Executive summary

The Carbon Border Adjustment Mechanism (CBAM) Omnibus Regulation (Regulation (EU) 2025/2083), amending Regulation (EU) 2023/956 to streamline compliance and reduce the administrative burden for importers of carbon-intensive goods, entered into force on 20 October 2025 following its publication in the Official Journal on 17 October 2025. The European Union (EU) had adopted the new Regulation on 8 October 2025.

Changes in the Regulation include a new mass-based exemption threshold, delayed certificate surrender obligations and simplified emissions reporting. These adjustments aim to maintain the environmental integrity of CBAM while addressing concerns raised by businesses during the transitional phase. Companies importing CBAM-covered goods should assess their exposure under the new rules and prepare for the definitive regime.

Background

CBAM is the cornerstone of the EU's climate policy, designed to equalize carbon costs between domestic and imported goods. Following the start of the transitional phase in October 2023, the EU Commission refined the framework in response to stakeholder feedback. The Omnibus Regulation introduces targeted amendments to facilitate implementation of the definitive regime from 1 January 2026. (For further details, see EY Global Tax Alert, European Commission releases Omnibus Package I proposal to simplify EU Carbon Border Adjustment Mechanism regulation, dated 3 March 2025.)

Key changes introduced by the Omnibus Regulation

1. New mass-based exemption threshold (50 tons per year)

In a central change, a 50-ton per-importer annual threshold is introduced for product imports in the categories iron, steel, aluminum and fertilizers/chemicals. Importers whose total CBAM-covered imports remain below this threshold are exempted from the CBAM obligations. This exemption replaces the value-based exemption of €150 per consignment. The new threshold is designed to reduce the compliance burden for small-volume importers while preserving the environmental scope of the mechanism.

2. Removal of the €150 value threshold

The repeal of the €150 consignment-value exemption simplifies the legal framework and aligns the exemption criteria with environmental impact, rather than commercial value. This change eliminates the need to track all invoice values for exemption purposes and allows a shift to focusing on the physical quantities.

3. Postponement of certificate surrender obligations to 2027

Although the definitive CBAM regime begins on 1 January 2026, the possibility to purchase and surrender CBAM certificates will only apply from February 2027, covering emissions embedded in 2026 imports. This delay gives businesses additional time to adapt their systems and processes to the new requirements. For 2026, the cost must already be considered commercially and for accounting purposes, even if the cash-out through purchase of certificates is possible only from February 2027 onward.

4. New annual declaration deadline: 30 September

The deadline for submitting the annual CBAM declaration has been set as 30 September of the following year, starting with the 2026 reporting year. This replaces earlier expectations of a 31 July deadline and provides businesses additional time to compile and verify emissions data. As an example, the 2026 CBAM declaration will be due by 30 September 2027.

5. Mandatory authorization for CBAM importers

From 2026 onward, only authorized CBAM declarants may import CBAM goods exceeding the 50-ton threshold. Nonetheless, the regulation provides a simplification that allows importers to continue importing beyond the 50-ton limit if an authorization request is filed by 31 March 2026 and the competent authorities have not yet ruled on application. Imports of electricity, hydrogen and any imports made by indirect customs representatives require an Authorized CBAM Declarant authorization from the first import. This requirement introduces a gatekeeping function to ensure that only compliant entities participate in the CBAM regime. (See EY Global Tax Alert,European Commission sets conditions and procedures for authorized CBAM declarants, dated 20 March 2025.)

6. Introduction of CBAM representatives for non-EU importers

Non-EU established importers may now designate a CBAM representative to fulfill their obligations. This is similar to mechanisms in customs and value-added tax (VAT) law and is intended to facilitate compliance for global supply chains involving non-EU entities.

7. Simplified emissions calculation for complex goods

The Omnibus Regulation also introduces simplified methodologies for calculating embedded emissions in goods with multiple components or intermediate inputs. These methods aim to reduce the administrative burden for importers of complex products, particularly if upstream emissions data is difficult to obtain.

8. Recognition of carbon prices paid in third countries

Importers will be able to deduct from their CBAM certificate obligation carbon prices paid in the country of origin if an accredited independent party has verified those prices, along with the actual embedded emissions of the manufacturing installation that produces the CBAM goods. The Regulation sets out the specific conditions for recognition, including documentation, verification and transparency requirements. This provision is intended to avoid double carbon pricing and promote fairness within international trade.

9. Clarified use of default values

The use of default values for emissions reporting has been clarified and expanded. Default values may now be used more broadly, especially by small importers or if the actual embedded emission data verified by an accredited independent party is unavailable. This change is expected to reduce compliance costs and improve predictability.

10. Alignment with EU Emission Trading Scheme (ETS) benchmarks

The methodology for calculating embedded emissions and adjusting for free allocation is now more closely aligned with the EU ETS. This alignment helps ensure consistency across carbon pricing instruments and simplifies the integration of CBAM into the existing compliance frameworks.

Strategic considerations for businesses

The CBAM Omnibus Regulation introduces meaningful simplification, but simultaneously raises new compliance challenges. Businesses should take into account the following considerations.

Threshold analysis

Determine whether the import volumes exceed the 50-ton threshold and whether there is a need to register as an authorized CBAM declarant.

Supply chain planning/supplier collaboration

It is important to collaborate with non-EU manufacturers to make sure they will be able to determine, document and have verified the actual embedded emissions, if using actual embedded emissions is expected to be an economically better option than using default values for calculating CBAM emissions embedded in imported CBAM goods plus the cost to purchase relevant CBAM certificates. Note that determining, documenting and verifying actual embedded emissions must be done throughout the supply chain, including the relevant CBAM precursors.

Commercial consideration

CBAM costs will apply from 1 January 2026 for the import of CBAM-covered goods. This cost should be considered from a commercial perspective. This requires cost transparency, clear designation of roles and cost bearing in multi-party transactions, which should be reflected in clear contractual terms.

Financial provisions

Despite the deferral of certificate-surrender obligations, businesses should establish financial provisions in 2026 to cover the costs of CBAM certificates due in 2027. Also, from 2027, deferred CBAM cost will need to be considered in the accounting.

Third-country carbon pricing

Assess whether carbon prices paid abroad can be recognized and, in collaboration with the manufacturers in the value chain, establish supporting documentation that can be provided during the verification of the actual embedded emissions as well as the carbon price paid.

Process integration

Align CBAM compliance with the existing customs, VAT and sustainability reporting systems.

CBAM organizational implementation

Utilize the Regulation to plan in detail from the perspective of structural and procedural organization, internal controls, education of staff, collaboration with third parties and suppliers and timely implementation of an adequate setup. Non-consideration can lead to unexpected cost and compliance infringements that trigger sanctions, either commercially or driven by enforcement authorities.

Next steps and outlook

The European Commission is expected to publish additional implementing regulations in late 2025 and early 2026 to operationalize the CBAM regulation with further details. These anticipated regulations are expected to provide additional granularity on emissions calculation methodologies, verification requirements, collaboration of the diverse authorities involved, details about CBAM cost calculation (like the CBAM benchmark values as well as the CBAM default values). Businesses should monitor these developments closely as implementation of required changes may require immediate action. Additional public consultations from the EU Commission are also expected. Finally, toward the end of the 2025, the EU Commission is expected to release information about the planned extension of CBAM to a larger portfolio of downstream processed goods.