EUDR Penalties: What Non-Compliance Actually Costs

The penalty framework under Article 25

Article 25 of Regulation (EU) 2023/1115 sets out the penalty requirements that member states must implement. The article specifies minimum penalty levels, meaning member states can impose higher penalties but not lower. The Netherlands has implemented these requirements through national legislation, and Dutch enforcement authorities apply them.

The penalties cover a range of violations, not only placing non-compliant products on the market. Violations of the information collection obligation, failure to submit a DDS, providing false or misleading information in a DDS, and failure to maintain the required records for five years all fall within scope.

Financial penalties

The most serious category of violation, which includes placing products on the EU market without having submitted a DDS or placing products that are not deforestation-free, carries a fine of at least 4% of the operator's total annual turnover in the Union in the business year preceding the fine decision. For a company with EUR 100 million in EU annual turnover, the minimum fine is EUR 4 million. For a company with EUR 500 million in EU annual turnover, the minimum is EUR 20 million.

The 4% figure aligns the EUDR penalty framework with other major EU regulatory instruments, notably the GDPR, which uses the same percentage benchmark for its most serious violations. The comparison is intentional: the EU has established a consistent signal across regulatory regimes that serious non-compliance with major regulatory obligations carries material financial exposure.

For violations that are less serious (procedural failures, incomplete records, minor DDS errors that do not affect the substantive compliance assessment), the fine levels are lower, but the regulation requires that they still be "effective, proportionate, and dissuasive."

Confiscation of goods and revenues

Beyond the fine, Article 25 requires that member states provide for confiscation of the relevant products placed on the market in violation of the regulation. This means the non-compliant goods can be seized. Where those goods have already been sold and revenue generated, the revenue derived from the transaction can also be confiscated.

For an importer who has placed a shipment on the market, sold it to retailers or processors, and received payment, the exposure is not limited to the goods still in inventory. The revenues from the sale are also within reach. The double hit of the fine on top of confiscation of revenues means that the financial exposure from a serious violation can exceed the value of a single shipment.

Temporary market access ban

For serious violations or repeated non-compliance, Article 25 provides for a temporary prohibition on placing relevant commodities and products on the EU market or exporting them. The duration is at the discretion of the member state authority within the parameters the regulation sets. A temporary ban on trading in, for example, cocoa or coffee products on the EU market is an operational disruption that no importer or processor can absorb without significant business impact.

Public disclosure of violations

Article 26 requires member states to publish information on violations and the penalties imposed, without undue delay. The information is to include the name of the natural or legal person found in violation, the nature of the violation, and the penalty imposed. This creates a public record of EUDR non-compliance that goes beyond the direct financial and operational penalties.

For companies operating in branded food, beverage, or consumer goods markets, the reputational dimension of a public EUDR violation finding is potentially more damaging than the financial penalty itself. A company found to have placed cocoa or coffee on the EU market without conducting due diligence faces questions from customers, retailers, and investors that do not resolve quickly.

How penalties are calibrated in practice

Article 25 requires member states to ensure that penalties take into account certain factors when calibrating the specific amount: the gravity and duration of the infringement, the damage caused to the environment, the degree of responsibility, the financial strength of the responsible person, the economic benefit obtained, and whether the person voluntarily disclosed the non-compliance to authorities.

The last factor is significant. A company that identifies a compliance gap and proactively discloses it to authorities before an investigation begins is in a materially better position than one whose non-compliance is discovered during a check. This mirrors the logic of voluntary disclosure in customs and other regulatory frameworks: the underpinning liability still exists, but the penalty treatment reflects the difference in conduct.

For the full framework of EUDR obligations, see our guide on EUDR compliance for EU importers. For companies wanting to understand what simplified due diligence options exist, see our article on EUDR simplified due diligence for SMEs.