Rules

The cap is on component cost, not on contract value. European here means the 27 Member States, Norway, Iceland, Liechtenstein and Ukraine; Switzerland, the United Kingdom and Canada are third countries. The second sentence bans components from a third country that contravenes the security and defence interests of the Union and its Member States; the act names no such country.

10. The cost of components originating outside the Union, EEA EFTA States and Ukraine shall not be higher than 35 % of the estimated cost of the components of the end product. For the purpose of procurements supported by the SAFE instrument, no component shall be sourced from a third country that contravenes the security and defence interests of the Union and its Member States.

The Commission proposed a floor instead: European components at no less than 65 % of the estimated cost of the end product. The adopted text caps the other side and divides by component cost only. Commentaries that still speak of 65 % European content quote the proposal.

8. The cost of components originating in the Union, in EEA EFTA States or Ukraine shall not be lower than 65 % of the estimated cost of the end product. No component shall be sourced from another third country that contravenes the security and defence interests of the Union or its Member States.

Contractors and subcontractors involved in the common procurement must be established, and have their executive management structures, in the Union, an EEA EFTA State or Ukraine, and must not be controlled from outside.

3. Contractors and subcontractors involved in the common procurement shall be established and have their executive management structures in the Union, in an EEA EFTA State or in Ukraine. They shall not be subject to control by a third country which is not an EEA EFTA State or Ukraine or by another third-country entity which is not established in the Union, in an EEA EFTA State or in Ukraine.

An entity established in the Union but controlled from another third country may still take part if it went through investment screening under Regulation (EU) 2019/452, with mitigation where needed, or gives guarantees its Member State verifies. The contracting authority notifies the Commission.

5. By way of derogation from paragraph 3, a legal entity established in the Union and controlled by another third country or by another third-country entity may participate in the common procurement if it has been subject to screening within the meaning of Regulation (EU) 2019/452 and, where necessary, to appropriate mitigation measures, or if it provides guarantees verified by the Member State in which the contractor or subcontractor involved in the common procurement is established. The guarantees shall provide assurances that the involvement of the contractor or subcontractor in the common procurement does not contravene the security and defence interests of the Union and its Member States as established in the framework of the common foreign and security policy pursuant to Title V of the Treaty on European Union.

A subcontractor outside the set may hold 15 % to 35 % of the contract value if it had a direct contract with the contractor before 29 May 2025, or if the contractor commits to study replacing its input within two years. Article 16(12) defines which subcontractors count.

4. By way of derogation from paragraph 3, in order to take into account industrial cooperation with non-EU partners, common procurements that involve a subcontractor which is allocated between 15 % and 35 % of the value of the contract, and that is not established or doesn’t have its executive management structures in the Union, EEA EFTA State or Ukraine, shall be eligible for support under the SAFE instrument providing that at least one of the following conditions are met: (a) a direct contractual relationship related to the defence product has been established between the contractor and that subcontractor prior to the date of entry into force of this Regulation; (b) the contractor commits to studying, within two years, the feasibility of replacing the input provided by that subcontractor with an alternative, restriction-free input originating in the Union, EEA EFTA States or Ukraine, and meeting technical and time requirements.

This applies to category two products only: air and missile defence, maritime capabilities, drones of NATO class 2 and 3 with their anti-drone systems, strategic enablers, space, artificial intelligence and electronic warfare. Small drones are category one.

SAFE places small drones (NATO class 1) and their anti-drone systems in category one, and larger drones (NATO class 2 and 3) and theirs in category two. Article 1Council Regulation (EU) 2025/1106 (SAFE), Article 1, second paragraph(a) category one: ammunition and missiles; artillery systems, including deep precision strike capabilities; ground combat capabilities and their support systems, including soldier equipment and infantry weapons; small drones (NATO class 1) and related anti-drone systems; critical infrastructure protection; cyber; and military mobility including counter-mobility; (b) category two: air and missile defence systems; maritime surface and underwater capabilities; drones other than small drones (NATO class 2 and 3) and related anti-drone systems; strategic enablers such as, but not limited to, strategic airlift, air-to-air refuelling, C4ISTAR systems as well as space assets and services; space assets protection; artificial intelligence and electronic warfare.Official text, as of 12 October 2026. ELI

11. For defence products related to category two as referred to in Article 1, second subparagraph, point (b), contractors shall have the ability to decide, without restrictions imposed by third countries or by third-country entities, on the definition, adaptation and evolution of the design of the defence product procured, including the legal authority to substitute or remove components that are subject to restrictions imposed by third countries or by third-country entities.

