The law only applies to products listed in Annex I of the regulation. If a product contains one of these commodities but isn\u2019t listed, it’s not covered. For example, a bar of soap with palm oil might be excluded if it\u2019s not in the annex. This list may expand, but any updates must go through formal procedures.<\/p>\n\n\n\n
The Three Legal Pillars of Compliance<\/h3>\n\n\n\n
At the heart of the EUDR are three strict legal requirements. A product may only be placed on the EU market or exported if:<\/p>\n\n\n\n
- \n
- It is deforestation-free (land used in production was not deforested after Dec 31, 2020)<\/li>\n\n\n\n
- It is legally produced (follows the laws of the country of origin)<\/li>\n\n\n\n
- It is backed by a valid due diligence statement submitted electronically<\/li>\n<\/ol>\n\n\n\n
Each of these elements has legal implications. Let\u2019s break them down.<\/p>\n\n\n\n
What \u201cDeforestation-Free\u201d Means Under the Law<\/h2>\n\n\n\n
Legally, the term \u201cdeforestation\u201d is defined quite narrowly. It refers to converting forest land to agricultural use, regardless of legality or cause. That includes clearing forest to plant soy or expand cattle grazing.<\/p>\n\n\n\n
\u201cForest degradation\u201d is also covered. For wood products, converting a primary forest into a plantation is considered degradation and therefore a breach of the regulation.<\/p>\n\n\n\n
The cutoff date of December 31, 2020 is non-negotiable. If a product\u2019s raw material came from land cleared or degraded after that date, it\u2019s disqualified.<\/p>\n\n\n\n
For businesses, this means you\u2019ll need to prove what happened on that land and when.<\/p>\n\n\n\n
![\"\"](\"https:\/\/eudr.co\/wp-content\/uploads\/2025\/09\/deforestation-1-1024x683.jpg\")
<\/figure>\n\n\n\nLegal Definition of \u201cLegally Produced\u201d<\/h2>\n\n\n\n
The EUDR requires that the production process complies with all relevant laws of the country where the commodity was produced. This includes, but isn\u2019t limited to:<\/p>\n\n\n\n
- \n
- Land use rights and land tenure laws<\/li>\n\n\n\n
- Environmental protection legislation<\/li>\n\n\n\n
- Forest management laws<\/li>\n\n\n\n
- Labor laws and Indigenous rights<\/li>\n\n\n\n
- Anti-corruption, tax, and customs regulations<\/li>\n<\/ul>\n\n\n\n
Importantly, operators must provide supporting documentation to demonstrate this legal compliance. It\u2019s not enough to assume legality based on permits or supplier declarations.<\/p>\n\n\n\n
What Is a Due Diligence Statement?<\/h2>\n\n\n\n
A due diligence statement is the central legal requirement under the EUDR. Before a company can place goods on the EU market or export them, it must submit this statement through the EU\u2019s official information system. The operator is responsible for confirming that the products are compliant with all regulatory obligations. The statement must include detailed geolocation data for every plot of land where the commodities were produced, along with the type and quantity of the products, including any relevant identifying codes such as HS codes. It also needs to specify the date or production period, provide a full record of the risk assessment and any mitigation steps taken, and include conclusive proof that the products are both legally produced and deforestation-free. This submission isn\u2019t just procedural – it\u2019s a binding declaration. If the information provided is incomplete, misleading, or based on insufficient due diligence, the operator may face legal consequences, including penalties or restrictions from trading.<\/p>\n\n\n\n
Operators vs. Traders: Different Roles, Different Rules<\/h2>\n\n\n\n
The regulation defines two main types of actors:<\/p>\n\n\n\n
Operat\u00f6rer<\/h3>\n\n\n\n
These are the first entities to place covered products on the EU market or export them. They carry full legal responsibility for compliance.<\/p>\n\n\n\n
Handlare<\/h3>\n\n\n\n
These are any other businesses that make the product available downstream (e.g. wholesalers, retailers). Their obligations depend on size:<\/p>\n\n\n\n
- \n
- Large traders<\/strong> must verify that upstream due diligence has been completed<\/li>\n\n\n\n
