Country Classification, Updated FAQ and Guidance, Draft Delegated Regulation: EUDR Compliance Made Easier?

On 22 May 2025, the European Commission (“Commission”) made public risk classification of countries under the EU Deforestation Regulation (“EUDR”)¹ which assigned a low level of risk to 140 countries and high level of risk to 4 countries, thus leaving 50 countries in standard risk category. Since simplified due diligence applies to relevant products produced from commodities harvested in low-risk countries, many operators have sighed in relief. But what does simplified due diligence involve? We break it down below.

We also review the most important novelties in the fourth version of the Frequently Asked Questions (“FAQs”), updated Guidance Document (“Guidance”), and Draft Delegated Regulation amending Annex I to the EUDR (“Draft Delegated Regulation”) released by the Commission on 15 April 2025.

1. Simplified Due Diligence: Not So Simple

EUDR allows operators sourcing relevant products produced in low-risk countries to conduct simplified due diligence (EUDR Article 13) to ensure that the relevant products they place on the Union market are deforestation-free, and that the relevant commodities contained therein have been produced in accordance with the relevant legislation of the country of production. 

While simplified due diligence is indeed less burdensome than full-fledged due diligence because it does not involve risk assessment and risk mitigation, it is nevertheless a major undertaking, requiring collection, review, and basic analysis of a very broad range of information, data and documentation, employment of supply chain traceability systems, and, in many cases, engagement of service providers to conduct deforestation-free analysis, as well as engagement of certification schemes to ensure compliance with the EUDR’s legality requirement.

In practical terms, in the same way as full-fledged due diligence, simplified due diligence is aimed at establishing no or negligible risk (no cause of concern) of non-compliance. Simplified due diligence involves:

1. Collection of geolocations of the respective plots of land;
2. Collection of adequately conclusive and verifiable information that the relevant products are deforestation-free (which in many cases would require engagement of a specialized service provider to conduct deforestation-free analysis);
3. Collection of adequately conclusive and verifiable information that the relevant products/commodities have been produced in accordance with the relevant legislation of the country of production (which might be difficult to achieve unless a relevant product is covered by a certification that is aligned with the EUDR);
4. Collection of other information listed in Article 9;
5. Ensuring that the information collected is internally consistent (in accordance with Section 4(b) of the updated Guidance);
6. Assessment of the complexity of the relevant supply chain and ensuring that the relevant products are traceable back to the plots of land where the relevant commodities that each relevant product contains, or has been made using, were produced (and thus employing a supply chain traceability system);
7. Assessment of the risk circumvention and of mixing with products of unknown origin or origin in high-risk or standard-risk countries, ensuring that segregation of EUDR-compliant, relevant products and relevant commodities is maintained across the supply chain, and collection of evidence demonstrating no or negligible risk of circumvention and of mixing (again, this might be difficult to achieve, unless a relevant product is covered by a certification that aligns with the EUDR, especially where complex supply chains are involved);
8. Ascertaining that all relevant commodities and relevant products have been produced in low-risk countries (notably, the Commission clarified in the update to Section 4(b) of the Guidance that simplified due diligence applies where relevant products have been produced (relevant commodities produced/harvested) “exclusively” in low-risk countries);
9. Creating a record (due diligence report) reflecting the aforementioned assessment and ascertainment; and
10. Submission of due diligence statements (“DDS”) to the Information System, etc.

Finally, an operator would still be required to carry out risk assessment and risk mitigation if, while exercising simplified due diligence, it obtains, or is made aware of, relevant information that would indicate a risk that the relevant products are not compliant, or a risk of circumvention.

None of the above is easy or simple. Establishment of a due diligence system capable of handling simplified due diligence is a major compliance effort that requires significant investment of resources.

2. Novelties in FAQ, Guidance and Draft Delegated Regulation

On 16 April 2025, the Commission released updated versions of FAQs and Guidance as well as the Draft Delegated Regulation, aiming not only at clarification, but also at simplification of compliance. The most significant changes introduced by these documents are highlighted below.

