Who Must Comply: Operators and Traders
Two categories of obligated parties
The EUDR distinguishes between operators and traders, and applies different levels of obligation to each. It further distinguishes between large/medium enterprises and small/micro enterprises (SMEs). Understanding which category your organisation falls into is the first step in determining the precise nature of your compliance obligations.
Operators: Full Due Diligence Obligation
An operator is any natural or legal person who, in the course of a commercial activity, places relevant products on the EU market or exports them. Operators are the primary obligated parties under the EUDR. They carry the full due diligence burden:
- Establish and maintain a due diligence system covering information collection, risk assessment, and risk mitigation.
- Submit a due diligence statement through the EUDR Information System before each placement on the market or export.
- Keep all due diligence records and documentation for at least five years.
- If they are non-SMEs, publish annual reports on their due diligence systems.
The category of operator is deliberately broad. It includes importers, manufacturers, producers, and processors. A Belgian chocolate manufacturer using Ghanaian cocoa is an operator. An Indonesian palm oil company exporting to Germany is an operator. A French furniture maker using French timber is also an operator, because EU domestic production is within scope.
The operator is the gatekeeper
Think of the operator as the last checkpoint before a product enters the EU market or leaves it as an export. Just as a customs officer checks what comes through a border, the operator is legally responsible for ensuring that only deforestation-free, legally produced, and duly declared goods cross into the market. The operator cannot pass this responsibility upstream to their suppliers without also maintaining their own due diligence system.
Traders: A Lighter Touch for SMEs
A trader is any person in the supply chain, other than the operator, who makes relevant products available on the EU market. Traders are further downstream: they do not place products on the market for the first time but distribute or sell them to other businesses or consumers.
The EUDR applies materially different obligations to traders depending on their size:
| Category | Obligation Level | Key Requirements |
|---|---|---|
| Non-SME traders | Operator-equivalent | Full due diligence system; submit due diligence statements; publish annual reports |
| SME traders | Simplified | Collect and keep due diligence statement reference numbers from suppliers; maintain 5-year supply chain records |
This distinction between non-SME and SME traders is one of the most practically important in the regulation. A large retailer selling chocolate products in the EU is a non-SME trader and must exercise due diligence equivalent to an operator. A small independent importer with fewer than 50 employees and annual turnover below EUR 10 million is an SME trader and has the lighter obligation of maintaining reference numbers from supplier statements.
Defining SMEs: The Exact Thresholds
The EUDR uses the Commission Recommendation 2003/361/EC definition of SMEs, which classifies enterprises by employee count and financial thresholds:
| Category | Employees | Annual Turnover | Balance Sheet Total |
|---|---|---|---|
| Micro-enterprise | Fewer than 10 | Not exceeding EUR 2 million | Not exceeding EUR 2 million |
| Small enterprise | Fewer than 50 | Not exceeding EUR 10 million | Not exceeding EUR 10 million |
| Medium enterprise | Fewer than 250 | Not exceeding EUR 50 million | Not exceeding EUR 43 million |
| Large enterprise | 250 or more | Exceeding EUR 50 million | Exceeding EUR 43 million |
It is important to note that SME status for EUDR purposes is based on the enterprise as a whole, not a specific business unit or subsidiary. A subsidiary of a large multinational that might otherwise meet SME thresholds on its own does not qualify as an SME if its parent group does not.
An Important Distinction: SME Operators vs. SME Traders
One of the most frequently misunderstood aspects of the EUDR is that SME status does not reduce obligations equally for all parties. The simplified regime applies to SME traders, not to SME operators. An SME that is an operator (placing products on the market for the first time or exporting) must carry out full due diligence regardless of its size.
This means that a small cocoa importer with 30 employees who imports cocoa beans directly from Cote d'Ivoire and places them on the EU market for the first time is an operator and must conduct full due diligence. Only when it sells those beans to a chocolate manufacturer does the buyer become a trader. If that chocolate manufacturer is also an SME, it gets the simplified trader obligations (collecting reference numbers). If the chocolate manufacturer is a large company, it must exercise full due diligence as a non-SME trader.
A supply chain example: from Brazilian soy to European pork
Brazilian soy exporter (operator): Collects geolocation data for all farms in its supply chain, conducts risk assessment, submits due diligence statement to EUDR Information System before shipping to the EU. Regardless of whether it is large or small, as an operator it carries full obligations.
Dutch commodity trader (non-SME trader): Purchases soy from the Brazilian exporter. As a large trader, it must exercise due diligence equivalent to an operator and submit its own due diligence statement.
German animal feed manufacturer (operator): Buys soy meal from the Dutch trader and produces feed. It is an operator placing a relevant product (soy-containing animal feed) on the market, so full due diligence applies.
Small German pig farm (SME trader): Buys the feed and uses it to raise pigs. It is an SME trader: it needs to keep the due diligence statement reference number from its feed supplier but does not need to conduct its own full due diligence.
Penalties and the Application Timeline
Large and medium operators are subject to the regulation from 30 December 2026. SME traders and small operators have until 30 June 2027. Both timelines were extended from earlier dates following the application date amendment of December 2024.
Non-compliance exposes operators to significant penalties. Member States set specific penalty structures, but the EUDR mandates minimum standards including maximum fines of at least 4% of annual turnover in the relevant Member State, confiscation of non-compliant products and associated revenues, temporary exclusion from public procurement processes, and temporary prohibition from placing products on the EU market.
The EUDR's obligations formally apply to whoever places products on the EU market or exports from the EU. A non-EU supplier who ships goods to an EU importer is not directly the operator under the regulation; the EU importer who places the product on the EU market is the operator. However, in practice, the EU importer can only comply with its due diligence obligations if its non-EU supplier provides the necessary information, including geolocation data and evidence of deforestation-free production.
This creates a cascade of contractual requirements: EU operators insert EUDR compliance clauses into their supplier contracts, requiring non-EU producers to provide the data needed for the operator's due diligence. Non-EU producers who cannot provide this data will find their access to the EU market cut off, effectively making the EUDR's requirements apply throughout the global supply chain even though the formal obligation rests with the EU operator.
Key Takeaways
- 1Operators are any natural or legal person who places relevant products on the EU market or exports them: they carry the full due diligence obligation regardless of size
- 2Traders are downstream supply chain participants who make products available on the market: non-SME traders carry operator-equivalent obligations, while SME traders need only maintain supplier due diligence statement reference numbers
- 3SMEs are defined by the EU Commission Recommendation 2003/361/EC thresholds: micro (under 10 employees), small (under 50), and medium (under 250); the simplified regime applies only to SME traders, not SME operators
- 4Large and medium operators apply from 30 December 2026; SME traders and small operators from 30 June 2027
- 5Non-EU suppliers are not formally obligated parties under the EUDR, but EU operators can only comply by obtaining geolocation and deforestation-free evidence from those suppliers, effectively extending the regulation's reach globally