Introduction

The EU Deforestation Regulation (EUDR) is a new European law designed to ensure that certain commodities are deforestation-free and legally produced. In short, it aims to stop products linked to recent forest loss from entering the EU market. Applying to seven core commodities and derived products, the EUDR aims to cut to the heart of deforestation drivers.

Why SMEs are still in scope - and why they need to act

Crucially, businesses of all sizes are in scope; the EUDR’s requirements apply to any company that sells the regulated commodities in the EU or exports them from the EU. This means, SMEs are not exempt. Smaller firms may have slightly simpler duties, and in some cases, an extended deadline, but they too must take action to comply with EUDR.

What you’ll find in this guide

In this article we’ll walk you through the EUDR, and how it specifically applies to SMEs. We’ll give you a comprehensive understanding of the (conditional) lightened requirements for SME operators and traders, and outline how the compliance timelines differ for medium and small / micro firms. 

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EUDR explained in 60 seconds (for SME readers)

What the regulation aims to do

The EUDR is part of the EU’s Green Deal agenda to combat global deforestation (see EUDR pillar page for more details). It ensures EU consumption of certain products no longer drives deforestation or forest degradation. In practice, the law prohibits placing specific high-risk commodities on the EU market (or exporting them) unless they are verified “deforestation-free” and produced in accordance with local laws. To do so, it requires companies to submit a due diligence statement through the EU’s centralised information system, formally declaring that: due diligence has been properly conducted; the product meets EUDR requirements; and supporting documentation is available on request.

What businesses it applies to

Any company that operates in the supply chains of the covered commodities – defined as either an ‘operator’ or a ‘trader’ under the law – must follow the EUDR. In essence, if you place and/or make available these commodities or products on the EU market, or export them, you must prove they’re not sourced from recently deforested land. 

The regulation refers to these seven commodities:

• Cattle (and derived products like beef and leather)
• Cocoa
• Coffee
• palm oil
• Soy
• Rubber
• Wood

Alongside these products, the regulation covers many of their derivatives, such as chocolate, furniture, tires, paper, and palm oil-based ingredients.

Do you count as an SME - and what changes

SME definition under the EUDR

The term SME covers a range of company sizes. The EU defines a medium, small or micro-sized enterprise based on employee count and financial thresholds. 

• Medium enterprise: Fewer than 250 employees and ≤ €50 million turnover (or ≤ €43 million balance sheet)

• Small enterprise: Fewer than 50 employees and ≤ €10 million turnover (or ≤ €10 million balance sheet)

Micro enterprise: Fewer than 10 employees and ≤ €2 million annual turnover (or ≤ €2 million balance sheet total)

Small vs. Medium - when do I need to comply?

If your business falls into any of these categories, it’s considered an SME for regulatory purposes. Under EUDR, company size determines your compliance deadline. 

Medium-sized enterprises are treated the same as large firms in the rollout of EUDR. This means that medium companies must comply with EUDR by December 30, 2025, alongside large companies. 

The extended deadline is only applicable to small and micro businesses, who are given slightly longer to prepare for the new regulation. Small and micro businesses have a delayed compliance deadline of June 30, 2026, by which point they must be fully EUDR compliant.

Don’t let the term “SME” cause confusion – medium SMEs have to act by December 2025, whereas the smallest firms get a bit more leeway.

What SMEs still need to do under EUDR

To comply with the EUDR, SMEs must follow certain simplified procedures in order to prove that no deforestation activities have taken place. The streamlining of EUDR compliance for SMEs include a deferred entry in application, fewer obligations for downstream SME operators, no annual reporting obligations and the opportunity to mandate an authorised representative.

Fewer obligations for downstream SME operators

As an operator (placing a product on the market) under EUDR you are required to perform due diligence. This includes collecting data, assessing and mitigating risk, and submitting a due diligence statement for that product. The extensiveness of due diligence depends on the risk benchmark of the source country, with those sourcing from low-risk countries exempt from conducting risk mitigations and assessments. All operators, regardless of size, have a responsibility to ensure the commodity is deforestation-free and legal. For a full understanding of an operator’s responsibilities under EUDR, check out our step-by-step guide.

