Summary Yes, local and regional authorities can join the EuroCloud Federation, provided they qualify as "public sector bodies" under EU law. As proposed in the Cloud and AI Development Act (CADA), membership is voluntary and open to Union entities and public sector bodies, a category that explicitly includes sub-national authorities such as municipalities, regions, and local governments. To join, these authorities must submit a formal request to the European Commission. The federation is designed to facilitate the sharing of idle cloud and data centre capacity among public bodies, governed by public-interest principles rather than commercial market rates.

Detail

The Cloud and AI Development Act (CADA), as proposed in COM(2026) 502 final, establishes the European public sector cloud federation (the "EuroCloud Federation") under Article 34. This initiative aims to create a secure, interoperable environment where public sector bodies can share data centre services and cloud computing services, thereby reducing fragmentation and enhancing the Union's strategic autonomy.

Eligibility: Who qualifies as a member?

Article 34(1) states that the EuroCloud Federation "is hereby established" and "shall be open for the participation of Union entities and public sector bodies on a voluntary basis."

The term "public sector body" is not defined within CADA itself but is cross-referenced to Article 2(6) of the Regulation, which adopts the definition from Directive (EU) 2019/1024 (the Open Data Directive). Under that Directive, a public sector body includes:

  • State, regional, and local authorities;
  • Bodies governed by public law;
  • Associations formed by one or more such authorities or bodies.

Consequently, municipalities, cities, regions, and local councils are explicitly within the scope of eligible participants. The federation is not restricted to national governments or Union institutions; it is designed to encompass the full spectrum of public administration across the EU.

The Joining Process: A voluntary request

Participation is not automatic. Article 34(1) specifies that Union entities and public sector bodies "may request the Commission to join the EuroCloud Federation." This establishes a clear procedural step: an authority must actively apply.

The mechanics of this request are further detailed in Article 34(4), which empowers the Commission to adopt implementing acts to:

  1. Specify the procedure to participate in the federation.
  2. Establish a template concerning the content and other details of the request for participation.

Until these implementing acts are adopted, the specific administrative steps remain to be formalised, but the legal requirement to submit a request to the Commission is already set.

What joining entails: Sharing capacity and hardware ownership

Once a local or regional authority joins, it becomes a "member" capable of sharing services. Article 35 governs the sharing of data centre and cloud services within the federation.

A critical condition for a member acting as a "sharing entity" (the body providing the service) is hardware ownership. Article 35(1) states that a member may share services "where the sharing entity directly, or indirectly through an intermediate legal entity, owns the hardware through which the service is made available."

If a local authority uses an intermediate legal entity to provide the service, Article 35(1) imposes strict control requirements:

  • The sharing entity (the public authority) must exercise decisive influence over the strategic objectives and significant decisions of the intermediate entity.
  • There must be no direct private capital participation in that intermediate entity.
  • More than 80% of the intermediate entity's activities must be carried out in the performance of tasks entrusted by the sharing entity.

This ensures that the federation remains a public-sector cooperation mechanism, preventing private providers from dominating the shared infrastructure.

Cost structure: Public interest, not profit

The financial model of the federation is distinct from commercial cloud markets. Article 35(5) and Recital 73 clarify that while a sharing entity may charge a fee to a "using entity" (another member), the fee is strictly limited.

The fee must be "limited strictly to what is necessary and proportionate to recover the costs incurred by the sharing entity." These costs include:

  • Allocating and isolating resources.
  • Managing access.
  • Enabling integration and interoperability.
  • Ensuring compliance with Union law.
  • Managing the sharing relationship.

Crucially, Recital 73 states that such fees "shall not be deemed as a consideration for the provision of a service" and "shall not constitute a pecuniary interest." Therefore, the sharing of services within the federation is free of charge in the commercial sense, operating instead as a cost-recovery mechanism for public-sector cooperation.

What this means for you

For IT managers, procurement officers, and strategic planners at municipalities and regional authorities, the EuroCloud Federation offers a new pathway for infrastructure management.

  • Strategic Voluntary Choice: You are not mandated to join. You must assess whether your authority has idle capacity to share or a need to access shared capacity from other public bodies. The decision is strategic and voluntary.
  • Hardware Ownership is Key: If your authority wishes to offer services to the federation, you must own the underlying hardware (or control an entity that does). If you currently lease all infrastructure from third-party providers, you may not be eligible to share capacity unless you restructure your ownership model to meet the Article 35 criteria.
  • Cost Efficiency: If you join as a user of shared services, you can access capacity from other public bodies at cost-recovery rates, potentially avoiding commercial market premiums. However, you must be prepared to pay for the specific administrative and technical costs of resource isolation and management.
  • Future-Proofing: The Commission will soon publish implementing acts detailing the application template. Authorities should monitor these developments to prepare their internal documentation regarding hardware ownership and control structures.

Common misconceptions

"Only national governments can join the federation."

  • Reality: Article 34(1) explicitly includes "public sector bodies." As defined by the referenced Open Data Directive, this category encompasses regional, local, and municipal authorities. The federation is designed to be inclusive of all levels of public administration.

"Joining the federation is mandatory for all public bodies."

  • Reality: Participation is strictly voluntary. Article 34(1) states that entities "may request" to join. There is no obligation for a municipality or region to participate.

"Members can charge market rates for shared services."

  • Reality: Article 35(5) and Recital 73 explicitly prohibit commercial pricing. Fees are limited to recovering the additional costs incurred in sharing (e.g., isolation, management). The arrangement is a public-sector cooperation, not a commercial transaction.

"Any cloud provider can join on behalf of a local authority."

  • Reality: Direct private participation is excluded. Recital 71 and Article 35(1) require that the sharing entity (the public authority) owns the hardware or controls an intermediate entity with no direct private capital participation. Private providers cannot join as members; they can only be subcontractors under strict public control.

Related

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