On May 17, 2023, the European Union Regulation 2023/956 establishing the Carbon
Border Adjustment Mechanism (CBAM) entered into force. The regulation established a
tax on the carbon emissions that result from the production of carbon-intensive goods.
The tax is assessed on goods entering the EU for free circulation and is designed to
encourage the cleaner production of carbon products in non-EU countries.

CBAM was implemented in stages. The initial transitional phase, from 2024 until January
2026, requires only reporting of imported quantities and greenhouse emissions data
from those goods but no collection of taxes. Starting in 2026, only authorized importers
will be allowed to enter “CBAM goods” into the EU and the collection of CBAM taxes will
commence.

Details on CBAM reporting requirements, mandatory data, and how to prepare for the
2026 implementation, can be found at European Commission – Taxation and Customs
Union.

Goods that fall within the scope of CBAM are outlined in Annex I to the Regulation. Items
are listed according to their corresponding Harmonised System (HS) code. Included in
Annex I are many goods made of iron, steel and aluminium.

Certain imported products are specifically exempt from the CBAM. These include:

• Imports from EFTA countries (Iceland, Norway, Liechtenstein and Switzerland) and some territories (e.g. Heligoland)
• Goods listed in Annex I of Regulation (EU) 2023/956 whose total value per consignment does not exceed Eur150
• Goods in personal luggage within the value limit of EUR150

Companies should review their supply chain to identify any goods that may fall into the
CBAM scope and, if any, take advantage of the dedicated tools and trainings developed
by the EU to help importers perform and report these calculations in this transitional
phase.

Please contact our Marken team at Tradecompliance@marken.com if you have any
questions.