From 19 July 2026, economic operators placing apparel, clothing accessories, and footwear on the EU market are prohibited from destroying unsold consumer products listed in Annex VII to Regulation (EU) 2024/1781.
Commission Delegated Regulation C(2026) 659, adopted 9 February 2026, sets out ten derogation grounds under which destruction remains permitted. Understanding the structure of these derogations — which are independent, which are sequential, and what evidence each requires — is the starting point for any compliant disposal decision.
Who Is in Scope
The prohibition applies to large enterprises — 250 or more employees, or annual turnover exceeding EUR 50 million — from July 2026. Medium enterprises (50–249 employees) have until July 2030. Micro and small enterprises are currently exempt.
ESPR obligations attach to any economic operator placing products on the EU market, regardless of where the operator is headquartered. A US, UK, or Australian brand selling into the EU through direct e-commerce, a distributor, or a marketplace carries the same obligation as an EU-domiciled company.
The Ten Derogation Grounds
Article 2 of the Delegated Regulation lists ten circumstances under which destruction is permitted, provided the economic operator can present the documentation specified in Article 3. The grounds are not a sequential hierarchy — with one critical exception.
| Ground | Condition for Destruction | Routing Type |
|---|---|---|
| (a) | Dangerous product under Regulation (EU) 2023/988 | Direct — independent ground |
| (b) | Non-compliant with EU or national law (non-safety). Destruction required by law or is appropriate corrective action | Direct — independent ground |
| (c) | Infringes intellectual property rights — substantiated by judicial decision, ADR, right holder notification, or internal investigation | Direct — independent ground |
| (d) | Licence or contractual IP restriction expired — sale after specified period constitutes infringement. Must demonstrate destruction is appropriate and proportionate | Direct — independent ground |
| (e) | Unsuitable for reuse/remanufacturing — technically unfeasible to remove or render inaccessible protected IP marks or inappropriate characteristics | Direct — independent ground |
| (f) | Damaged, deteriorated, or contaminated — repair/refurbishment not technically feasible or not cost-effective. Includes consumer returns and supply chain handling damage | Direct — independent ground. DER-NCE calculation applies here |
| (g) | Unfit for purpose due to design/manufacturing defect — repair not technically feasible. Cost-effectiveness test does NOT apply | Direct — independent ground |
| (h) | Offered for donation to at least 3 EU social economy entities or listed on website for minimum 8 weeks — not accepted. Only available when (a)–(g) do not apply | Sequential — last resort only |
| (i) | Received by social economy entity as donation — no recipient found | Downstream — applies to donee, not original operator |
| (j) | Prepared for reuse by waste treatment operator, made available on market — no recipient found | Downstream — circular economy safeguard |
Independent Grounds vs Sequential Derogation
Grounds (a) through (g) are independent. An economic operator can invoke any of them directly when the relevant condition is met, without first attempting the others. A contaminated garment routes to ground (f) without needing to demonstrate that donation was attempted. A counterfeit item routes to ground (c) without a cost-effectiveness assessment.
Ground (h) — the donation pathway — is sequential. Article 2(h) states explicitly that it applies “only where none of the circumstances referred to in points (a) to (g) are applicable.” An economic operator must first confirm that no independent ground applies before relying on the donation derogation.
Grounds (i) and (j) are downstream provisions. Ground (i) covers social economy entities that received donated products but could not find recipients. Ground (j) protects circular economy operators whose prepared-for-reuse products could not find a market. Neither applies to the original economic operator making the disposal decision.
Where the Cost-Effectiveness Test Applies
The cost-effectiveness test is specific to ground (f) — damaged, deteriorated, or contaminated products where repair or refurbishment is an option. Article 1(2) of the Delegated Regulation defines “cost-effective” as the cost of repair not outweighing the total cost of destruction plus the full replacement cost of that product: materials, manufacturing, packaging, transport, stocking, and administrative expenses.
Ground (g) — design or manufacturing defects — requires only that repair is not technically feasible. Cost-effectiveness is not available as a justification under ground (g). This distinction is commercially significant: a structurally defective garment that could theoretically be repaired at disproportionate cost cannot use the cost-effectiveness route.
This distinction matters for how brands structure their assessment procedures. Detailed analysis of the cost-effectiveness calculation is covered in The Cost-Effectiveness Test Under Article 2(f).
Documentation Requirements at a Glance
Article 3 requires economic operators to retain documentation for five years after destruction, in electronic form, and to make it available to competent authorities within 30 days of a request. Each derogation ground has specific documentation requirements — from safety assessments for ground (a) to donation offer evidence for ground (h).
Where multiple products are affected by the same circumstances, documentation may be prepared collectively rather than per item. This is relevant for batch-level processing of returns or warehouse-damaged stock.
Full documentation requirements by derogation ground are covered in Article 3: Documentation and Evidence Requirements.
What This Means for Fashion Brands
The derogation framework is not a barrier to destroying stock that genuinely cannot be sold. It is an evidence requirement. Every destruction event must be traceable to a specific derogation ground, supported by the documentation Article 3 specifies, and retained for five years.
For most fashion brands processing returns and end-of-season inventory, Article 2(f) will be the dominant derogation pathway — products damaged through handling, storage, transport, or consumer use where repair is not cost-effective. The cost-effectiveness calculation under Article 1(2) becomes the core compliance question. Brands with significant donation programmes will additionally need to understand the sequential relationship between grounds (a)–(g) and ground (h), to ensure that donated inventory and residual inventory are correctly documented through different pathways
