Penalties under Article 25: what non-compliance actually costs

Penalties are the part of the EUDR most often quoted and least often read. The 4% figure has become shorthand for the whole regime, which is unfortunate, because it is the sanction a large company is best equipped to absorb. The measures that sit alongside it are considerably harder to plan around.

The sanctions

Member states set their own penalties, but the regulation prescribes what those regimes must include. They have to be effective, proportionate and dissuasive, and they must cover at least the following.

Why confiscation of revenues is the sharp one

A fine is a cost, and costs can be modelled. Confiscation of the revenues gained from a non-compliant transaction is different in kind, because it removes the upside rather than taxing it.

Combined with the provision allowing fines to be raised above any economic benefit obtained, the design forecloses the calculation that non-compliance might simply be cheaper. There is no version of the arithmetic where knowingly placing non-compliant goods works out — which is the point, and is why the regime is structured this way rather than as a flat penalty.

Decisions are published

The regulation provides for infringement decisions against legal persons, and the penalties imposed, to be made public. In some sectors that is the most consequential sanction on the list — a durable, searchable, official record connecting a company name to deforestation.

It is also the one least amenable to remediation. A fine is paid and closed. A published decision remains findable by customers, investors and journalists indefinitely.

The criminal layer

Sitting alongside the EUDR's administrative penalties is Directive (EU) 2024/1203 on the protection of the environment through criminal law, which requires member states to criminalise certain serious environmental offences. Its scope extends to conduct connected with the trade in commodities associated with deforestation.

The directive contemplates custodial sentences for natural persons in the most serious cases, and for legal persons fines set by reference to worldwide turnover or to a fixed ceiling, depending on how a member state implements it.

The practical significance is a change in who is exposed. Administrative penalties fall on the company. Criminal liability can reach the individuals who made decisions — which is the consideration that tends to move a board discussion from cost management to genuine risk.

The regulation sets a floor, not a ceiling

It is worth being clear that 4% is a minimum maximum — the regulation requires that member states provide for fines with a maximum of at least that level. Nothing stops a member state going further, and the competent authority you deal with is national, not European.

For a business importing into several member states this has a practical consequence that is easy to miss: your exposure is not uniform across the single market. The same failure, on the same commodity, can attract materially different treatment depending on the port of entry and the enforcement culture behind it. Compliance programmes designed around the most permissive jurisdiction you operate in are designed around the wrong number.

What happens before a penalty

Enforcement does not begin with a fine. Where a check finds non-compliance, authorities can require corrective action — and the regulation contemplates a range of interim measures well before any sanction is decided.

• Suspending the placing on the market, making available or export of the products concerned.
• Requiring the operator to remedy formal non-compliance, or to bring the products into conformity.
• Withdrawing or recalling products already on the market.
• Requiring donation to charitable or public interest purposes, or disposal, where conformity cannot be achieved.

These are frequently the more disruptive outcomes in commercial terms. A recall of goods already distributed, or a suspension while a question is resolved, imposes costs and customer damage that arrive long before any formal penalty is calculated — and they land on perishable and seasonal goods hardest.

How enforcement actually arrives

Competent authorities are required to check a minimum proportion of operators each year, scaled by the risk tier of the country of production: 1% for low risk, 3% for standard, and 9% of operators plus 9% of the volume placed on the market for high risk.

Those are floors, not ceilings, and they are not the only route. Authorities also act on substantiated concerns submitted by third parties — which means an NGO with satellite imagery and your published supplier list can initiate a check without any statistical sampling being involved.

What a defensible position looks like

It is worth being precise about what protects you, because it is not good intentions and it is not effort.

1. 1

   Evidence tied to consignments, not to suppliers

   An authority selects a consignment. If your records are organised by supplier and cannot be resolved to specific goods, the file does not answer the question asked.

2. 2

   Reasoning recorded, not just conclusions

   "Negligible risk" without the argument behind it is an assertion. What makes it defensible is being able to show how you got there.

3. 3

   A dated record of what you knew when

   Compliance is judged against the position at the time of filing. Evidence assembled afterwards demonstrates diligence after the fact, which is a different thing.

4. 4

   A working process for substantiated concerns

   Ignoring a credible external report is what turns a single problematic consignment into a serious or repeated infringement.

The regime is severe by design, and it is worth reading it as aimed at a specific behaviour: continuing to trade while declining to find out. Operators who collect the evidence, reach honest conclusions and act on what they find are in a fundamentally different position from those who did not look — even when something eventually turns out to be wrong somewhere in a large supply chain.

Published August 12, 2026 · Last reviewed August 12, 2026 against the sources listed above.