Navigating the CBAM policies operating in the Netherlands

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On the 1st of October 2023, the Netherlands implemented the Carbon Border Adjustment Mechanism (CBAM). This regulatory framework within the European Union will have a potential compliance and financial impact on Dutch companies and businesses trading via the Netherlands. In this blog, we aim to provide you with the background of CBAM as well as an overview of the upcoming documentation requirements.

 

About CBAM

The European Union is steadfast in its commitment to achieving a reduction in emissions. In pursuit of these goals, the EU has implemented various climate change measures, with a particular emphasis on the EU Emission Trading System (ETS).

Recognizing certain limitations of the ETS, the EU has introduced the Carbon Border Adjustment Mechanism (CBAM) to complement its efforts. CBAM is designed to play a crucial role in contributing to a global reduction in carbon emissions. This mechanism involves adjusting the prices of specific goods imported into the EU to reflect the CO2 emissions generated during their production outside the EU. The primary objective of CBAM is to address the risk of carbon leakage by incentivizing emission reduction efforts in third countries.

 

Which products are subject to CBAM regulations?

Importers should take note of specific goods falling within designated categories (Steel & Iron, Cement, Fertilizers, Aluminum, Hydrogen, and any finished products including these materials).

This obligation is applicable when these goods are manufactured outside the EU and subsequently imported into the EU for free market trading. There are exceptions to the CBAM obligation, including:

  • Products produced within the EU;
  • Products valued at € 150 or less (which are considered goods of negligible value);
  • Personal belongings of travellers;
  • Goods transported or used in connection with military activities
  • Returned goods process – items that were previously in the EU and return within 3 years (customs procedure for returned goods) – reporting obligations apply in this case, but ultimately, no certificates are required.
Reporting obligations for companies

The CBAM entry process will have two phases, i.e. transition phase (October 1, 2023 until December 31, 2025) and overall entry phase (from January 1, 2026).

During the initial transition phase, businesses must promptly attend to two critical components: import declaration and mandatory reporting. Both of these vital documents must be submitted to the Dutch customs authority without delay.

1. Import declaration

Starting from October 1, 2023, importers have an obligation to submit a comprehensive quarterly report to the European Commission. This report is due within one month after each quarter and must outline the quantity of CBAM goods imported, along with the corresponding CO2 emissions generated during their production. The first due date for reporting is therefore January 31, 2024.

Guidance documents for reporting can be found on the CBAM transitional registry platform of the European Commission’s (follow link).

 

2. Mandatory reporting

Starting October 1, 2023, importers of the above mentioned goods need to file a fictitious report to the Dutch Customs Authorities. This need to be done in order for the importer to acknowledge that they are aware of the CBAM changes. No additional documents are needed, but it’s essential to capture the relevant code in your import declaration:

  • 1200 – With this fictitious document code, you indicate that you are aware of the mandatory reporting requirement for the declared CBAM goods.
  • 1300 – With this fictitious document code, you indicate that the CBAM goods you declared are exempt from the mandatory reporting requirement. (For example, products are produced in the EU).

 

Links for more information

  • EU framework was established by an EU Regulation adopted by EU co-legislators on 16 May 2023 (follow link)
  • Background of CBAM and key elements on the EU Commission website (follow link)
  • Dutch Tax authorities CBAM summary (follow link)

Need assistance?

For any inquiries regarding CBAM or the documentation process, feel free to schedule a call with us. If you need assistance in determining the most beneficial course of action, please don’t hesitate to reach out to Hub van Grinsven at Maprima Business Support BV ([email protected]).