Procurement by one Member State alone is supported only where the contract was signed no later than 30 May 2026. Common procurement by several countries continues.

3. By derogation from paragraph 1 of this Article, procurements carried out by one Member State shall be eligible for support under the SAFE instrument where a procurement contract was signed no later than 30 May 2026. Where a Member State includes such a procurement in the plan referred to in Article 7(2), it shall actively take all necessary steps to extend the benefit of the contract concerned to at least one additional Member State, one EEA EFTA State, or Ukraine, in addition to any interested acceding country, candidate country, potential candidate, or other third country with which the Union has entered a Security and Defence Partnership. Eligibility conditions established in Article 16(2) to (14) shall apply mutatis mutandis.

The European Parliament has asked the Court of Justice to annul SAFE for its legal basis (Case C-560/25, brought on 20 August 2025) and to maintain its effects meanwhile. The case is open.

Each Member State agrees the documentary evidence with the Commission in operational arrangements under SAFE Article 10(3)Council Regulation (EU) 2025/1106 (SAFE), Article 10(3)3. The operational arrangements shall set out the relationship between the implementation of a plan and the corresponding financial assistance, including a tentative schedule of disbursement of the loan instalments, with yearly ceilings as appropriate. In addition, these operational arrangements shall set out types of documentary evidence and control rules related to the fulfilment of the specific eligibility rules applied by the Member States in accordance with Article 16, and the detailed elements referred to in Article 14.Official text, as of 12 October 2026. ELI. They are not public. The evidence pack has a country annex for what a buyer asks.

3. The operational arrangements shall set out the relationship between the implementation of a plan and the corresponding financial assistance, including a tentative schedule of disbursement of the loan instalments, with yearly ceilings as appropriate. In addition, these operational arrangements shall set out types of documentary evidence and control rules related to the fulfilment of the specific eligibility rules applied by the Member States in accordance with Article 16, and the detailed elements referred to in Article 14.

Ukraine is outside the European set here. Norway, Iceland and Liechtenstein become associated countries once an EEA decision is in force; until then a result that rests on them needs review. The German text says Bestandteile here, where SAFE says Komponenten.

3. For procurement carried out pursuant to Articles 11, 13 and 35 which is supported by Union funding, the cost of components originating outside the Union and associated countries shall not be higher than 35 % of the estimated cost of the components of the end product. No component shall be sourced from third countries that contravene the security and defence interests of the Union and its Member States.

For industrial reinforcement under Article 12, and for activities under Article 35 other than procurement, the cap is the same but the base is the product whose production capacity the Union funds, which can itself be a part such as a motor.

4. For actions carried out pursuant to Article 12 and activities carried out pursuant to Article 35 other than procurement activities, the cost of components originating outside the Union and associated countries shall not be higher than 35 % of the estimated cost of the components of the product the increase in production capacity of which is supported by Union funding. No component of the product the increase in production capacity of which is supported by Union funding shall be sourced from third countries that contravene the security and defence interests of the Union and its Member States.

Each paragraph adds its own sentence: no component may come from third countries that contravene the security and defence interests of the Union and its Member States. The act lists no country; the applicant assesses.

Recipients must be free to change the design and to replace restricted components, in every action. Only for ammunition and missiles may a binding commitment to gain that freedom by 31 December 2033 take its place.

5. Recipients of Union funding or, where relevant, contractors, shall have the ability to decide, without restrictions imposed by non-associated third countries or by non-associated third-country entities, on the definition, adaptation and evolution of the design of the defence products concerned, including the legal authority to substitute or remove components that are subject to restrictions imposed by non-associated third countries or by non-associated third-country entities.

