Hot Spot EU Carbon Border Adjustment Mechanism (CBAM) – NOW LIVE

What is it?

The EU CBAM tax is live from 1st January 2026. Products in scope that are imported into the EU will attract a tax based on the carbon content.

The product’s CN* code determines if it is subject to the CBAM tax.

Currently, valves (CN codes starting 8481) are NOT covered by EU CBAM.

Tubes, pipes, flanges, fittings and fasteners (CN codes starting 72 or 73) ARE covered.

• The CBAM tax is paid by importers by the purchase of CBAM certificates. The value is determined by the CO₂ content.
• The CO₂ content can be based on actual values, determined by each manufacturing facility (“installations”) or default values which are by country and production process. Values are also available for goods of unknown origin. Default values will increase annually.
• Benchmark free allocation allowances can be deducted (these are typical CO₂ values that would be achieved within the EU).
• Defaults for CO₂ content and benchmark allocation allowances have been published by the EU in mid-December 2025.
• The defaults are set to incentivise the use of actual values. For example €435/tonne default, €158/tonne actual.
• The de minimis exemption is 50 tonnes of goods per year per importer.
• EU CBAM certificates will only be on sale from February 2027. However, reporting of imports to the EU is on a quarterly basis.
• The certificate price will be based on the average EU ETS auction price.
• Fines of €134/tCO₂e (failure to purchase CBAM certificates) and €670/tCO₂e (importing without authorisation) are possible.
• Documents should be retained for 4 years after CBAM report submission.
• Additional product categories will be introduced from 2028 which includes downstream steel and aluminium products, heavy machinery, specialised equipment and household goods.

Why is it important?

• The data required affects the whole supply chain; its collection is not trivial.
• If you export CBAM products to the EU, you must report the CO₂ content to the importer.
• If you are a stockist, foundry, forge or supplier of material to exporters, do you know the CO₂ content? (actual values from installations or default values depending on country)? Your customer will need to know.
• There is a significant advantage to providing actual values as the CO₂ content is likely to be lower.
• The details of EU CBAM legislation are extensive: the EU published over a dozen documents in 2025 alone.
• If the EU CBAM affects you, please get professional tax advice as it is a complex topic.
• Note that the UK has published draft legislation for its own CBAM legislation, taxes scheduled from 2027. This is a separate topic.

The BVAA would like to hear from members about their CBAM experiences.

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Hot Spots are intended to alert members and provide a brief overview of new standards, activities or procedures that are being introduced in the industry. If there is key information missing that would be helpful, please let us know so that we can improve our future service.

Please Note: This Hotspot is for information purposes, and we invite comments from BVAA members only. Please also note that at time of publication ballots may be closed. For more information, please contact the Secretariat.

BVAA Members: Did you know we have a hotspot tab on the BVAA website? Head over to www.bvaa.org.uk/login-here.asp and log into the member only area. You then need to select ‘Hotspots’ for the latest. For information on how to access the member only area of the website please contact jane@bvaa.org.uk. 

*A CN code (Combined Nomenclature) classifies goods for EU Customs Tariffs and is a development the World Customs Organization's HS (Harmonized System).

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