Summary Under the proposed Cloud and AI Development Act (CADA), Member States and other public bodies participating in the EuroCloud Federation are permitted to charge a fee when sharing idle cloud or data centre capacity with another public entity. However, this fee is strictly limited to the actual costs incurred by the sharing entity specifically for the act of sharing (e.g., resource isolation, access management, and integration). It cannot constitute a commercial profit or a "pecuniary interest" that would trigger standard EU public procurement rules. This mechanism ensures that sharing entities are not financially disadvantaged while maintaining the arrangement as a public-interest cooperation rather than a market transaction.

Detail

The Cloud and AI Development Act (CADA), as proposed in COM(2026) 502 final, seeks to strengthen the EU's cloud and AI ecosystem by reducing dependencies on third-country providers. A key instrument in this strategy is the EuroCloud Federation, established under Article 34 as a voluntary framework for Union entities and public sector bodies to share secure and resilient data centre and cloud computing services.

While the primary goal is to foster cooperation and optimize the use of existing public resources, the regulation acknowledges the practical need for financial sustainability. Public authorities often possess underutilised ("idle") compute capacity. CADA encourages the redistribution of this capacity to improve efficiency and resilience across the Union. However, for a sharing entity to participate, it must not suffer a net financial loss due to the administrative and technical overhead of sharing.

The Fee Mechanism under Article 35(5)

The financial rules governing the actual exchange of capacity are set out in Article 35, specifically paragraph 5. This provision explicitly authorises the charging of fees while defining their strict boundaries.

"The sharing entity may charge a fee to the using entity. The amount of the fee shall be limited to the costs that the sharing entity incurs in relation to the sharing of the service and shall not constitute a pecuniary interest within the meaning of Article 2 of Directive 2014/24/EU and Regulation (EU, Euratom) 2024/2509."

This text establishes a cost-recovery model. The fee is not a price for the service itself (which would imply a commercial sale), but rather a reimbursement for the incremental costs generated by the sharing activity. The regulation explicitly states that such fees "shall not be deemed as a consideration for the provision of a service" and "shall not constitute a pecuniary interest."

What Costs Can Be Recovered?

To ensure the fee remains a cost-recovery mechanism and does not cross into commercial territory, the scope of recoverable costs is narrowly defined. The sharing entity cannot charge for the base operational costs of the data centre (such as electricity, cooling, or building maintenance) that it would incur regardless of whether the capacity is shared. Instead, the fee is limited to the additional costs directly attributable to the sharing arrangement.

Based on the text of Article 35(5) and the accompanying recitals, these recoverable costs include:

  1. Resource Allocation and Isolation: The technical expenses required to partition hardware, virtual machines, or storage to ensure the using entity has secure, logically isolated access to the shared resources.
  2. Access Management: The administrative and technical overhead associated with managing the using entity's credentials, authentication, and permission sets.
  3. Integration and Interoperability: The costs incurred to ensure the shared resources integrate smoothly with the using entity's existing IT systems and workflows.
  4. Compliance and Legal Overhead: The costs associated with ensuring the sharing arrangement meets all applicable Union law requirements, including data protection (GDPR) and cybersecurity standards, as well as the specific technical, operational, and organisational measures required by Article 35(2).

The recitals further clarify that the sharing of services within the EuroCloud Federation is "governed solely by considerations of public interest" and "should not entail any form of consideration in exchange for another." The fee is the exception that allows this public-interest cooperation to be financially viable for the provider without becoming a commercial contract.

Why This Structure Matters: Avoiding Procurement Rules

The strict limitation on fees is a critical legal design feature. Under EU public procurement law, specifically Directive 2014/24/EU, if a public entity provides a service to another public entity in exchange for a "pecuniary interest" (i.e., a payment that represents a commercial consideration), the transaction is classified as a public contract. This classification would trigger full procurement procedures, including competitive tendering, transparency obligations, and strict award criteria.

