Colin Farrell, Tax Partner, Financial Services, PwC Ireland: The Carbon Border Adjustment Mechanism (CBAM) is a European Union initiative designed to combat ‘carbon leakage’ - companies relocating production to countries with less stringent climate policies. Under CBAM, importers of materials such as steel, aluminium, cement, and fertilisers must: become authorised to import such goods, calculate the carbon emissions associated with these imports, report this data to the European Commission and, from 2027 (but backdated to include 2026 imports), purchase CBAM certificates in proportion to these emissions.
Colin Farrell
The February 2025 Omnibus package introduced a series of important simplifications to ease the administrative and financial burden on importers. Most notably, a new exemption threshold of 50 net tonnes per year means that importers below this level are no longer required to submit CBAM reports, providing significant relief for small businesses and “accidental” CBAM importers.
Additionally, importers can delegate the process to a third party, such as a customs agent, without the need for official accreditation, though the importer remains legally responsible for the accuracy of the data.
The calculation of emissions has also been simplified: certain emissions from downstream processing of aluminium and steel are excluded, and default values used for emissions reporting no longer require third-party verification, making compliance easier.
The annual reporting deadline has been extended from 31 May to 31 August, giving companies more time to gather and submit the necessary data.
Financial obligations have also been reduced, with the minimum rate of certificates to be held lowered from 80% to 50% of reported emissions, and the ability to reuse data from previous years for the same products and countries.
For taxpayers and corporates, these changes mean a more accessible and manageable compliance process, especially for smaller importers. However, companies above the exemption threshold must still prepare by mapping their supply chains, establishing robust emissions tracking and reporting systems, and ensuring timely and accurate declarations. While the new rules significantly reduce the burden for many, larger corporates must invest in compliance infrastructure and stay informed to meet the evolving requirements of the CBAM regime.
Claire Healy
: The Carbon Border Adjustment Mechanism (CBAM) is a system designed to ensure that a fair price is paid for the embedded carbon emissions generated during the production of certain goods imported into the EU. It is a charge on the carbon emissions of certain imported goods to ensure they are taxed equally to products made in the EU.
Importers affected by the Carbon Border Adjustment Mechanism (CBAM) system must comply with registration requirements and reporting obligations. The obligations imposed by CBAM apply to all who import CBAM goods (iron, steel, aluminium, cement, electricity, fertilisers, and hydrogen), where the total intrinsic value of the CBAM goods within the consignment exceeds a value of €150.
The implementation of CBAM commenced in October 2023, with a transitional phase applying from 2023 to 2025. During that time, importers of CBAM goods were required to register on the CBAM transitional registry, and as of January 2024, they have been required to file quarterly reports on CBAM imports.
If a company imports 50 tonnes or more of CBAM goods per calendar year, it must now apply for the status of Authorised CBAM Declarant to continue importing CBAM goods into Ireland from 1 January 2026. From that date, CBAM goods will be subject to a carbon charge when imported. There will be a requirement to declare yearly quantities and embedded emissions of CBAM goods. CBAM certificates must be purchased by the importer and surrendered to cover the declared emissions.
While the transitional measures have been in place since October 2023, with full implementation of CBAM scheduled for 1 January 2026, taxpayers should consider the various implications and how to best prepare. Due consideration should be given to any potential impact of CBAM on your supply chain, which may require broader decarbonisation strategies and consideration of mitigation measures.
Contracts in place with suppliers should be reviewed to ensure the required references to CBAM obligations are stated therein. This should facilitate compliance with the additional reporting obligations. Needless to say, with new CBAM requirements comes additional financial costs for a company. Taxpayers should be prepared for these to avoid any interruption to the importation of CBAM goods.
Deirdre Barnicle
: The CBAM transitional period, where importers are required to register on the transitional registry and make quarterly reports of their CBAM goods, will come to an end on 31 December 2025. From 1 January 2026, imported goods will be subject to a charge relative to their embedded carbon volume. The charge is intended to equalise the playing field for EU-produced goods subject to similar carbon costs and prevent ‘carbon leaking’, where production is relocated to jurisdictions to take advantage of less carbon-intensive rules.
The CBAM rules apply to CBAM goods listed in Annex 1 of Regulation (EU) 2023/956. The list includes certain goods made of iron, steel, cement and aluminium, as well as certain fertilisers, electricity and hydrogen. Companies should be mindful that this list will likely be extended in the future.
The end of the transitional period means increased reporting and payment obligations for importers of CBAM goods. In preparation for 1 January, in-scope importers should seek status as an Authorised CBAM Declarant through the European Commission website and ensure that they have filed their quarterly returns on the transitional registry.
This article appeared in the October 2025 edition of the Irish Tax Monitor.
