Clarification on CBAM Reporting Requirements


CBAM (Important Update): Clarification on Reporting Requirements

On 20 October 2023, the Federation of Belgian enterprises (VBO/FEB) hosted a CBAM information session with the participation of the European Commission (DG TAXUD) and two Federal Public Services (FOD/SPF), Finances and Public Health. 

During the session, PwC raised an important question regarding the definition of the Reporting Declarant as outlined in Article 2 of the implementing regulation for the transitional phase.In our view the latter is causing some ambiguity and uncertainty among economic operators. In particular, the CBAM legislation is problematic for companies importing through direct customs representatives, a common practice for international trade. 

What is the issue?

Indeed the CBAM legislation (see our previous newsflash here) provides a strict definition of a CBAM Declarant being, 

(a) The importer who lodges a customs declaration for the release of goods in their own name and on their own behalf.

(b) The person holding an Entry into the Declarant’s Record authorization.

(c) The indirect customs representative,

and does not foresee the possibility of a direct customs representative for imports in the definition of CBAM Declarant. 

For clarity, an indirect representative lodges a declaration in its own name, but on behalf of a third party. As such, there is a joint liability. Due to the growing impact of the customs declaration and strong links with other legislation, such as CBAM, customs representatives want to limit their scope and liability and strongly prefer the direct representation model where they lodge declarations in name and on behalf of third parties. 

This results in a practical concern as a vast majority of importers is using a customs representative and does not do any self filing (e.g., via  PLDA in Belgium (option (a) above) or making use of the simplified EiDR regime (option (b) above)). Not only is their the push away from indirect representation, companies often use a multitude of different brokers depending on the mode of transport, country etc. 

This creates significant uncertainties regarding who can and must fulfil the role of the Declarant in such cases. On one hand, the importers using a direct customs representative cannot be the CBAM Declarant as they do not lodge their own declarations (the broker is), and on the other hand, the direct customs representatives lodging the declaration for these same stakeholders are also unable to act as the CBAM reporting declarant because legislation specifically prohibits it. 

Policy response

The responses shared in the session did not provide clarity or perspective as the representatives of the European Commission and the Federal Public Services were unable to provide an unambiguous answer. 

While the European Commission is open to feedback, it is unlikely that an erratum of the CBAM law will be initiated soon. 

Key considerations

After having pointed out the highly impractical nature of this definition for importations undertaken under a direct representation scheme, it is expected that companies will need to take one of the two following actions:

  1. Declare their own goods via PLDA or third-party software to become a CBAM Reporting Declarant; or
  2. Renegotiate their contracts with their customs brokers / service providers to shift to indirect representation;

in addition to…

ensure sufficient data sharing as the brokers will not possess the required information on embedded emissions linked to the imports. 

PwC continues to monitor the situation and is actively collaborating with the different stakeholders in order to maximise information sharing and minimise possible disruptions resulting from regulatory changes.