Keep in mind, however, that neither FAQs nor Guidance are legally binding. They cannot replace, add to or amend the provisions of the EUDR, which is the only binding document establishing the legal obligations. Nevertheless, the Guidance as well as the FAQs provide a useful reference for anyone who must comply with the EUDR. They will also guide national competent authorities in the process of implementing and enforcing the EUDR.

Simplifying Clarification on Due Diligence to be Carried Out by Non-SME Downstream Operators And Traders (FAQ 3.4, FAQ 7.15)

Updates to FAQs reduce to a bare minimum the scope of “ascertaining” to be carried out by non-SME downstream operators and traders. In particular, FAQs clarify that (a) collection of the reference numbers and verification numbers of upstream DDS and verification of the validity of the reference numbers is sufficient for “ascertaining” that due diligence has been exercised upstream in accordance with the EUDR, and (b) upstream operators and non-SME traders are not required to share geolocation information along the supply chain. FAQs also list possible further steps that non-SME downstream operators and traders may choose to take, given that they retain responsibility for compliance of the relevant products, including checking the chain of and information in the upstream DDS, and consulting reports to be annually published by non-SME operators and traders, as well as consulting results of audits of the due diligence systems of non-SME operators and traders.

Burdensome Clarification on Obligations of Traders that Acquire Relevant Products Covered by DDS Of Non-EU Operators (FAQ 3.7)

Based on EUDR Article 7 and Recital 30, updated FAQs clarify that SME and non-SME EU companies which (a) acquire relevant products placed on the Unionmarket by non-EU operators, and thus covered by DDS of non-EU operators, and (b) make them further available on the Union market, are deemed to be operators (“second operator”) and are required to conduct full-fledged due diligence on the respective relevant products, i.e., they cannot make use of simplifications (such as “ascertaining”) established by the EUDR with respect to relevant products that have been subject to due diligence upstream. This clarification does not simplify compliance requirements imposed on “second operators”. To the contrary, it actually makes it more burdensome than was otherwise expected.

Long Awaited Clarification with Respect to the In-Scope Products and Scope of Due Diligence for Composite Products (FAQ 2.2 And Section 9 of the Guidance), Intended Correction of the Outstanding Scope Issues in the Draft Delegated Regulation

Updated FAQs explain that (a) products listed in Annex I are in-scope only if they are made of a commodity to which they are linked in the corresponding left column of Annex I, and (b) where a relevant product contains or is made of a number of relevant commodities or relevant products containing a number of relevant commodities (“composite relevant product”), due diligence must be exercised only with respect to the relevant commodity (and input relevant products made thereof) to which the composite relevant product is linked in Annex I.

In line with the above, Draft Delegated Regulation envisages introduction of an “ex” prefix for most of the relevant products listed under the oil palm commodity, thus clarifying the scope of the EUDR. Since many such products can be made of commodities other than oil palm, they are out of scope of the EUDR, and the introduction of the “ex” prefix will allow operators to import/export such products under an exemption.

Clarification on the Status of a Company Transforming a Relevant Product into Another Relevant Product (FAQ 3.1.1 and Section 2 of the Guidance)

Updated FAQs assign the status of traders (rather than downstream operators) to companies that process a relevant product into a derived relevant product in situations where both the input relevant product and the output final product fall under the same HS, CN, or TARIC Codes at the level of digits defined in Annex I to the EUDR.

Simplifying Clarification on Re-Import of a Relevant Product Covered by an “Export” DDS and Import of a Relevant Product Made of Inputs Covered by an “Export” DDS (FAQ 5.4)

Updated FAQs assign the status of downstream operators to re-importers of the relevant products covered by “export” DDS and to importers of the relevant products made of inputs covered by “export” DDS. For such cases, they also allow (i) non-SMEs to reference “export” DDS in “import” or “re-import” DDS and (ii) SMEs to use “export” DDS reference numbers in the customs declaration for import (re-import).