4. For the production of ammunition and missiles, recipients of Union funding or relevant governmental authorities of the Member States concerned shall have the ability to decide, without restrictions imposed by non-associated third countries or by non-associated third-country entities, on the definition, adaptation and evolution of the design of the defence product concerned, including the legal authority to substitute or remove components that are subject to restrictions imposed by non-associated third countries or by non-associated third-country entities, or alternatively, by way of derogation from Article 10(5), shall have obtained a legally binding commitment from the non-associated third country or the non-associated third-country entity concerned that they will obtain such ability to decide within a reasonable timeframe commensurate with the complexity of the action concerned, and in any event no later than 31 December 2033.

Every EDIP call published so far allows two calculation methods, and meeting either is enough for the whole action. Method (a) counts procured tier-1 components; method (b) adds the manufacturing cost of sub-systems built in house. The base follows the action type. Ukraine Support Instrument calls count the EU and Ukraine.

The component origin eligibility criterion will be considered met if either of the following two calculation methods are complied with: a) if the costs of tier 1 procured components originating outside the EU or EDIP associated countries divided by the estimated costs of all tier 1 procured components of the product whose production capacity is being increased, independently of their origin remains below or equal to 35% (i.e. only counting procured components) OR b) if the costs of tier-1 procured components originating outside the EU or EDIP associated countries divided by the cost of components of the defence product remains below or equal to 35% (i.e. also counting total manufacturing costs (TMC) at the level of subsystems built in-house together with the cost of the tier-1 procured components ready to be integrated directly in the product whose production capacity is being increased until (but excluding) the last manufacturing process ahead of the packaging and quality control) The condition must be complied with during the entire duration of the action.

Recipients must be established, and managed, in the Union or an associated country, and not controlled from a non-associated third country, unless guarantees accepted under national procedures reach the Commission.

1. Only legal entities established in the Union or in an associated country and having their executive management structures in the Union or in an associated country shall be eligible to be recipients of Union funding under this Regulation.

6. By way of derogation from paragraph 5 of this Article, a legal entity established in the Union or in an associated country and controlled by a non-associated third country or by a non-associated third-country entity shall be eligible to be a recipient of Union funding if guarantees approved in accordance with the national procedures of a Member State or associated country in which it is established, such as adequate measures pursuant to screening, as defined in Article 2, point (3), of Regulation (EU) 2019/452 of the European Parliament and of the Council (39), are made available to the Commission.

EUR 1.2 billion for the Programme and EUR 0.3 billion for the Ukraine Support Instrument, in current prices, from 30 December 2025 to 31 December 2027, plus any additional contributions (Article 3(1) and (2)).

On the site, a Canada result shows one state: the weakest of the three tests. The three tests and their figures sit under "Why".

8. The cost of components originating in Canada may exceed 35 % of the estimated cost of the components of the end product. The cost of components originating either in the Union, an EEA EFTA State or Ukraine must not be lower than 20 % of the estimated cost of the components of the end product. The cost of the components from third countries must not exceed the cost of components originating in the Union, an EEA EFTA State, or Ukraine, and in any case may not exceed 35 % of the cost of the components of the end product.

Canadian entities must be established in Canada, with management in Canada, the Union, an EEA EFTA State or Ukraine, and not controlled from a third country. A controlled entity takes part only with a guarantee on the Commission template, checked by a participating Member State. There is no screening route.

2. Canadian legal entities must be established in Canada and have their executive management structures in Canada, in the Union, in an EEA EFTA State, or in Ukraine. They must not be subject to control by a third country or by an entity which is established in a third country, or which is established in the Union, in an EEA EFTA State, in Ukraine or in Canada and has its executive management structures in a third country.

3. By way of derogation from paragraph 2 of this Article, a Canadian legal entity controlled by a third country or by an entity which is established in a third country, or which is established in the Union, in an EEA EFTA State, in Ukraine, or in Canada and has its executive management structures in a third country may participate in a procurement supported by the SAFE Instrument if it provides a guarantee to be verified by at least one Member State participating in that procurement. The guarantee must provide assurances that the involvement of the contractor or subcontractor in that procurement does not contravene the security and defence interests of the Union and its Member States as established in the framework of the common foreign and security policy pursuant to Title V of the Treaty on European Union.