Such a requirement would defeat the purpose of the EuroCloud Federation, which is designed to enable agile, rapid sharing of capacity among public bodies without the delays and administrative burdens of standard procurement. By limiting the fee to cost-recovery and explicitly excluding it from the definition of "pecuniary interest," CADA ensures that the sharing of capacity remains an exercise of public-sector cooperation. As stated in the recitals, under these conditions, "the sharing of public-sector data centre services and cloud computing services within the EuroCloud Federation should not fall under Union public procurement rules."

Connection to EuroCloud Federation Financing

It is vital to distinguish between two distinct financial flows established by CADA:

  1. The Sharing Fee (Article 35): This is paid by the using entity directly to the sharing entity. Its sole purpose is to fund the specific technical and administrative effort required to enable a specific capacity share. It ensures the sharing entity is not out of pocket for the act of sharing.
  2. The Administration Fee (Article 36): This is paid by all members of the EuroCloud Federation to the European Commission. As outlined in Article 36, these fees cover the costs of establishing and maintaining the central platform, assessing membership applications, and managing the governance of the federation.

The Article 35 fee funds the capacity-sharing mechanism itself, ensuring that the infrastructure and operational overhead of connecting two public bodies are covered. The Article 36 fee funds the governance and platform that makes the federation possible. These are separate streams: one supports the bilateral exchange of resources, while the other supports the multilateral framework.

What this means for you

For public-sector procurement officers, IT directors, and financial managers, the CADA framework offers a streamlined pathway to access compute capacity without navigating complex tender processes, provided the arrangement adheres to the EuroCloud Federation rules.

  1. Budgeting for Shared Services: If your authority plans to use shared capacity from another Member State or Union entity, you should anticipate paying a fee. However, this fee is not a market rate. You can negotiate it based on a transparent breakdown of the sharing entity's actual incremental costs. You are reimbursing their effort, not purchasing a commercial product.
  2. Transparency and Justification: If you are the sharing entity, you must be prepared to justify the fee. Your internal accounting systems must be capable of isolating the specific costs of resource allocation, access management, and integration. The fee must be proportionate and directly linked to the sharing activity.
  3. No Profit Motive: Do not structure the fee to generate revenue for your department. If the fee exceeds the actual costs incurred, it risks being classified as a "pecuniary interest." This could invalidate the arrangement under procurement law, potentially exposing your authority to legal challenges and requiring a full tender process.
  4. Voluntary Participation: Participation in the EuroCloud Federation is voluntary. You are not obliged to share your capacity, nor are you obliged to use shared capacity. However, if you choose to participate, you must adhere to these fee structures and the technical requirements of Article 35(2).

Common misconceptions

Misconception 1: "The sharing is completely free of charge." While the recitals state that sharing should be "free of charge" in the sense that it is not a commercial sale, Article 35(5) explicitly allows for fees. The "free" aspect refers to the absence of profit and the exemption from procurement rules, not the absence of cost recovery. Entities can and should charge for the specific costs incurred to enable the share.

Misconception 2: "I can charge the full market price for my idle capacity." No. The fee is capped at the costs incurred in relation to the sharing. You cannot charge the market rate for cloud computing, nor can you charge for the base operational costs of your data centre (like electricity or building maintenance) that you would pay anyway. You can only charge for the additional costs caused by the specific act of sharing.

Misconception 3: "This fee is paid to the European Commission." No. The fee under Article 35 is paid directly to the sharing entity (the other public authority). The Commission charges separate administration fees under Article 36 for running the EuroCloud Federation platform and governance. These are two distinct financial flows with different purposes.

Misconception 4: "Any public body can join and share capacity immediately." Participation in the EuroCloud Federation is voluntary and requires meeting specific technical, operational, and organisational measures to ensure security and resilience (Article 35(2)). Furthermore, the sharing entity must demonstrate to the Commission that it fulfils these conditions before it can begin sharing services (Article 35(3) and (4)). The fee mechanism only applies once these conditions are met and the entity is approved to share.

Official sources

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This is general information about a draft EU regulation, not legal advice.