The EU Deforestation Regulation applies to a broader range of businesses than many expect. Whether you are an importer, a manufacturer, a retailer, or a non-EU company selling into Europe, understanding your obligations is the first step toward compliance.
The EUDR defines two distinct categories of regulated entities, each with different levels of obligation. Understanding which category your business falls into is essential for determining what you need to do.
An operator is any natural or legal person who, in the course of a commercial activity, places relevant commodities or products on the EU market for the first time, or exports them from the EU. The key phrase is "first places on the market" — this means the entity that introduces the product into the EU's commercial ecosystem, whether through import, domestic production, or any other means.
Operators carry the full weight of EUDR compliance. They must:
In practical terms, the operator is usually the importer — the entity named on the customs declaration when goods enter the EU. For domestically produced commodities (such as wood harvested within the EU), the operator is the entity that first makes the product available on the market.
A trader is any natural or legal person in the supply chain other than the operator who, in the course of a commercial activity, makes relevant commodities or products available on the EU market. In simpler terms, traders are the businesses that buy and resell products that are already on the EU market — distributors, wholesalers, retailers, and intermediaries.
Traders have lighter obligations than operators, but they are not exempt from the regulation. Traders must:
However, there is an important exception: traders that are not SMEs (i.e., large traders) are subject to the same full due diligence obligations as operators. This means large distributors, retailers, and wholesalers must conduct their own due diligence, not just retain DDS reference numbers.
If your business is established in the EU and you import, produce, or trade any of the seven regulated commodities (cattle, cocoa, coffee, oil palm, rubber, soya, wood) or their derived products, you are subject to the EUDR. The regulation applies regardless of the size of your business, although the timeline and the extent of obligations differ based on whether you qualify as an SME.
For EU-based importers, the compliance obligation is straightforward: if you are the entity that clears goods through EU customs, you are the operator. You must complete due diligence and submit a DDS before the goods can be released for circulation.
For EU-based manufacturers, the situation depends on your inputs. If you use any regulated commodity or derived product as an ingredient or raw material — for example, if you are a chocolate manufacturer using cocoa, a furniture maker using wood, or a tyre manufacturer using rubber — you need to ensure that your suppliers have valid DDS reference numbers and that the products you receive are compliant. If you are the first to place a finished product containing regulated commodities on the EU market, you may be classified as an operator for that product.
The EUDR has significant implications for companies based outside the European Union that sell commodities or products into the EU market. The regulation applies to the product, not to the location of the company. If a non-EU company is the first entity to place a regulated product on the EU market, that company is the operator and must comply with the full due diligence requirements.
This is particularly relevant for:
The critical question for non-EU companies is: who is the importer of record? If the non-EU company handles customs clearance and is named as the declarant on the customs declaration, it is the operator. If the EU buyer handles customs clearance, the EU buyer is the operator. This distinction has major implications for compliance responsibility and should be addressed explicitly in commercial contracts and Incoterms agreements.
The EUDR provides a longer transition period for small and medium-sized enterprises (SMEs). While large operators and non-SME traders must comply by 30 December 2026, SMEs have until 30 June 2027 to meet their obligations.
The EU definition of an SME is a company that meets at least two of the following three criteria:
It is important to note that the SME extension applies to the timeline, not to the obligations. SME operators must still conduct full due diligence, collect geolocation data, and submit DDS statements — they simply have six additional months to prepare. SME traders benefit from simplified obligations (retaining DDS reference numbers rather than conducting full due diligence), but this simplification applies regardless of the timeline.
The EUDR creates a clear distinction between upstream and downstream obligations in the supply chain:
This system is designed to avoid duplication of effort. The upstream operator does the heavy lifting of verifying deforestation-free status and legality, and this verification flows downstream through the DDS reference number. However, downstream actors are not absolved of all responsibility — they must exercise reasonable vigilance and cannot ignore red flags.
One area that catches many businesses off guard is the EUDR's application to manufacturers that use regulated commodities as ingredients or inputs. The regulation covers not just raw commodities but also a wide range of derived products listed in Annex I.
Examples of manufacturers that may be in scope include:
If you are a manufacturer and you source any of these inputs, you need to verify that your suppliers can provide valid DDS reference numbers. If you import these inputs directly from outside the EU, you are the operator and must conduct full due diligence yourself.
A common misconception is that holding a sustainability certification — such as Rainforest Alliance, FSC, PEFC, RSPO, or Fairtrade — exempts a company from EUDR compliance. This is not the case.
The EUDR explicitly states that certifications and third-party verification schemes may be used as part of the risk assessment process, but they do not replace the due diligence obligation. Article 10(2) of the regulation lists certification schemes as one of several factors that operators may consider when assessing risk, but it also makes clear that no certification scheme can, on its own, demonstrate compliance with the regulation's requirements.
The reasons for this are straightforward:
In practice, certifications can be a valuable input to your risk assessment — a certified supply chain may present lower risk than an uncertified one — but they are not a substitute for the EUDR's due diligence process.
Perhaps the most consequential practical question under the EUDR is: who is the importer? The answer determines which entity bears the full compliance obligation.
Under EU customs law, the importer is the entity that files the customs declaration (or on whose behalf it is filed) when goods enter the EU. This is the entity that becomes the operator under the EUDR. The determination depends on the commercial and logistics arrangements between the parties:
This question is not just a legal technicality — it has major implications for compliance costs, risk exposure, and commercial relationships. Many companies are currently renegotiating their Incoterms and contractual arrangements to clarify EUDR responsibilities. The key principle is: whoever controls the customs declaration controls the compliance obligation.
If you are unsure whether your business is subject to the EUDR, start with these steps:
Sources: This article draws on Regulation (EU) 2023/1115 (EUDR) and the European Commission's EUDR implementation guidance.
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