Canada, not the companies, pays 15 % of the value of Canadian content, and nothing for contracts where more than 65 % of content value is European. Annex, Article 2(3)Agreement between the European Union and Canada on participation in the SAFE instrument (OJ L, 2026/445), Annex, Article 2(3)3. From 2027, the annual Canadian participation contribution shall be determined by the Union as follows: (a) for contracts where more than 65 % of the total value of the content originates either in the Union, an EEA EFTA State or Ukraine, the participation contribution is zero; (b) for contracts where 65 % or less of the total value of the content originates either in the Union, an EEA EFTA State or Ukraine, the participation contribution is equal to 15 % of the sum of the total value of: (i) contracts supported by the SAFE Instrument awarded to Canadian legal entities minus the value subcontracted to non-Canadian legal entities; and (ii) contracts subcontracted to Canadian legal entities in contracts awarded to non-Canadian entities; (c) the Union shall deduct from the amount determined under paragraph 3, points (a) and (b), of this Article any remaining value of the initial instalment referred to in paragraph 5, point (a), of Article 6 of this Agreement: (i) if the result of this calculation is a negative number, the equivalent positive amount shall be the yearly participation contribution to be paid; or (ii) if the result of this calculation is a positive number, this amount constitutes the remaining value of the initial instalment for the next annual review, and the participation contribution for that year is zero.Official text, as of 12 October 2026. ELI

4. The participation contribution referred to in paragraph 2, point (b), is 15 % of the value of Canadian content in contracts that are based on the conditions set out in this Agreement.

3. From 2027, the annual Canadian participation contribution shall be determined by the Union as follows: (a) for contracts where more than 65 % of the total value of the content originates either in the Union, an EEA EFTA State or Ukraine, the participation contribution is zero; (b) for contracts where 65 % or less of the total value of the content originates either in the Union, an EEA EFTA State or Ukraine, the participation contribution is equal to 15 % of the sum of the total value of: (i) contracts supported by the SAFE Instrument awarded to Canadian legal entities minus the value subcontracted to non-Canadian legal entities; and (ii) contracts subcontracted to Canadian legal entities in contracts awarded to non-Canadian entities; (c) the Union shall deduct from the amount determined under paragraph 3, points (a) and (b), of this Article any remaining value of the initial instalment referred to in paragraph 5, point (a), of Article 6 of this Agreement: (i) if the result of this calculation is a negative number, the equivalent positive amount shall be the yearly participation contribution to be paid; or (ii) if the result of this calculation is a positive number, this amount constitutes the remaining value of the initial instalment for the next annual review, and the participation contribution for that year is zero.

The control rules reach a subcontractor only when it provides critical inputs, holds at least 15 % of the contract value and needs access to classified information.

(h) ‘subcontractors involved in a procurement supported by the SAFE Instrument’ means any legal entity which provides critical inputs that possess unique attributes essential for the functioning of a product, which is allocated at least 15 % of the value of the contract, and which needs access to classified information for the performance of the contract.

Lodemark's reading (interpretation A2-28): you state whether the contract is based on the agreement. If you do not, and a Canadian component exists, both results are shown, because under SAFE Article 16(10) alone Canadian components are third-country.

Signed on 14 February 2026, applied provisionally from 13 April 2026, in force since 1 August 2026.

Up to EUR 90 billion for Ukraine, available until 31 December 2027, under Regulation (EU) 2026/467.

1. The Ukraine Support Loan shall be for a maximum amount of EUR 90 000 000 000. That amount shall be made available to Ukraine in accordance with Ukraine’s financing needs, as provided for in the Ukrainian Financing Strategy approved in accordance with Article 8. 2. The Ukraine Support Loan shall be available until 31 December 2027. It shall be made available by the Commission in instalments, which may be disbursed to Ukraine in one or more tranches. The disbursement of all such tranches shall take place by 31 December 2028.

The arithmetic matches SAFE Article 16(10), but the base is the defence product, the noun this act uses. Its French security sentence reads differently from the SAFE one.

(g) the cost of components originating outside the Union, EEA EFTA States and Ukraine shall not be higher than 35 % of the estimated cost of the components of the defence product. No component shall be sourced from a third country that contravenes the security and defence interests of the Union and its Member States;

Manufacturers and subcontractors must be established and managed in the Union, an EEA EFTA State or Ukraine and not controlled from elsewhere, with a screening or guarantee route; screening is open only to entities established in the Union, as under SAFE. A subcontractor's direct contract must date from before 28 May 2025 (under SAFE, before 29 May 2025), so a contract signed on 28 May 2025 is in time under SAFE and too late under the loan.

