EU Council commits EUR 150 billion to joint EU security and defence procurement

On 27 May 2025, the EU Council adopted Regulation (EU) 2025/1106 establishing the Security Action for Europe (SAFE) through the Reinforcement of the European Defence Industry Instrument. A new EU financial tool, SAFE will help member states invest in the defence industry through the common procurement of priority capabilities. Its goal is to boost Europe's defence production capacity, ensuring timely availability of equipment and addressing current capability gaps, thereby strengthening the EU's overall defence readiness. Importantly, SAFE will also support Ukraine by involving its defence industry from the start. The most important takeaways from SAFE are outlined below. 

Functioning of SAFE

SAFE will provide up to EUR 150 billion in financial support to interested member states through competitively priced, long-maturity loans. These loans will be disbursed upon demand and contingent on the submission of national plans, with repayment expected from the beneficiary states. To achieve economies of scale, enhance interoperability, and reduce fragmentation of the European defence technological and industrial base (EDTIB), participating member states will, in principle, be required to conduct common procurements involving at least two countries to qualify for the loans. However, due to the current geopolitical climate and the pressing need for substantial defence investment, SAFE will also temporarily allow procurement by a single member state. 

Third country involvement

The SAFE instrument marks the beginning of a new cooperation phase with third countries. Ukraine and EEA-EFTA nations will be treated equally to EU member states, allowing them to participate in common procurements and supply goods through their industries. Furthermore, acceding countries, candidate countries, potential candidates, and countries with Security and Defence Partnerships with the EU, such as the United Kingdom, will also be able to join common procurements. 

Eligible activities

SAFE will finance eligible activities aligned with the priority areas identified by the European Council on 6 March 2025. These activities concern specific defence products belonging to the following categories:

1. Category 1: Ammunition and missiles; artillery systems (including deep precision strike capabilities); ground combat capabilities and their support systems (including soldier equipment and infantry weapons); critical infrastructure protection; cyber; and military mobility (including counter-mobility).
2. Category 2: Air and missile defence systems; maritime surface and underwater capabilities; drones and anti-drone systems; strategic enablers (e.g., strategic airlift, air-to-air refuelling, C4ISTAR systems, space assets and services); space assets protection; artificial intelligence; and electronic warfare.

Defence products in Category 2 will face stricter eligibility criteria, requiring contractors to demonstrate control over the definition, adaptation, and evolution of the product's design. For both categories, procurement contracts must ensure that the cost of components sourced from outside the EU, EEA-EFTA states, or Ukraine does not exceed 35% of the end-product's estimated components cost.

Reflecting the EU's commitment to strengthening transatlantic cooperation and complementarity with NATO, SAFE will further aim to enhance interoperability, maintain industrial collaboration, and secure reciprocal access to cutting-edge technologies with trusted partners.

Entry into force and next steps

SAFE entered into force on 29 May 2025, the day after its publication in the Official Journal of the EU. Member states can now start submitting national plans to access the funds. The EU Parliament has two month from the date of entry into force to file an appeal with the Court of Justice.

In case of questions on the broader application and functioning of SAFE, do not hesitate to reach out to our dedicated Deloitte Legal Public Law Team.