Opinion on the legal basis of the Proposal for a Regulation of the European Parliament and of the Council amending Regulations (EU) 2021/694, (EU) 2021/695, (EU) 2021/697, (EU) 2021/1153, (EU) 2023/1525 and 2024/795, as regards incentivising defence-related investments in the EU budget to implement the ReArm Europe Plan

03.12.2025

Mr Borys Budka

Chair

Committee on Industry, Research and Energy

BRUSSELS

Subject: Opinion on the legal basis of the Proposal for a Regulation of the European Parliament and of the Council amending Regulations (EU) 2021/694, (EU) 2021/695, (EU) 2021/697, (EU) 2021/1153, (EU) 2023/1525 and 2024/795, as regards incentivising defence-related investments in the EU budget to implement the ReArm Europe Plan (COM(2025)0188 – C100070/2025 – 2025/0103(COD))

Dear Mr Chair,

By letter of 13 November 2025, the Chair of the Committee on Industry, Research and Energy (ITRE) requested the Committee on Legal Affairs (JURI), pursuant to Rule 41(2) of the Rules of Procedure, to provide an opinion on the appropriateness of the legal basis for the proposal for a Regulation of the European Parliament and of the Council amending Regulations (EU) 2021/694, (EU) 2021/695, (EU) 2021/697, (EU) 2021/1153, (EU) 2023/1525 and 2024/795, as regards incentivising defence-related investments in the EU budget to implement the ReArm Europe Plan (hereinafter “the proposal”).

The JURI committee considered the above question at its meeting on 3 December 2025.

I - Background

In April 2025, the Commission presented the proposal with targeted amendments to several Union programmes - including the Digital Europe Programme (DEP), Horizon Europe, the European Defence Fund (EDF), the Connecting Europe Facility (CEF) and cohesion policy regulations - with the overarching objective to recalibrate them in order to incentivise defence-related investments through the Union budget. The proposal formed part of the Commission’s legislative package to operationalise the ReArm Europe Plan.

The proposal also included extending the Regulation on supporting ammunition production (hereinafter “ASAP”) and permitting Member States to transfer cohesion policy funds to the EDF, ASAP and the CEF.

The Commission based the proposal on a series of TFEU Articles corresponding to the legal bases of the basic acts which were being proposed to be amended, namely Articles 114, 164, 172, 173, Article 175, third paragraph, Articles 176, 177, 178, 182, 183, 188 and Article 192(1).

In their respective mandates, the co-legislators both deleted the proposed extension of ASAP. This deletion was provisionally agreed upon in the subsequent inter-institutional negotiations, together with a corresponding removal of the reference to Article 114 TFEU as the legal basis.

In addition, the co-legislators provisionally agreed to explicitly reference the relevant paragraphs of Article 173(3) TFEU (industrial policy, relating to DEP, Horizon Europe, EDF, ASAP and Strategic Technologies for Europe Platform (STEP)), Article 182(1) and (4) (research and technological development, relating to Horizon Europe, EDF and STEP) and Article 188, second paragraph, TFEU (research and technological development, relating to EDF), as well as to remove the reference to Article 176 TFEU.

In light of the foregoing and in line with Rule 41 of the Rules of Procedure, the ITRE committee requested the JURI committee to provide an opinion on the changes to the legal bases as provisionally agreed during the interinstitutional negotiations.

II - The relevant Treaty Articles

Chapter 3 of Title VII of Part three TFEU, on “Approximation of laws” reads, inter alia:

Article 114

(ex Article 95 TEC)

1. Save where otherwise provided in the Treaties, the following provisions shall apply for the achievement of the objectives set out in Article 26. The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market.

2. Paragraph 1 shall not apply to fiscal provisions, to those relating to the free movement of persons nor to those relating to the rights and interests of employed persons.

3. The Commission, in its proposals envisaged in paragraph 1 concerning health, safety, environmental protection and consumer protection, will take as a base a high level of protection, taking account in particular of any new development based on scientific facts. Within their respective powers, the European Parliament and the Council will also seek to achieve this objective.

4. If, after the adoption of a harmonisation measure by the European Parliament and the Council, by the Council or by the Commission, a Member State deems it necessary to maintain national provisions on grounds of major needs referred to in Article 36, or relating to the protection of the environment or the working environment, it shall notify the Commission of these provisions as well as the grounds for maintaining them.

5. Moreover, without prejudice to paragraph 4, if, after the adoption of a harmonisation measure by the European Parliament and the Council, by the Council or by the Commission, a Member State deems it necessary to introduce national provisions based on new scientific evidence relating to the protection of the environment or the working environment on grounds of a problem specific to that Member State arising after the adoption of the harmonisation measure, it shall notify the Commission of the envisaged provisions as well as the grounds for introducing them.