- Small and micro enterprises<\/strong> (SMEs) have reduced obligations, but must still maintain traceability and documentation<\/li>\n<\/ul>\n\n\n\n
Traders are still accountable for knowingly distributing non-compliant goods.<\/p>\n\n\n\n
Traceability and Geolocation Requirements<\/h2>\n\n\n\n
This is one of the most legally challenging parts of the EUDR. Operators are required to provide plot-level geolocation data for every batch of commodities they place on or export from the EU market. The regulation is very specific about what this data must include:<\/p>\n\n\n\n
- \n
- Latitude and longitude coordinates to at least six decimal places<\/li>\n\n\n\n
- Polygons outlining the entire plot perimeter if the area is larger than 4 hectares<\/li>\n\n\n\n
- A list of all production sites if the commodity came from multiple plots<\/li>\n\n\n\n
- For cattle, coordinates of each establishment where the animal was kept<\/li>\n<\/ul>\n\n\n\n
These requirements might sound technical, but they serve a clear legal purpose. The EU wants full visibility of where every covered commodity originates so it can verify that no deforestation or forest degradation occurred after December 31, 2020. That\u2019s why general sourcing information or broad regional data isn\u2019t enough. Authorities must be able to trace every product back to a precise location and confirm that it complies with the regulation.<\/p>\n\n\n\n
For larger farms, the use of polygons instead of single GPS points ensures that the full boundaries of the land are recorded and can be checked against satellite imagery. When multiple farms contribute to one shipment, every plot must be identified, even if the goods are later mixed or processed together. In the livestock sector, the rule goes further: for cattle, each location where the animal was kept must be logged to maintain a full trace of its movements.<\/p>\n\n\n\n
The regulation also makes it clear that mass-balance or mixed-origin systems are not acceptable. In other words, operators cannot blend compliant and non-compliant goods or rely on averages. Every component of the shipment must individually meet the deforestation-free and legality criteria. This pushes companies to establish fully segregated supply chains for EU-bound products and to maintain detailed, verifiable records.<\/p>\n\n\n\n
Complying with these traceability and geolocation obligations may require new data systems, stronger collaboration with suppliers, and investment in satellite-based monitoring tools. But for companies trading in regulated commodities, these steps are essential. Without complete and accurate location data, compliance simply isn\u2019t possible under the EUDR.<\/p>\n\n\n\n
![\"\"](\"https:\/\/eudr.co\/wp-content\/uploads\/2025\/09\/deforestation3-1024x683.jpg\")
<\/figure>\n\n\n\nThe Risk Assessment Obligation<\/h2>\n\n\n\n
Legally, it\u2019s not enough to just collect documents. Operators must conduct a formal risk assessment based on:<\/p>\n\n\n\n
- \n
- Country risk classification (low, standard, or high)<\/li>\n\n\n\n
- Complexity and traceability of the supply chain<\/li>\n\n\n\n
- Presence of Indigenous Peoples or land disputes<\/li>\n\n\n\n
- Known governance issues in the source country<\/li>\n\n\n\n
- Potential for mixing compliant and non-compliant products<\/li>\n<\/ul>\n\n\n\n
If there\u2019s any indication of more than \u201cnegligible risk,\u201d mitigation becomes mandatory.<\/p>\n\n\n\n
Country Risk Benchmarking<\/h3>\n\n\n\n
The European Commission classifies countries into:<\/p>\n\n\n\n
- \n
- L\u00e5g risk<\/strong>: simplified due diligence (still requires geolocation, but no mitigation)<\/li>\n\n\n\n
- Standardrisk<\/strong>: full due diligence, risk assessment, and mitigation if needed<\/li>\n\n\n\n
- H\u00f6g risk<\/strong>: enhanced scrutiny, higher inspection rate, and likely mitigation required<\/li>\n<\/ul>\n\n\n\n
This classification affects how burdensome compliance is. For example, sourcing from a low-risk country like Australia may reduce your reporting obligations. But keep in mind the risk status is reviewed regularly and may change.<\/p>\n\n\n\n
What Counts as Mitigation?<\/h3>\n\n\n\n
