The European Union Deforestation Regulation (EUDR) sets different requirements for businesses based on their size and role in the supply chain. This comprehensive guide focuses on two critical aspects of EUDR compliance:
- Extended compliance deadlines for micro and small businesses
- Reduced obligations for SME traders
Extended EUDR Compliance Deadlines for Micro and Small Businesses
Who Gets Extra Time for EUDR Compliance?
Businesses meeting at least two of the three criteria for micro or small enterprises:
- Micro businesses:
- Fewer than 10 employees
- Net turnover: Less than €700,000
- Balance sheet total: Less than €350,000
- Small businesses:
- Fewer than 50 employees
- Net turnover: Less than €8 million
- Balance sheet total: Less than €4 million
What are the EUDR Compliance Deadlines?
- Standard EUDR deadline (for medium and large businesses): December 30, 2024
- Extended EUDR deadline (for micro and small businesses): June 30, 2025
Why the EUDR Compliance Extension?
This extension recognises the unique challenges smaller businesses face in adapting to new regulations, giving them additional time to implement necessary changes without disrupting their operations.
Special EUDR Treatment for SME Traders
Who Are SME Traders Under EUDR?
SME traders are small and medium-sized enterprises that make relevant products available on the EU market after the initial placement by operators. They include micro, small, and medium-sized businesses that meet at least two of the three criteria:
- Micro: As defined above
- Small: As defined above
- Medium:
- Fewer than 250 employees
- Net turnover: Less than €40 million
- Balance sheet total: Less than €20 million
How Are SME Traders Treated Differently Under EUDR?
- No Full Due Diligence Required - Unlike operators and large traders, SME traders don't need to perform comprehensive due diligence checks under EUDR.
- Simplified Record-Keeping for EUDR Compliance - SME Traders must only:
- Collect and keep basic information about their suppliers and customers
- Maintain records for at least 5 years
- Provide this information to authorities upon request
- No Due Diligence Statements - SME traders are not required to submit due diligence statements for EUDR compliance.
Why This EUDR Distinction for SMEs?
This approach ensures that smaller businesses can contribute to deforestation-free supply chains without facing disproportionate administrative and financial burdens.
Key EUDR Definitions for Context
Operators vs. Traders in EUDR
- Operators: Organisations that first place relevant products on the EU market or export them. They have primary responsibility for EUDR compliance.
- Traders: Organisations in the supply chain that make relevant products available after initial placement. They have lighter obligations, unless they are large companies.
EUDR Business Size Classifications
Organisations must meet at least two of the three criteria to qualify for a size category:
- Micro:
- Fewer than 10 employees
- Net turnover: Less than €700,000
- Balance sheet total: Less than €350,000
- Small:
- Fewer than 50 employees
- Net turnover: Less than €8 million
- Balance sheet total: Less than €4 million
- Medium:
- Fewer than 250 employees
- Net turnover: Less than €40 million
- Balance sheet total: Less than €20 million
- Large:
- 250 or more employees
- Net turnover: Over €40 million
- Balance sheet total: Over €20 million
Conclusion: EUDR Compliance for Small Businesses and SME Traders
EUDR's nuanced approach to business size and role reflects an effort to balance environmental protection with practical economic considerations. By offering extended deadlines to micro and small businesses and reduced obligations for SME traders, the regulation aims to ensure widespread compliance while minimising undue strain on smaller enterprises.
For detailed guidance on your specific obligations under EUDR, consult with regulatory experts or refer to official EU EUDR documentation.
Frequently Asked Questions about EUDR for SMEs
Q: When does EUDR come into effect?
A: EUDR comes into effect on December 30, 2024, for most businesses. Micro and small businesses have until June 30, 2025
Q: Do SME traders need to submit due diligence statements under EUDR?
A: No, SME traders are not required to submit due diligence statements for EUDR compliance.
Q: How long do SME traders need to keep records for EUDR compliance?
A: SME traders must maintain records for at least 5 years under EUDR requirements.
Q: What determines if a business is classified as an SME under EUDR?
A: A business is classified as an SME if it meets at least two of three criteria related to employee count, net turnover, and balance sheet total. For example, a medium-sized enterprise has fewer than 250 employees, net turnover less than €40 million, or a balance sheet total less than €20 million.
Q: Are there any exemptions from EUDR for small businesses?
A: While there are no complete exemptions, micro and small businesses have extended compliance deadlines and SME traders have reduced obligations under EUDR.