From coffee and chocolate to furniture, paper and tyres, businesses will now need to know not only who supplied a product, but also the origin of its raw materials.

Deforestation may take place thousands of kilometres away from Europe, yet it is often linked to products consumed daily in the European market. This is precisely why the EU adopted Regulation (EU) 2023/1115 on deforestation-free products, commonly known as the EUDR, short for the EU Deforestation Regulation.

Annex I of the Regulation contains an extensive list of covered products, including coffee, cocoa, soy, palm oil, rubber, all types of timber (including paper) and cattle-derived products. These commodities serve as key raw materials for a wide range of food products and consumer goods.

As a regulation rather than a directive, the EUDR is directly applicable in all Member States, including Cyprus, without requiring transposition into national law. However, Member States must organise inspections, designate competent authorities and establish effective penalties.

What exactly does it prohibit?

The EUDR establishes specific conditions for every product falling within its scope.

A relevant product may be placed on the EU market or exported from it only if it meets the following requirements: it is (a) deforestation-free, (b) has been produced in accordance with the relevant legislation of the country of production, and (c) is covered by the required due diligence statement or, where applicable, a simplified declaration.

Broadly speaking, a deforestation-free product is one whose relevant raw materials were produced on land that has not been subject to deforestation after 31 December 2020.

For timber, there is an additional requirement: the production must not have caused forest degradation after the same date. This deadline is significant because future compliance cannot “legalise” deforestation that took place after the end of 2020. Read more about the relevant provisions.

Another requirement concerns the legality of production. Businesses must ensure compliance with the relevant laws of the country of production, including rules on land-use rights, environmental protection, labour and human rights, third-party rights, taxation, trade and customs.

Which products are covered?

The EUDR covers seven main commodity categories: cattle, cocoa, coffee, palm oil, rubber, soy and timber, together with their derived products.

Annex I of the Regulation also includes many processed and derived products, identified through specific customs codes, beyond the raw materials themselves.

Depending on their customs classification, products falling within the scope may include beef and certain leather products, chocolate, coffee preparations, palm oil products, tyres, timber, paper and furniture.

This means that businesses must examine both the composition of their products and, crucially, their customs classification codes.

The product’s “identity”

Another major change introduced by the EUDR is the requirement for effective traceability. Businesses placing a product on the market for the first time or exporting it must know the origin of the relevant raw material, in accordance with the Regulation.

The information that must be collected includes the country of production, the quantity, the identity of suppliers and, most importantly, the geographical location of the plots of land where the raw material was produced. For large plots, the boundaries must generally be mapped rather than providing only a general reference to a region or province.

Geolocation data makes it possible to compare the declared land plots with satellite imagery and other data to assess whether deforestation has occurred after the cut-off date. An invoice or supplier certificate alone is not sufficient if there is no reliable link between the product and its actual place of production.

Under the current framework, the main obligations apply from 30 December 2026 for medium-sized and large businesses and from 30 June 2027 for micro and small businesses.

Specific transitional arrangements apply to certain small-scale timber operators who were already covered by the previous EU Timber Regulation.

Mapping products, communicating with suppliers, collecting geographical coordinates and adapting IT systems all take time. Businesses should therefore have already begun preparing.

Penalties

The EUDR requires national penalties to be effective, proportionate and dissuasive. These may include fines, confiscation of products or the proceeds derived from them, temporary exclusion from public procurement and public funding, as well as temporary bans on placing products on the market or exporting them.

For legal entities, the maximum fine must be at least 4% of their total annual EU-wide turnover in the preceding financial year.

The EUDR seeks to ensure that access to the European market will no longer be based on a lack of knowledge about where and how a product was produced.