Indirect Representation under CBAM: Emergency Fix or Structural Solution?

Since the introduction of CBAM, indirect representation is no longer a strategic choice for many companies. It is an emergency fix.

Companies that traditionally sell DDP are running into structural barriers. Without an EU registration, they cannot act as an importer themselves. So they turn to an indirect representative to assume the role - and the liability.

That may work temporarily. But under CBAM, this model becomes increasingly fragile.

The Risk Is No Longer Marginal

Indirect representation means shared liability.

Under CBAM, we are no longer talking about small customs duties. We are talking about carbon costs that fluctuate with the EU ETS market.

Consider this:

10,000 tons of steel may result in a €1.5 million CBAM obligation in 2027 under actual values. But it could just as easily become €7.5 million.

We see steel traders operating at volumes of 800,000 tons. That implies potential exposure between €120 million and €600 million.

For an indirect representative, that is not operational risk. That is balance sheet risk.

In addition:

  • CBAM certificate prices are linked to the EU ETS.

  • The final cost is only known at the time of purchase in 2027.

  • Contracts can allocate risk - but they cannot control market volatility.

This is why representatives are becoming cautious. And why many DDP models are starting to stall if there are signifant volumes in play.

The Second Option: Establish Your Own EU Entity

More and more non-EU suppliers are therefore exploring a structural solution:

Establishing their own company within the European Union. Becoming the importer themselves. Retaining control over CBAM exposure.

This fundamentally changes the dynamic.

There is no external party required to absorb the liability. The supplier controls the structure.

But this is where strategic thinking must begin.

Strategy First. Incorporation Second.

Setting up a legal entity is not difficult. Designing the right structure is.

Before incorporating, companies must clearly assess:

  • In which country should the entity be established - and why?

  • What is the tax position?

  • How does the tax treaty with the parent company apply?

  • How should transfer pricing be structured?

  • Who will act as director?

  • How will substance be demonstrated (office, administration, real activity)?

  • How will future CBAM certificate purchases be financed?

Without this analysis, incorporation can create new risks instead of solving existing ones.

Dubrink’s Role

Dubrink does not set up legal entities.

We work closely with specialized international partners who advise on:

  • Structural and tax analysis

  • EU entity incorporation

  • Director and substance structuring

  • Transfer pricing setup

Our role is to ensure that CBAM implications are considered from day one.

Because the core questions remain:

  • Who carries the CBAM liability?

  • How do you manage ETS volatility?

  • How do you automate monitoring and reporting?

  • When and how do you transition from indirect to direct representation?

Temporary Patch or Structural Transition?

For some companies, indirect representation remains a temporary necessity.

For others, the logical next step is a controlled move toward direct representation via a properly structured EU entity.

Dubrink supports both models through:

  • CBAM governance design

  • Monitoring and data processes

  • Certificate cost forecasting

  • Reporting automation

  • Software for both indirect and direct representation

We know companies are looking for indirect representatives. We also know representatives willing to operate under the right conditions.

More importantly, we help you to set the right direction.

Interested in Exploring the Right Structure?

Schedule an informational discussion with Dubrink.

CBAM does not require emergency fixes. It requires structural decisions.