CBAM Inward Processing:

When CBAM Applies & Business Benefits

If your company imports steel, aluminium, cement, fertilisers or other goods covered by the Carbon Border Adjustment Mechanism (CBAM) to process, transform or use as raw material, EU rules allow you to place these goods under Inward Processing (IP).

When this procedure is used for CBAM-covered goods, it is often referred to as Perfeccionamiento activo CBAM. Under this regime:

Import duties are suspended
VAT is often deferred
CBAM is not triggered on import, because CBAM only applies when covered goods are released for free circulation in the EU market

The CBAM obligation is shifted to the moment the final product (or the CBAM-covered input material used in it) is released for free circulation in the EU, based on the quantity and embedded emissions of the input material.

How Does CBAM Inward Processing Work?

CBAM inward processing is particularly useful for:

Industrial plants importing steel, aluminium, cement, fertilisers or other CBAM-covered goods
Manufacturers of metal parts, tubes, profiles, structures, reinforced concrete elements and prefabricated components
Businesses that import, transform materials, and then either re-export the final product or sell it within the EU

From a CBAM compliance perspective, the regime allows you to:

Delay the CBAM trigger point
CBAM obligations are activated only when the final product (or the CBAM-covered input material used in it) is released for free circulation in the EU, not when raw materials enter the EU under IP.
Simplify CBAM reporting
You do not need to report CBAM for each import of raw material. Reporting is organised based on production batches and EU releases.
Improve cash-flow predictability
CBAM certificates are purchased later, at the moment of release for free circulation, giving you more time to plan and budget.

What Does CBAM Inward Processing Look Like in Practice?

A factory in Spain imports hot-rolled steel coils from China (a CBAM-covered product) and transforms them into welded tubes.

Scenario A: Final product is re-exported outside the EU

The steel is non-Union goods (originating outside the EU).
The company obtains authorisation for Inward Processing.
On import, the steel is declared under CBAM inward processing, not released for free circulation.
The steel is transformed into tubes under the IP regime.
The final product is exported to Turkey and never enters the EU market.

Result for CBAM:

No import duties, and in many cases no VAT on import.
As the finished product never enters the EU market → CBAM is not triggered for that input material.

Scenario B: Final product is released for free circulation in the EU

The same factory sells the tubes to a constructor in the EU.

Inward Processing does not remove the CBAM obligation, but it conditions when it is activated.
CBAM is calculated on the quantity of CBAM-covered input material (steel) used, based on its embedded carbon footprint, when the final product is released for free circulation.

Key takeaway:

If the final product is re-exported, CBAM is typically not triggered on the input material.
If the final product is released for free circulation in the EU, CBAM applies on the CBAM-covered input material used, not on every import shipment.

What Are the Business Benefits?

For companies importing CBAM-covered materials for processing, CBAM inward processing offers these concrete benefits:

Lower cash-flow pressure

Import duties are suspended; VAT is often deferred.
CBAM certificates are purchased later, at release for free circulation, not at import.
This improves working capital and makes it easier to plan carbon costs.

Simpler CBAM reporting

You do not report CBAM for every raw-material import.
Reporting is based on production batches and EU releases, aligning with internal accounting and sales cycles.
This reduces the number of CBAM declarations and lowers the risk of errors.

Clearer emissions traceability

To use inward processing correctly, you must track each batch of CBAM-covered input material from import to final product.
This same traceability is essential for accurate embedded emissions calculation under CBAM.
A robust traceability system from the start makes CBAM compliance easier and more defensible in audits.

Better control over CBAM exposure

You can plan which products and batches will be released into the EU market and which will be exported.
This allows you to manage CBAM liability strategically, rather than reacting to every import.

You can align certificate purchases with actual EU releases, avoiding premature or excessive purchases.

What Do You Need to Use CBAM Inward Processing Correctly?

To use the regime effectively and stay compliant, you must:

Obtain authorisation for Inward Processing
- Apply for and manage IP authorisation at the transformation plant
- Comply with customs requirements on controls, supervision and traceability
Build clear and verifiable traceability
- Track each batch of CBAM-covered input material from import to final product
- Ensure this traceability works for both customs and CBAM reporting
Apply the correct customs procedure and codes
- Ensure the IP procedure and any relevant information codes (including CBAM-related codes set out by national customs rules) are used correctly
Assess your business model
- Identify which products will be re-exported (where CBAM is typically not triggered)
- Identify which will be released for free circulation in the EU (where CBAM applies on the CBAM-covered input material used)
Integrate customs and CBAM workflows
- Align your production planning, customs declarations and CBAM reporting
- Ensure that the quantity used for CBAM matches the quantity under IP and the final release for free circulation

Only when the final product is released for free circulation in the EU market does the obligation to manage CBAM on the CBAM-covered input material used come into play.

What Are the Common Mistakes to Avoid?

Assuming CBAM is always avoided
Inward processing does not automatically remove CBAM. If the final product is released for free circulation in the EU, CBAM still applies on the CBAM-covered input material used.
Weak traceability
Without clear tracking from raw material to final product, you cannot reliably calculate embedded emissions, which undermines CBAM compliance.
Misaligned customs and CBAM data
If the quantity declared for customs under IP does not match the quantity used in CBAM reporting, you risk discrepancies and audit issues.

CBAM Inward Processing: Key Questions Answered

1. What is CBAM inward processing?

Perfeccionamiento activo CBAM means placing CBAM-covered goods under the EU’s Inward Processing customs regime. During this regime:

Import duties are suspended.
CBAM is managed when the processed product is released for free circulation in the EU.

CBAM is therefore triggered when the product actually enters the EU market, not at import.

2. Does CBAM always apply when I import under Inward Processing?

No.

If the processed product is re-exported from the EU and never released for free circulation, CBAM is generally not triggered.
CBAM typically applies when the final product or the CBAM-covered materials are released for free circulation in the EU market.

3. Can businesses other than manufacturers use CBAM inward processing?

Yes.

Any economic operator that imports CBAM-covered goods under Inward Processing and performs an authorised processing operation, including transformation, mixing or blending, can use the regime, provided they meet the customs and traceability requirements.

4. How does CBAM inward processing affect my emissions reporting?

Under CBAM inward processing, you report CBAM based on:

The quantity of CBAM-covered input material used in the final product.
The embedded emissions of that input material.

This applies when the final product is released for free circulation in the EU, not at import.

Do You Import CBAM-Covered Materials for Processing?

Póngase en contacto con nosotros to assess CBAM inward processing suitability and align customs and reporting workflows in line with EU requirements.