains specific provisions on both applying for the status of authorized CBAM declarant (Art. 5) and the authorization itself (Art. 17). In both articles, the Commission is empowered to adopt implementing acts. The CBAM application must be filed electronically in the CBAM registry. If changes occur, the application must be adjusted in the CBAM registry. The competent authorities assessing compliance with the criteria set out in Article 17(2) of the CBAM Regulation may consider expert opinions, third-party assessments and audit reports provided by the applicant. The competent authority will review applications within 120 days of receipt. Applicants must provide any information requested by the competent authority within the specified deadline, but no later than 30 days after the request. The application review period may accordingly be extended by up to 30 days. The total application period may not exceed 180 days. For applications submitted before 15 June 2025, the competent authority shall assess the application within 180 calendar days. A decision on the application shall take effect on the date on which the competent authority registers that decision in the CBAM registry, and the applicant is notified of that decision. Where the registration of a guarantee is required, the decision shall take effect on the day the guarantee is registered. To be an authorized CBAM declarant, neither the applicant nor any responsible or controlling persons may have committed serious or repeated violations of customs, tax or market abuse law in the last three years, or any serious criminal offenses in a business context in the last five years. For applicants that have been established for less than five years, the competent authority will evaluate the application based on existing registry entries. If necessary, it may request criminal records or comparable documents from applicants, beneficial owners and managing directors, with the reasons for the request documented. Applicants must demonstrate with the relevant financial figures and financial information that (1) they are not subject to bankruptcy, (2) they are not in material arrears for the payment of customs duties, taxes or charges that are collected on or in connection with importing goods and financial regulatory obligations and (3) they have sufficient financial standing to meet their obligations and fulfil commitments in regard to the type and volume of economic activity performed. Applicants must have an administrative organization suitable for fulfilling the estimated obligations to surrender CBAM certificates, and have internal controls capable of preventing, detecting and correcting errors in CBAM declarations and CBAM certificates management, and preventing and detecting illegal or irregular transactions. Through the CBAM registry, the competent CBAM authority must consult with the competent authorities in the other EU Member States and the EU Commission if, for example, the competent authorities have any objections against granting the authorized CBAM declaration. Applicants must provide security if they have not been continuously established during the two financial years prior to the year in which the application was submitted. The authorized CBAM declarant must monitor and ensure that the provided security is sufficient to cover the number of CBAM certificates they would need to surrender, based on the estimates made regarding the imports of CBAM goods. The competent authorities shall periodically reassess the authorization requirements, including the information provided by applicants and indications that the requirements may no longer be fulfilled. A person whose status of authorized CBAM declarant has been revoked is still obligated to submit a CBAM declaration for goods imported prior to the revocation. A revocation can also be applied for by the authorization holder. The revocation of the status of authorized CBAM declarant shall take effect the day following the date on which the decision on the revocation has been notified. The notification must be registered in the CBAM registry and the CBAM declarant shall be deemed notified. In specific cases the authorities can also immediately revoke the authorization. The competent authority must give the authorized CBAM declarant the possibility to be heard before revoking the status of authorized CBAM declarant. The revocation decision will not be suspended by an appeal. A person whose status as an authorized CBAM declarant has been revoked may reapply for approval at any time. Further legislative action with regard to CBAM is expected to take place in 2025. In addition to the proposed changes in the first Omnibus Package, a comprehensive review will cover the future (1) potential extension of CBAM to other product categories, (2) inclusion of more downstream goods and (3) supporting measures for exporters. The report is expected to be released in Q3 2025 and the new legislative proposal on the scope extension of CBAM is planned for early 2026. The regulation provides clarity for EU operators subject to the CBAM Regulation. Businesses can now start preparations to file applications for the authorized CBAM declarant authorization. Given the theoretical processing time by the competent CBAM authorities, businesses should consider filing the applications in the first half of 2025 with a substantive application package that addresses all the application requirements to reduce the possibility of the application being withdrawn. Not having the authorized CBAM declarant authorization in place means, if the Commission's proposals are adopted, being unable to import CBAM goods at a volume beyond 50 tons of goods in a year by the customs declarant and exclusion from business for indirect representatives.
Document ID: 2025-0720 | ||||||
