Summary The proposed Cloud and AI Development Act (CADA) establishes the EuroCloud Federation with two distinct financial streams to ensure cost recovery without distorting the market. Article 35 governs peer-to-peer transactions: a "sharing entity" may charge a "using entity" a fee strictly limited to the additional costs of sharing capacity (e.g., isolation, access management). This fee must not constitute a "pecuniary interest," ensuring the arrangement remains outside standard public procurement rules. Article 36 governs the federation's overhead: all members must pay administration fees to the Commission to cover the costs of establishing the platform, assessing membership, and managing the federation. These are collective levies classified as "internal assigned revenues." In short: Article 35 pays for the service shared; Article 36 pays for the federation running.

Detail

The EuroCloud Federation, established under Title IV, Chapter III of the proposed CADA (COM(2026) 502 final), is designed to facilitate the voluntary sharing of public-sector data centre and cloud computing services between Union entities and public sector bodies. To prevent the federation from becoming a commercial venture while ensuring financial sustainability, the proposal delineates two separate fee mechanisms with different legal bases, payers, recipients, and purposes.

Article 35: The Cost-Recovery Mechanism for Shared Services

Article 35 regulates the direct financial relationship between two members of the federation: the sharing entity (the member providing the service) and the using entity (the member consuming it).

Nature and Limit of the Fee Under Article 35(5), a sharing entity is permitted to charge a fee to the using entity. However, this permission is heavily constrained to prevent profit-making. The text explicitly states: "The amount of the fee shall be limited to the costs that the sharing entity incurs in relation to the sharing of the service."

The proposal clarifies that these recoverable costs are specific to the act of sharing. They include:

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

Legal Characterization and Procurement Exemption The most critical aspect of Article 35 is its legal characterization. Article 35(5) states that these fees "shall not constitute a pecuniary interest within the meaning of Article 2 of Directive 2014/24/EU and Regulation (EU, Euratom) 2024/2509."

This distinction is fundamental. In EU public procurement law, a "pecuniary interest" typically triggers the application of procurement directives. By limiting the fee to strict cost recovery and explicitly excluding it from the definition of pecuniary interest, CADA ensures that the sharing of services within the federation does not fall under Union public procurement rules. This allows public bodies to share capacity efficiently without undergoing full tender procedures, provided the fee remains within the narrow cost-recovery bounds.

Article 36: The Administration Mechanism for the Federation

While Article 35 handles the transaction between members, Article 36 handles the operational costs of the federation itself, which are managed by the European Commission.

Scope and Payers Article 36(1) establishes that "The costs arising from the activities carried out by the Commission pursuant to this Chapter shall be jointly financed by the members of the EuroCloud Federation through fees levied by the Commission."

Unlike Article 35, where the payer is the specific user of a service, the payers under Article 36 are all members of the federation. This is a collective contribution to the common infrastructure. The Commission's activities covered by these fees include:

  • Assessing requests to join the EuroCloud Federation.
  • Establishing and maintaining the platform facilitating the sharing of services.
  • General administration of the federation.

Financial Treatment Revenues generated by these fees are classified as "internal assigned revenues" under Article 36(3). This means the money collected is ring-fenced to cover the specific costs of the federation's administration. The text mandates that "Any revenue remaining after covering those costs shall be entered into the general budget of the Union."

Implementation The proposal empowers the Commission to adopt implementing acts under Article 36(4) to lay down detailed rules for determining the estimated costs, the individual amount of the fees, and the manner and conditions of payment. This ensures that the fee structure can be adapted to the actual operational needs and the number of participating members.

Summary of Differences

Feature Article 35 (Sharing Fees) Article 36 (Administration Fees)
Payer The using entity (consumer of the shared service). All members of the EuroCloud Federation.
Recipient The sharing entity (provider of the capacity). The European Commission.
Purpose To reimburse additional costs incurred specifically for sharing (isolation, access, interoperability). To cover Commission costs for establishing the platform, assessing membership, and administration.
Legal Nature Not a pecuniary interest; exempt from public procurement rules. Internal assigned revenue; collective levy for the federation.
Basis Variable, based on actual costs of the specific sharing transaction. Collective, determined by implementing acts based on membership and operational costs.

What this means for you

For legal counsel, finance officers, and procurement managers in public sector bodies, the bifurcation of these fees requires distinct budgeting and compliance strategies.

1. Dual Budgeting Requirements Organizations planning to join the EuroCloud Federation must forecast two separate cost lines:

  • Membership Costs (Article 36): You must budget for the annual administration fees levied by the Commission. While the exact amounts will be defined in future implementing acts, these are mandatory for all members to sustain the federation's platform and governance.
  • Usage Costs (Article 35): If your entity acts as a "using entity," you must budget for variable fees charged by sharing entities. These fees will fluctuate based on the volume of capacity shared and the specific costs of isolation and integration. Conversely, if your entity acts as a "sharing entity," you must implement robust cost-tracking systems to ensure that any fees charged are strictly limited to the additional costs incurred, avoiding any inclusion of general overheads or profit margins.

2. Procurement Compliance Strategy The Article 35 exemption is a significant operational advantage but carries compliance risks. Because the arrangement is exempt from public procurement rules only if the fee does not constitute a "pecuniary interest," any deviation from strict cost recovery could invalidate this exemption.

  • Action: Ensure that all invoices from sharing entities clearly itemize costs directly attributable to the sharing activity (e.g., "cost of resource isolation," "cost of access management").
  • Risk: If a sharing entity includes general administrative overheads or profit in the fee, the transaction could be reclassified as a public contract, triggering full procurement obligations and potential legal challenges.

3. Governance and Reporting The Commission is empowered to adopt implementing acts to specify the technical and operational measures for the federation. Entities should prepare to engage with the Commission's platform and adhere to reporting requirements for cost verification. The Commission will likely require evidence that Article 35 fees are calculated correctly to maintain the federation's legal status.

Common misconceptions

Misconception 1: Article 35 fees allow sharing entities to make a profit. This is incorrect. Article 35(5) strictly limits fees to the "costs that the sharing entity incurs in relation to the sharing of the service." The text explicitly excludes any element of profit or pecuniary interest. The mechanism is designed for cost recovery, not commercial gain. Charging a fee that exceeds the actual additional costs incurred would violate the regulation and risk the procurement exemption.

Misconception 2: Only entities that actively share or use services pay Article 36 fees. Article 36(1) states that costs are "jointly financed by the members of the EuroCloud Federation." This implies a collective obligation. Once an entity joins the federation, it contributes to the administration costs regardless of whether it is currently acting as a sharing entity, a using entity, or simply a member waiting to participate. The fee is for membership and access to the federation's infrastructure, not just for specific transactions.

Misconception 3: The fees are fixed and identical for all members. While Article 36 fees are collective, the proposal does not mandate a flat rate for all. Article 36(4) empowers the Commission to adopt implementing acts to determine the "individual amount of the fees." This suggests that fees could be calibrated based on factors such as the size of the entity, its usage of the platform, or its contribution to the federation's costs. Similarly, Article 35 fees are inherently variable, depending on the specific costs incurred by each sharing entity for each transaction.

Related

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