6. The Commission shall, within six months of the notifications as referred to in paragraphs 4 and 5, approve or reject the national provisions involved after having verified whether or not they are a means of arbitrary discrimination or a disguised restriction on trade between Member States and whether or not they shall constitute an obstacle to the functioning of the internal market.

In the absence of a decision by the Commission within this period the national provisions referred to in paragraphs 4 and 5 shall be deemed to have been approved.

When justified by the complexity of the matter and in the absence of danger for human health, the Commission may notify the Member State concerned that the period referred to in this paragraph may be extended for a further period of up to six months.

7. When, pursuant to paragraph 6, a Member State is authorised to maintain or introduce national provisions derogating from a harmonisation measure, the Commission shall immediately examine whether to propose an adaptation to that measure.

8. When a Member State raises a specific problem on public health in a field which has been the subject of prior harmonisation measures, it shall bring it to the attention of the Commission which shall immediately examine whether to propose appropriate measures to the Council.

9. By way of derogation from the procedure laid down in Articles 258 and 259, the Commission and any Member State may bring the matter directly before the Court of Justice of the European Union if it considers that another Member State is making improper use of the powers provided for in this Article.

10. The harmonisation measures referred to above shall, in appropriate cases, include a safeguard clause authorising the Member States to take, for one or more of the non-economic reasons referred to in Article 36, provisional measures subject to a Union control procedure.

Title XVII of Part three TFEU on “Industry”, reads, inter alia:

Article 173

(ex Article 157 TEC)

1. The Union and the Member States shall ensure that the conditions necessary for the competitiveness of the Union's industry exist.

For that purpose, in accordance with a system of open and competitive markets, their action shall be aimed at:

– speeding up the adjustment of industry to structural changes,

– encouraging an environment favourable to initiative and to the development of undertakings throughout the Union, particularly small and medium-sized undertakings,

– encouraging an environment favourable to cooperation between undertakings,

– fostering better exploitation of the industrial potential of policies of innovation, research and technological development.

2. The Member States shall consult each other in liaison with the Commission and, where necessary, shall coordinate their action. The Commission may take any useful initiative to promote such coordination, in particular initiatives aiming at the establishment of guidelines and indicators, the organisation of exchange of best practice, and the preparation of the necessary elements for periodic monitoring and evaluation. The European Parliament shall be kept fully informed.

3. The Union shall contribute to the achievement of the objectives set out in paragraph 1 through the policies and activities it pursues under other provisions of the Treaties. The European Parliament and the Council, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, may decide on specific measures in support of action taken in the Member States to achieve the objectives set out in paragraph 1, excluding any harmonisation of the laws and regulations of the Member States. This Title shall not provide a basis for the introduction by the Union of any measure which could lead to a distortion of competition or contains tax provisions or provisions relating to the rights and interests of employed persons.

Title XVIII of Part three TFEU on “Economic, social and territorial cohesion”, reads, inter alia:

Article 176

(ex Article 160 TEC)

The European Regional Development Fund is intended to help to redress the main regional imbalances in the Union through participation in the development and structural adjustment of regions whose development is lagging behind and in the conversion of declining industrial regions.

Title XIX of Part three TFEU on “Research and technological development and space”, reads, inter alia:

Article 182

(ex Article 166 TEC)

1. A multiannual framework programme, setting out all the activities of the Union, shall be adopted by the European Parliament and the Council, acting in accordance with the ordinary legislative procedure after consulting the Economic and Social Committee. The framework programme shall:

– establish the scientific and technological objectives to be achieved by the activities provided for in Article 180 and fix the relevant priorities,

– indicate the broad lines of such activities,

– fix the maximum overall amount and the detailed rules for Union financial participation in the framework programme and the respective shares in each of the activities provided for.

2. The framework programme shall be adapted or supplemented as the situation changes.

3. The framework programme shall be implemented through specific programmes developed within each activity. Each specific programme shall define the detailed rules for implementing it, fix its duration and provide for the means deemed necessary. The sum of the amounts deemed necessary, fixed in the specific programmes, may not exceed the overall maximum amount fixed for the framework programme and each activity.

4. The Council, acting in accordance with a special legislative procedure and after consulting the European Parliament and the Economic and Social Committee, shall adopt the specific programmes.

5. As a complement to the activities planned in the multiannual framework programme, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, shall establish the measures necessary for the implementation of the European research area.

Article 188

(ex Article 172 TEC)

The Council, on a proposal from the Commission and after consulting the European Parliament and the Economic and Social Committee, shall adopt the provisions referred to in Article 187.

