CBAM is :

Carbon Border Adjustment Mechanism (CBAM) is one of several initiatives of setting carbon prices proposed by the European green deal.

This is one of the parts of climate policy of the European Union, which was the resulted in Paris 2015 climate agreement and upcoming strategy of European Green Deal of 2019. CBAM’s establishment is supposed to become one of the ways to reduce greenhouse gas emissions and promoting pro-climate initiatives globally.
Regulation, suggested by European Commission (EC), applies not only to the new method of setting customs payments, but also to the whole infrastructure that changes way the goods’ importation happens.
CBAM introduces a new way of setting customs fees at the EU borders taking into account CO2 emissions and covers a group of products with high level emissions that are imported from third countries.
The changes introduced by CBAM have long term consequences for functioning of the entire market. There are also a new obligations for traders, such as a requirement receiving customs registration and CBAM certificate, which were presented.

The scope of the regulation

It extends on the group products with high level emissions. Such goods include, in particular :

• cement;
• electric energy ;
• chemical fertilizers ;
• cast iron and steel;
• aluminum ;
• products obtained from the above higher

Deadlines introduction CBAM reporting :

The first stage ( Transitional period ) from
October 1 , 2023 – December 31 , 2025

• The importers have the obligation towards CBAM providing quarter report

• Imported CBAM’s goods won’t have any financial adjustments

• Penalties sanctions could be applied

Second stage
from January 1 , 2026

• Importers could apply (in their Member State) to become an authorized CBAM declarant
• CBAM declarants would be obligated to buy CBAM certificates that meet built-in emissions
• CBAM quarter report from importers will contain approved data of a built-in emissions. The release date must be certified by accredited verifier

Authorized the applicant

Goods under the new regulation, will be allowed to be presented on the EU market only by so-called authorized applicants. This new subject of customs law will be able to apply for release for free circulation goods which fall under action decisions.
Therefore, import key for the economy goods will be possible only after receiving consent customs body, in the form administrative decision.
At the same time, the applicant must submit an application proving that:

• He didn’t do serious and repeated customs crimes, tax and market abuse legislation and had no records of serious business offense for 5 years that precede the year of submission of the application;
• He holds corresponding financial and operational performance opportunities their own customs and tax obligations in accordance with the Regulation.

After declarant’s authorization the competent the customs authority provides unique CBAM account number. The CBAM account will be used for registration transactions on the so-called CBAM certificates.

CBAM certificates

Appropriate customs bodies will sell CBAM certificates to authorized declarants. Purchased CBAM certificates will be covered in the amount which responds emissions declared by the authorized applicant. The amount of certificates which are offered for repayment, may be reduced by the amount of emissions duties paid in the country exporter. Extra certificates can also be redeemed, at the request of the declarant, by customs authorities.
The function of certificates shouldn’t exceed more than 1 year. According to the project regulations, by June 30 of each year, the competent authority of each member state cancels all CBAM certificates that were expired but still remain in the national register, on the account authorized applicants, in this member state.
Therefore, CBAM certificates are meant to be displayed trade ETS emissions within the EU. As ETS, CBAM will need to be maintained accordingly record and submit periodic declarations.

Administrative punishment

The new provision also provides introduction of strict administrative punishments for authorized declarants and ordinary importers. Any person who has failed CBAM certificates for redemption, in the amount that responds built-in emissions associated with the product are subject to a fine, which responds to increased fine for exceeding emissions, in accordance with Art. 16 of Directive 2003/87/EC of the European Parliament and of the Council of October 13, 2003, which establishes a scheme for trading emission permissions greenhouse gases inside Communities.
In addition to the above-mentioned sanctions, in case of non-compliance with the provisions of the CBAM Regulation, provisions of national sanctions and fines will be applied, in accordance with EU customs legislation. In Poland, the provisions of the Criminal and Tax Codes are applied.

KTF is your reliable partner

“SRC KTF” LLC is ready for cooperation and offers you services of development and preparation of reporting accordingly to requirements of CBAM, as well as the organization of verification of these reports. We guarantee first class professional assistance in the development, calculations and submission of a documentation package to the exporting company and European supervisory authority and receiving positive results.