(a) manufacturers and subcontractors involved in the production of the defence products shall be established and have their executive management structures in the Union, in an EEA EFTA State or in Ukraine. They shall not be subject to control by a third country which is not an EEA EFTA State or Ukraine or by another third-country entity which is not established in the Union, in an EEA EFTA State or in Ukraine;

5. By way of derogation from paragraphs 2 and 4 and in full respect of paragraph 3, where there is an urgent need for the delivery of a given defence product stemming from Russia’s war of aggression against Ukraine, the procurement of a defence product which does not comply with one or more of the conditions set out in paragraphs 2 and 4 shall be eligible for financial assistance under this Chapter provided that: (a) there is no equivalent product that responds to that urgent need which complies with the conditions set out in paragraphs 2 and 4 or it is not available at the required scale and whose delivery lead time is commensurate with the urgency of the situation and Ukraine’s immediate operational needs; or (b) the delivery lead time for such defence product is significantly shorter than for a defence product which would comply with the conditions set out in paragraphs 2 and 4 of this Article, even if that defence product was subject to a priority-rated request as referred to in Article 19. In such a case, Ukraine shall provide the information reasonably available to it demonstrating that the conditions for the application of this derogation are met. That information shall be checked by the Commission after consultation with the Expert Group referred to in Article 15 without undue delay. The procurement of defence products from manufacturers established in third countries other than EEA EFTA States and Ukraine shall be made only where there are no other alternatives available in the Union, EEA EFTA States and Ukraine under the conditions set out in the first subparagraph, points (a) and (b). In the context of the first subparagraph, points (a) and (b), that information shall include a legal commitment on compliance with the delivery lead time. The Commission shall approve the derogations referred to in this paragraph by means of implementing acts, acting in accordance with the examination procedure referred to in Article 27(3).

The product schedules are classified. Lodemark can say that a derogation exists for a schedule, never that it covers your product: ask the buyer.

A component of unknown origin counts as outside the European set when testing Meets, and as inside when testing Above. Between the two, the state is Needs review, with the reason shown. If a part comes from more than one source, the least favourable one counts.

Each rule divides the cost of components from outside its European set by its own cost base. Only procured components count. Raw materials, services and final assembly stay out.

Raw materials, services, tooling, freight and final assembly. Leaving them out can only raise the share, except for imported raw materials, so the pack also prints the share with raw materials counted. Under SAFE, the Ukraine loan and the Canada agreement, a difference turns Meets into Needs review.

Each rulebook is a dated configuration taken from the Official Journal. Every result carries its version and the date its texts were current, and every rule stays marked as not yet expert reviewed until a named reviewer signs.

Each rule text is copied from the Official Journal, fingerprinted with SHA-256 and dated. The texts are rechecked every month and whenever an act or call changes. No rule has had an outside legal review yet.

Eligibility, control and design authority. For those, Lodemark asks questions with the article next to each and lists your answers as statements you sign.

EDIP defines control as the ability to exercise decisive influence over a legal entity, directly or through intermediate entities. Article 2(8)Regulation (EU) 2025/2643 (EDIP), Article 2(8)‘control’ means the ability to exercise decisive influence over a legal entity directly, or indirectly through one or more intermediate legal entities;Official text, as of 12 October 2026. ELI

SAFE has no definition; recital (16) uses the same words, and a recital does not bind. Recital (16)Council Regulation (EU) 2025/1106 (SAFE), recital (16)In that context, control should be understood as the ability to exercise a decisive influence over a legal entity, directly or indirectly, through one or more intermediate legal entities.Official text, as of 12 October 2026. ELI

Trade register extracts, beneficial ownership and group structure charts, shareholder agreements, investment screening decisions and verified guarantees.

Rule texts: © European Union, 1998-2026, reproduced from EUR-Lex (eur-lex.europa.eu) and the Funding and Tenders Portal under Commission Decision 2011/833/EU on the reuse of Commission documents. Only the texts published in the Official Journal of the European Union are authentic. The texts are quoted unchanged; the date shown is the date Lodemark last checked them.