Mitigation, under the EUDR, comes into play when a company\u2019s risk assessment shows that the risk of deforestation or legal non-compliance is more than negligible. In such cases, the law requires the operator to take concrete steps to reduce that risk before proceeding. This might involve collecting additional documentation or clarifying data gaps, especially if information from suppliers is incomplete or outdated. Companies may need to conduct on-site audits or inspections to verify land use practices and production methods. In some cases, satellite imagery or remote sensing tools can be used to confirm that land has not been deforested or degraded after the cutoff date. Operators might also choose to bring in independent third-party verification to strengthen the credibility of their compliance documentation. If these efforts still leave too much uncertainty, the only viable option may be to change suppliers or source from different regions where compliance can be better guaranteed. The legal threshold is clear: if the risk cannot be reduced to negligible, the product must not be placed on the EU market or exported.<\/p>\n\n\n\n
How Is the EUDR Enforced?<\/h2>\n\n\n\n
The enforcement of the EUDR doesn\u2019t rest with a single EU body. Instead, each Member State is responsible for implementing the regulation through what are known as \u201ccompetent authorities.\u201d These national authorities are the ones who review due diligence statements submitted by operators, inspect shipments at border crossings, carry out audits on businesses, and investigate any complaints or alerts that suggest a company might not be compliant. These alerts are referred to as \u201csubstantiated concerns\u201d and can come from NGOs, journalists, or even competitors.<\/p>\n\n\n\n
To ensure consistent enforcement, the regulation sets minimum inspection targets based on a country\u2019s assigned risk level. For operators sourcing from low-risk countries, at least 1 percent must be checked. That figure rises to 3 percent for standard-risk countries and 9 percent for high-risk ones. These percentages aren\u2019t fixed caps – they\u2019re baselines. Authorities can conduct more checks if they receive credible concerns, notice irregularities, or identify previous violations tied to a company or supply chain.<\/p>\n\n\n\n
Unannounced audits are also permitted, and in some cases, expected. This is meant to discourage superficial compliance and ensure that the systems companies put in place can hold up under real scrutiny. The idea isn\u2019t just to punish violations, but to make compliance a continuous process. Companies need to stay alert, keep records up to date, and be ready for verification at any time.<\/p>\n\n\n\n
What Are the Legal Penalties?<\/h3>\n\n\n\n
Failure to comply can lead to serious consequences:<\/p>\n\n\n\n
- \n
- Fines<\/strong>: Up to 4% of annual EU turnover, calculated based on environmental harm and repeat violations<\/li>\n\n\n\n
- Confiscation<\/strong>: Goods or profits can be seized<\/li>\n\n\n\n
- Exclusion<\/strong>: Companies may be temporarily banned from public procurement or financial support<\/li>\n\n\n\n
- Trading bans<\/strong>: Offenders can be blocked from placing products on the EU market<\/li>\n<\/ul>\n\n\n\n
These penalties apply not just to EU-based companies, but also to foreign exporters whose products violate the regulation.<\/p>\n\n\n\n
Special Provisions for SMEs<\/h3>\n\n\n\n
- Confiscation<\/strong>: Goods or profits can be seized<\/li>\n\n\n\n
- Standardrisk<\/strong>: full due diligence, risk assessment, and mitigation if needed<\/li>\n\n\n\n
- L\u00e5g risk<\/strong>: simplified due diligence (still requires geolocation, but no mitigation)<\/li>\n\n\n\n
- Small and micro enterprises<\/strong> (SMEs) have reduced obligations, but must still maintain traceability and documentation<\/li>\n<\/ul>\n\n\n\n
- Large traders<\/strong> must verify that upstream due diligence has been completed<\/li>\n\n\n\n
![\"\"](\"https:\/\/eudr.co\/wp-content\/uploads\/2025\/06\/eudr.png\")
<\/figure>\n\n\n\n![\"\"](\"https:\/\/eudr.co\/wp-content\/uploads\/2025\/09\/deforestation6-1024x686.jpg\")
<\/figure>\n\n\n\n