However, a helpful allowance has been made for SMEs. If an SME’s product has already undergone EUDR due diligence, SME operators can skip duplicating the due diligence work, and simply record the existing DDS reference number. For example, if a coffee roaster imports coffee directly from a farm in Guatemala, they file a DDS for that coffee. If they also buy cocoa from an EU supplier, and the cocoa supplier has already undergone EUDR due diligence, the coffee roaster wouldn't be required to redo it - just reference the cocoa supplier’s DDS. 

Practically, this means that only SMEs who are the first to place a product on the EU market (or export it) are required to exercise due diligence and submit a DDS. SME operators that are first in the supply chain are required to perform the full due diligence process - there are no shortcuts. However, if DD has already been completed, SME operators can skip DD requirements, and pass on the reference number of a previous DDS. 

Lighter mitigation measures for all SME operators

SME operators also benefit from lighter mitigation measures to ease compliance burdens under EUDR. These provisions are designed to support SMEs in adapting to the regulations, whilst maintaining the integrity of deforestation-free supply chains. 

For example, SMEs are exempted from appointing a compliance officer and conducting independent audits. Unlike non-SMEs, who are required to have their internal policies and procedures independently audited, the EUDR regulation provides relief from this administrative and financial burden for SMEs. SME operators are also not subject to the annual reporting obligations of their due diligence system.

Authorised representatives

Operators that are microenterprises (<10 staff and < €2 million turnover and/or < €2 million turnover) or a natural person are allowed to mandate the next operator or trader down the supply chain as an authorised representative. The authorised representative is then able to submit a due diligence statement on behalf of the micro-operator, provided the authorised representative is not a natural person or micro enterprise themselves. Whilst this releases microenterprises and natural persons from being burdened with due diligence obligations, those mandating remain responsible for the overall compliance of the product with EUDR.

Fewer obligations for SME traders

If you are a trader under the EUDR, your business only deals in products that have already been placed on the EU market by someone else. As an SME trader, you have significantly simplified responsibilities, and act to pass along information, rather than collect it. SME traders are not required to exercise due diligence or submit a due diligence statement. They are only obliged to collect relevant information regarding their suppliers (name; address; DDS reference etc), and hold the information for a minimum of 5 years. SME traders are also subject to lighter checks by the competent authorities - and they are excluded from mandatory quotas for checks that competent authorities must perform.

Step-by-step compliance roadmap for SME operators

Step 1: Confirm role as an operator

• An operator is a natural or legal person who places relevant products on the market (inc. via an import) or exports them in the course of commercial activity
• A single business can have some activities as an operator and others as a trader - consider each supply chain

Step 2: Identify in-scope commodities and map to CN codes

• List all products you deal in and determine which fall under EUDR
• Remember, it’s not just raw materials - check processed materials (e.g., chocolate from cocoa), your ingredients and components
• Map each product to the relevant CN code

Step 3: Map your supply chain

• Map the supply chain for each in-scope product, identifying suppliers and the country of origin for each commodity
• The goal is to trace each ingredient back to its farm/ plantation

Step 4: Check if due diligence has been exercised, and there is an existing DDS

• As an SME operator, if a DDS has been submitted upstream, you are not required to exercise DD. But, you should provide competent authorities with the existing DDS reference number upon request
• For products / parts of the product where DD has not been exercised, follow step 5 

Step 5: (If no DD exercised) Collect all required data (geolocation, data, information)

• This includes geolocation, production data, product details, evidence of deforestation-free status and legality
• For a full list of requirements, see ‘How to comply with the EUDR’

Step 6: (If no DD exercised) Risk assessment and risk mitigation

• If your product comes from a low-risk country, you can skip the risk assessment and mitigation (if no substantiated concern of a risk of deforestation)
• If your product comes from a standard- or high-risk country, you must conduct a risk assessment - evaluating the risk that the commodity is linked to deforestation
• If the risk of deforestation is non-negligible, you must also take mitigation measures (e.g. internal control, reporting)  to reduce the risk of deforestation

Step 7: Upload or reference a due diligence statement

• If an existing DDS statement exists upstream, you must pass on the original suppliers DDS when requested by competent authorities
• If you completed DD, upload your DDS to EU Traces - the EU’s centralised information system

Step 8: Keep records for 5 years

• The EUDR requires operators to retain all information and documentation for a minimum of 5 years

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Example: how a small coffee roaster is preparing for EUDR

