EU agrees simplified AI rules to boost innovation and competitiveness

The European Commission has welcomed a political agreement reached between the European Parliament and the Council of the European Union on a package of simplified rules designed to make artificial intelligence regulation more innovation-friendly while maintaining safeguards for citizens.

The agreement centres on the EU’s proposed “Digital Omnibus on AI,” introduced by the Commission in November 2025 as part of a wider effort to streamline regulation, reduce administrative burdens and strengthen Europe’s competitiveness in emerging technologies.

Under the deal, implementation timelines for the EU’s landmark AI Act have been clarified and staggered to give businesses more time to prepare for compliance.

Rules governing AI systems used in high-risk sectors – including biometrics, critical infrastructure, education, employment, migration, asylum and border control – will apply from 2 December 2027. AI systems embedded within products such as lifts and toys will face compliance requirements from 2 August 2028.

EU officials said the phased implementation would ensure technical standards, guidance and compliance tools are available before obligations take effect.

The agreement also introduces a series of measures intended to reduce complexity for businesses and support innovation across the bloc.

Certain regulatory advantages previously reserved for small and medium-sized enterprises (SMEs) will now extend to smaller mid-cap companies. The legislation also clarifies how the AI Act interacts with existing EU product safety rules, particularly the Machinery Regulation, in an effort to avoid overlapping requirements and duplicated compliance obligations.

To encourage innovation, the agreement expands access to regulatory sandboxes, including the creation of an EU-level sandbox where developers can test AI technologies in real-world environments under regulatory supervision.

The powers of the Commission’s AI Office will also be strengthened to oversee certain advanced AI systems, including general-purpose AI models and AI technologies integrated into very large online platforms and search engines.

“Our businesses and citizens want two things from AI rules. They want to be able to innovate and feel safe,” Virkkunen said.

“Today’s agreement does both. With simpler and innovation-friendly rules, we make it easier to innovate without lowering the bar on safety. We are also making sure the tools supporting EU companies for a smooth implementation of the AI Act are ready.”

EU officials said the revised framework strikes a balance between encouraging investment and innovation while preserving protections relating to safety, transparency and fundamental rights.

The Digital Omnibus package also complements existing EU support initiatives, including the AI Act Service Desk and forthcoming guidelines on the classification of high-risk AI systems and transparency obligations.

The political agreement must now be formally approved by both the European Parliament and the Council before becoming law. Once adopted, the amendments will be published in the Official Journal of the European Union and will enter into force three days later.

The Digital Omnibus on AI forms part of a broader simplification drive by the European Commission and represents the seventh omnibus proposal introduced under its programme to reduce regulatory complexity for businesses operating within the EU.

The AI proposal was published alongside additional measures aimed at simplifying cybersecurity and data regulations, as well as the EU’s wider Data Union Strategy, which seeks to improve access to high-quality data for AI development and support initiatives such as European Business Wallets.