What is the carbon duty, i.e., the Carbon Border Adjustment Mechanism (CBAM)?
In May 2023, the European Union codified the rules and measures to offset the carbon intensity of imported goods into regulation (Regulation 2023/959 of the European Parliament and of the Council).
The aim of the measure is to counteract the competitive advantage of cheaper but more environmentally damaging products in EU countries and to reduce pollutant emissions. It is worth noting the acronym CBAM (Carbon Border Adjustment Mechanism) created from the English equivalent of the term, as it will be known in public discourse for the Union. However, with the cooperation of the Hungarian Climate Protection Authority, the data provision obligation, effective from January 31, 2024, will be implemented, and from 2026, in addition to the CBAM data provision obligation, the obligation to pay carbon duty will also come into effect.
CBAM: who is affected?
Companies involved in the following activities are affected by the registration, declaration and subsequent payment obligations in relation to CBAM/Carbon Duty. The parties subject to CBAM are companies importing the product concerned from a third country and their customs agents.
The following products are currently affected:
- Cement,
- Electricity,
- Fertilisers,
- Iron, steel and aluminium products
- Chemicals.
consult with our cbam specialist
What are the CBAM obligations?
The CBAM regulation imposes registration, record-keeping, reporting and payment obligations on data subjects.
1. Registration with the national authority and reporting to the EU authority - by 31 January 2024.
During a transitional period until 31 December 2025, importers / or the indirect customs representative in the case of a non-EU importer / or the indirect customs representative in the case of an EU importer, if the indirect customs representative agrees, will be required to register, record and report quarterly.
The fulfilment of the CBAM obligations is monitored by the National Climate Change Authority and sanctions are imposed for failure to fulfil the obligations or for inaccurate fulfilment. On 22 January 2024, the opportunity to complete the national CBAM registration was opened on the website of the National Climate Protection Authority.
The deadline for the first reporting obligation after registration is also 31 January 2024 (for the period from 1 October 2023 to 31 December 2023).
The NAV has also sent a direct letter to those concerned, asking them to comply with the CBAM obligation. If your company has received such a request from the NAV and has any questions, please contact our experts.
The first two CBAM quarterly reports can be corrected and replaced without penalty until 31 July 2024!
2. Reporting directly to the EU - 1 December 2024
From 1 December 2024, before importing goods into the customs territory of the EU, any importer established in a Member State or, in the case of an importer outside the EU, the indirect customs representative, or, in the case of an importer established in the EU, the indirect customs representative, if the indirect customs representative agrees, must submit an application for CBAM declarant status to the competent authority.
3. Obligation to declare when importing goods - 1 January 2026
From 1 January 2026, only an authorised CBAM declarant will be allowed to import goods into the customs territory of the Union.
4. Direct declaration to the EU - 1 December 2024
From 1 December 2024, before importing goods into the customs territory of the Union, any importer established in a Member State or, in the case of an importer established outside the EU, the indirect customs representative, or, in the case of an importer established in the EU, the indirect customs representative, if the indirect customs representative agrees, must submit an application for CBAM declarant status to the competent authority.
5. Obligation to declare when importing goods - 1 January 2026
From 1 January 2026, only an authorised CBAM declarant will be allowed to import goods into the customs territory of the Union.
6. Obligation to keep records - 1 January 2026
After 1 January 2026, each authorised CBAM declarant will be required to submit a CBAM declaration to the competent authority by 31 May each year for the previous calendar year, and for the first time in 2027 for the year 2026, using the CBAM register.
7. Obligation to pay - 1 January 2026
From 1 January 2026, imports of the products concerned will be subject to a payment obligation.
RSM CBAM advisory team assist you in :
- Advice on interpreting regulations and meeting obligations
- Assistance with the company's CBAM registration;
- Overview of the company's involvement, advice on determining the data required for declarations, assistance in providing data
- Development of the CBAM register, preparation of the company for its obligations after the CBAM transition period (2024-2026).
Background rules:
- REGULATION (EU) No 2023/956 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 10 May 2023 establishing a mechanism to offset the carbon intensity of imported goods (the "Regulation") was published in the Official Journal of the European Union on 16 May 2023.
- On 15 September 2023, the EU adopted COMMISSION REGULATION (EU) No 2023/1773 (17 August 2023) laying down the rules for the implementation of the above CBAM Regulation during its phase-in period.
- The CBAM provisions will be phased in in several stages from 01 October 2023.