To illustrate, we will consider a hypothetical coffee roaster (GreenBeanz) based in the EU. GreenBeanz has 25 employees and sources their coffee beans from various origins. Under EUDR they are considered a ‘small’ enterprise, and have a compliance deadline of 30 June 2026. Here’s how they are preparing:

• Mapping supply chains - by listing each coffee product they sell, and identifying whether they are an ‘operator’ or ‘trader’ and ‘upstream’ or ‘downstream’ for each product

• Collecting geolocation and farm data for products where they are ‘downstream SME operators’ - using accurate satellite imagery and an EUDR software solution to ensure compliance, keeping data out of spreadsheets

• Collecting due diligence statements - collecting existing DDS from upstream suppliers (and exercising DD where they don’t exist)

• Record keeping - maintaining organised and documented records

• Training and process integration - training the team on new procedures

• Continuous monitoring - keeping up to date with EUDR regulations and changing risk benchmarks

In summary, GreenBeanz are taking a proactive approach to be ready for the EUDR compliance deadline: mapping supply chains, identifying responsibilities, and maintaining records. It’s a significant effort for a small company, and many choose to rely on software or third-party support to confidently file due diligence statements.

Common mistakes SMEs make

Even with the best intentions, it’s easy for SMEs to get caught out by misconceptions or oversights regarding EUDR. Here are some common mistakes to avoid:

• Thinking medium-sized businesses have until 2026 - they don’t: Medium enterprises fall under the first wave deadline of 30 December 2025, the same as much larger companies

• Assuming ‘small’ means you’re exempt: there are no size obligations for the core obligations, SMEs must still comply, with some simplified processes

• Overlooking ‘derived’ products in your offerings: EUDR applies to more than just the seven listed commodities. Be sure to check whether you trade in derived products too

• Skipping the collection of geolocation data when exercising due diligence: SMEs may be tempted to ignore this, or assume the address of the farm is enough. It’s a mistake - geolocation is mandatory if you are the first in line to exercise due diligence

• Not tracking and referencing DDS (for traders): whilst SME traders don’t have any heavy due diligence, they are still required to collect and store the evidence of their supplier’s due diligence

By being aware of these common mistakes, SMEs can take proactive steps to avoid them. EUDR compliance is absolutely achievable for small and medium businesses - it just requires early planning, attention to detail, and a clear understanding of your role. Use checklists to ensure you’re covering all bases, and don’t hesitate to seek out authoritative resources or expert advice for any areas of uncertainty.

Frequently Asked Questions (FAQs) about EUDR for SMEs

1. Does the EUDR apply to small and medium-sized enterprises (SMEs)?

Yes. The EU Deforestation Regulation (EUDR) applies to businesses of all sizes. SMEs are not exempt. While small and micro enterprises have a deferred deadline (June 30, 2026), medium-sized enterprises must comply by December 30, 2025, the same deadline as large companies. All in-scope SMEs must still identify their role (operator or trader), collect supply chain data, and either perform or pass on due diligence where appropriate.

2. What is the difference between an SME operator and an SME trader?

Under the EUDR:

• SME operators are responsible for placing a product on the EU market for the first time or exporting it. They must submit a due diligence statement unless one has already been filed upstream.
• SME traders resell products that have already been placed on the market. They do not need to submit a DDS but must retain supplier information and pass on due diligence reference numbers for five years.

3. What if the product has already undergone due diligence upstream?

SMEs benefit from an important simplification. If a product has already been subject to EUDR-compliant due diligence upstream (for example, by a supplier), an SME operator or trader can pass on the existing DDS rather than duplicating the process. This only applies if the original DDS is valid and accessible.

4. What data do SME operators need to collect for EUDR compliance?

If due diligence is required, SME operators must collect:

• Geolocation coordinates of the land where the commodity was produced
• Production date (confirming the land was not deforested after December 31, 2020)
• Supplier details and legality documentation (such as land rights and permits)
• Confirmation that the product is deforestation-free and legal, including any risk assessment and mitigation measures undertaken

All information must be kept for at least five years and submitted via the EU’s TRACES system where applicable.

5. What are the penalties for non-compliance?

Penalties for EUDR non-compliance can include:

• Blocking of non-compliant products from entering the EU market
• Fines up to 4% of annual EU turnover
• Confiscation of goods and profits
• Temporary bans from public contracts or from placing goods on the market

Even small firms are subject to checks and audits. SMEs are advised to act early to avoid supply disruptions or regulatory action once enforcement begins.