Additional Clarification with Respect to an “Annual” DDS (FAQ 5.19 and FAQ 5.21)

Based on the updated FAQs, a DDS may cover relevant products that have not yet been manufactured; however, it should, in principle, cover commodities that have already been produced. Regardless, a DDS can be submitted only upon exercise of due diligence and once all information that is needed for submission is available. Finally, a DDS should not cover supplies of shipments/batches placed or made available on the Union market over a period longer than one year from the time of submission of the DDS.

Additional Clarification on Declaring Geolocations for Relevant Products Stored in Silos, Stacks, Tanks, etc. as Well as Those Involving Continuous Processing (FAQ 1.17)

In addition to an option of declaring geolocations for relevant products stored in silos, tanks, and the like as well as those produced using continuous processing, up to a minimum of 200% capacity involved, updated FAQs allow operators to use other approaches, as long as it is ensured that non-compliant relevant commodities/products or those from an unknown place of production are not mixed up in the process with compliant relevant commodities/products.

Clarification on Due Diligence with respect to “Feed Used for Livestock” (FAQ 1.26.1)

Updated FAQs clarify that, while exercising due diligence with respect to the relevant products that have been made using cattle, operators should ensure the deforestation-free status of the feed used for livestock, if such feed is a relevant product at the time of being fed to cattle.

Clarifications on Due Diligence with Respect to Compliance with EUDR’s Legality Requirement (Section 6(b) of the Guidance)

Guidance’s list of the “additional documents [that] can be also useful” for the purposes of demonstrating compliance with the EUDR’s legality requirement has been amended to include “voluntary self-declaration of producers of relevant commodities in which a producer declares that the product was produced in compliance with the legislation of the country of production”. This amendment emphasizes that while self-declarations may be useful, they cannot serve as sole evidence of compliance.

Intended Extension Of “Packaging” Exemption (FAQ 2.5, FAQ 2.6, Section 7(a) of the Guidance, Draft Delegated Regulation)

Updates to both, FAQs and Guidance, include additional information on the “packaging” exemption. Importantly, the packaging exemption is also envisaged in the Draft Delegated Regulation.

Based on the above, single-use packaging is intended to be exempt from the scope of the EUDR when it is actually used to support, protect, or carry another product placed on the market and presented with that product, provided that it is classified jointly with that other product(s) pursuant to General rules for the interpretation of the Combined Nomenclature.

Packaging clearly suitable for repetitive use is intended to be exempt from the scope of the EUDR from the moment it is actually used to support, protect, or carry another product placed on the market and presented with that product (our assumption is that the above classification requirement also applies in this case), and onwards.  

Intended exemptions for Accessory Materials and Samples (FAQ 2.5, FAQ 2.14, Draft Delegated Regulation)

Draft Delegated Regulation envisages exemptions for (a) accessory materials (user manuals, leaflets, catalogues, marketing materials) “accompanying other products” and (b) samples. Corresponding language has been incorporated into the updated FAQs. The scope of these exemptions is not yet certain, given the extensive public feedback on the Draft Delegated Regulation.

3. Conclusion

The updates to Guidance and FAQs close a number of major gaps in interpretation of the EUDR’s requirements, thus making it possible for operators and traders to finalize their due diligence systems. Further developments and simplifications are expected with the adoption of the Draft Delegated Regulation. Nevertheless, a number of uncertainties remain. Information System also still needs to be adjusted, including to allow submission of DDS by non-EU operators that produce relevant products in the European Union, and non-EU traders that re-sell relevant products within the European Union. The 30 December 2025 date of EUDR’s entry into application is fast approaching, and little time remains for the Commission to address the remaining issues and for the operators to prepare for implementation which—as mentioned —constitutes a major compliance effort.

 

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