Summary Under the proposed Cloud and AI Development Act (CADA), the fees levied by the European Commission for the EuroCloud Federation are strictly designed to cover the administrative and operational costs of running the federation. As set out in Article 36, these costs specifically include assessing requests to join the federation and establishing the platform for sharing services (as required by Article 34(3)). The mechanism is a cost-recovery model: fees constitute internal assigned revenues, and crucially, Article 36(3) mandates that any revenue remaining after covering those costs shall be entered into the general budget of the Union. The fees do not cover the actual cloud services shared between members, nor do they generate profit for the Commission.

Detail

The EuroCloud Federation, established by Article 34 of the proposed CADA (COM(2026) 502 final), is a voluntary mechanism for Union entities and public sector bodies to share data centre and cloud computing services. To ensure this initiative is financially sustainable without draining the general EU budget, the proposal introduces a specific fee-based financing model detailed in Article 36.

The Scope of Commission Activities Covered

Article 36(1) establishes the fundamental principle that the costs arising from the Commission's activities under Chapter III (the EuroCloud Federation chapter) shall be jointly financed by the members of the EuroCloud Federation through fees levied by the Commission.

These fees are not a general tax or a broad contribution to EU policy; they are strictly tied to the specific tasks the Commission must perform to make the federation operational. The text explicitly identifies two core activities that the fees must cover:

  1. Assessing Requests to Join: Before an entity can share or use services within the federation, it must be vetted. Article 36(1) and the associated explanatory context confirm that the Commission is responsible for assessing requests to join the EuroCloud Federation. This involves verifying that the "sharing entity" meets the conditions set out in Article 35, such as owning the hardware or exercising control over the intermediate legal entity providing the service, and ensuring appropriate technical and organisational measures are in place. The fees cover the administrative burden of this evaluation process.

  2. Establishing and Maintaining the Platform: Article 34(3) mandates that the Commission establish a dedicated platform for the federation. This platform must provide:

    • A catalogue providing information on available public sector data centre and cloud computing services.
    • A service platform for the exchange and orchestration of computing, storage, and network resources.

    Article 36(1) explicitly states that the fees cover the costs of establishing the platform referred to in Article 34(3). This includes the initial development, deployment, and ongoing maintenance of the digital infrastructure required to facilitate the sharing of services among members.

Beyond these two specific pillars, the fees cover the broader administrative activities the Commission undertakes to manage the federation under Chapter III, ensuring the smooth coordination of the voluntary sharing arrangement.

The Financial Mechanism: Internal Assigned Revenues

The financial architecture of the EuroCloud Federation fees is designed to be self-sustaining and transparent. Article 36(3) specifies that the revenues generated by these fees shall constitute internal assigned revenues within the meaning of Article 21(3), point (a), of Regulation (EU, Euratom) 2024/2509 (the Financial Regulation).

This legal classification is significant. It means the money collected from members is "earmarked" or "assigned" specifically to cover the costs of the EuroCloud Federation activities. It cannot be diverted to unrelated EU projects or general administrative spending. The revenue is ring-fenced to ensure that the federation pays for its own operation.

Handling Surplus Revenue: The "General Budget" Rule

A critical safeguard in the proposal is the treatment of any excess funds. The Commission is not permitted to retain surplus revenue as profit or to build a reserve fund for future, unrelated initiatives.

Article 36(3) is explicit on this point: "Any revenue remaining after covering those costs shall be entered into the general budget of the Union."

This provision ensures that the EuroCloud Federation operates on a strict break-even basis. If the fees collected in a given year exceed the actual costs incurred by the Commission for assessing members and running the platform, the surplus is immediately transferred back to the general EU budget. This prevents the federation from becoming a revenue-generating entity for the Commission and ensures that public funds are not over-collected.

Initial Costs and Reimbursement

The proposal acknowledges that setting up a new digital federation requires upfront investment before fees can be collected. Article 36(2) addresses this by allowing the general budget of the Union to initially bear the costs of establishing the common procurement activities and the platform.

However, this is not a permanent subsidy. The article mandates that these initial costs "shall be reimbursed by the EuroCloud members over a period not exceeding three years from the date on which the costs were borne by the Union." This creates a transitional period where the general budget funds the launch, but the long-term financial responsibility shifts to the participating members through the fee mechanism.

Determining the Fee Amounts

The primary legislation (the Regulation itself) does not fix a specific fee amount (e.g., "€50,000 per member"). Instead, it delegates this technical detail to the Commission. Article 36(4) empowers the Commission to adopt implementing acts to lay down detailed rules for:

  • Determining the estimated costs attributable to the activities.
  • Calculating the individual amount of the fees.
  • Specifying the manner and conditions under which fees are to be paid.

These implementing acts must be adopted via the examination procedure referred to in Article 46(2), ensuring that Member States have a say in the final fee structure. This allows the fees to be adjusted based on actual costs, the number of members, and the complexity of the platform, ensuring proportionality.

What this means for you

For public sector bodies, IT directors, and procurement officers considering joining the EuroCloud Federation, understanding the fee structure is vital for accurate budgeting and strategic planning.

  • Budgeting for Administration, Not Services: You must budget for a specific administrative fee to join and remain in the federation. However, it is crucial to distinguish this from the cost of the actual cloud services. The fee covers the platform and the vetting process, not the compute or storage you consume from another member. The cost of the shared service itself is governed separately by Article 35, which allows for cost-recovery fees between the sharing and using entities, but these are distinct from the Commission's administrative fee.
  • Predictable Cost Recovery: Because the fees are tied to actual costs and any surplus returns to the general budget, you can expect the fee to be a transparent reflection of the Commission's operational expenses. There is no hidden profit margin.
  • Phased Financial Impact: If your entity joins early, you may benefit from the initial costs being covered by the general budget, with reimbursement phased over three years. However, as the federation matures, your contribution will likely shift to covering the full operational costs of the platform and assessment activities.
  • Compliance with Future Rules: While the exact fee amount is not yet fixed, you should prepare for the implementation of the detailed rules under Article 36(4). This may involve providing data on your usage or size to help calculate a proportionate fee.

Common misconceptions

"The EuroCloud fees are a profit source for the Commission."

  • Correction: This is incorrect. Article 36(3) explicitly states that any revenue remaining after covering costs must be entered into the general budget of the Union. The Commission cannot retain surplus funds; the model is strictly cost-recovery.

"The fees cover the cost of the cloud services I use from other members."

  • Correction: No. The fees levied by the Commission under Article 36 cover only the administration of the federation (assessing members and running the platform). The actual cost of sharing data centre or cloud services between members is a separate matter, governed by Article 35, which allows for cost-recovery fees between the entities involved in the sharing, but these are not the "EuroCloud fees" discussed here.

"The fee amount is fixed in the law and cannot change."

  • Correction: The Regulation does not set a fixed amount. Article 36(4) empowers the Commission to adopt implementing acts to determine the specific amounts based on estimated costs. This allows the fee to be adjusted over time to reflect the actual operational needs of the federation.

"The fees are paid only once when joining."

  • Correction: While the text does not explicitly define the frequency, the reference to "costs incurred in relation to the sharing of the service" and the ongoing nature of platform maintenance implies an ongoing financial obligation. The implementing acts under Article 36(4) will specify whether this is an annual membership fee, a transaction-based fee, or a hybrid model.

Related

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