The European Parliament and the Council, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, shall adopt the provisions referred to in Articles 183, 184 and 185. Adoption of the supplementary programmes shall require the agreement of the Member States concerned.

III – CJEU case law on the choice of legal basis

The Court of Justice of the European Union (CJEU) has traditionally viewed the question of the appropriate legal basis as an issue of constitutional significance, guaranteeing compliance with the principle of conferred powers (Article 5 of the Treaty on European Union) and determining the nature and scope of the Union’s competence.

According to well-established case law, the legal basis of a Union act does not depend on an institution's conviction as to the objective pursued, but must be determined according to objective criteria amenable to judicial review, including in particular the aim and the content of the measure.

If examination of a measure reveals that it pursues a twofold purpose or that it has a twofold component and if one of those is identifiable as the main or predominant purpose or component, whereas the other is merely incidental, that measure must be based on a single legal basis, namely that required by the main or predominant purpose or component. Only exceptionally, if it is established that the act simultaneously pursues a number of objectives, inextricably linked, without one being secondary and indirect in relation to the other, may such an act be founded on the various corresponding legal bases. This would however only be possible if the procedures laid down for the respective legal bases are not incompatible with and do not undermine the right of the European Parliament.

IV – Aim and content of the proposal

The Commission proposal seeks to adapt and reinforce a set of existing Union programmes in order to enhance and streamline funding possibilities for defence-related investments as part of the ReArm Europe Plan. The proposal was conceived as a horizontal adjustment to several legislative acts, with the objective of ensuring that the Union budget can more effectively support actions strengthening the European defence industrial and technological base.

To achieve this purpose, the Commission proposed targeted amendments to a broad range of Union instruments including the DEP, Horizon Europe, the EDF, the CEF and cohesion policy regulations. These adjustments sought to facilitate a more flexible mobilisation of Union funding for defence-oriented projects, reinforce strategic industrial capabilities, and improve coherence between the Union budget and defence-related needs.

The proposal as put forward by the Commission also included amendments to ASAP and a mechanism allowing Member States to transfer cohesion policy funds to programmes such as the EDF, ASAP and the CEF. These mechanisms were intended to increase financial agility and enable Member States to redirect funding towards urgent defence priorities under the ReArm Europe Plan.

The architecture of the proposal rested on a series of legal bases underpinning the instruments being amended, following standard legislative practice in amending acts. This structure ensured that the amendments were legally anchored in the objectives and competences underpinning each basic act.

During the interinstitutional negotiations, the co-legislators agreed to remove all amendments relating to ASAP, following its expiry and the decision not to extend its scope. Consequently, the text of the proposal as provisionally agreed by the co-legislators during the interinstitutional negotiations no longer includes the instruments or mechanisms linked to ASAP.

As a result, the proposed Regulation now focuses exclusively on the remaining programmes for which amendments are required to ensure that the Union budget can effectively incentivise defence-related investment. The act, as refined by the co-legislators, therefore centres on strengthening the Union’s ability to channel resources towards defence-industrial capacity, technological development and strategic preparedness in full coherence with the ReArm Europe Plan.

V – Analysis

Deletion of Article 114 TFEU

As regards the deletion of Article 114 TFEU, it must be recalled that that provision allows the Union to adopt harmonisation measures for the purpose of the establishment and functioning of the internal market. Initially, that Treaty provision was relied on in the proposal in respect of the amendments proposed to ASAP which was based on it. At the same time, none of the other acts amended by the proposal relied on Article 114 TFEU as the legal basis nor did they pursue objectives falling within the scope of that provision.

However, following the submission of the proposal and prior to the conclusion of the interinstitutional negotiations, the ASAP expired and accordingly, the co-legislators provisionally agreed to delete all amendments to it.

It follows from the above that reliance on Article 114 TFEU as a legal basis for the proposal is no longer justified given that the amendments to the only act in respect of which that legal basis was introduced are devoid of purpose. The deletion of Article 114 TFEU appears therefore appropriate.

Deletion of Article 176 TFEU

As regards the deletion of Article 176 TFEU, that Treaty provision does not contain a legal basis as it does not provide for the adoption of a legal act by the Union institutions. Instead, Article 178 TFEU is the relevant legal basis in that regard and that provision is indicated as the legal basis. The deletion of Article 176 TFEU is therefore appropriate.

Indication of the specific paragraphs in Article 173, 182 and 188 TFEU

The indication of the specific paragraphs of Articles 173, 182 and 188 TFEU is of a technical nature as it reflects the legal bases of the relevant amended acts. Such an indication appears appropriate in view of the requirement of precision stemming from the case-law. This is particularly relevant where, as is the case with those three provisions, the Treaty provision which confers the power to act to the Union provides for distinct legal bases.

Specifically, Articles 173, 182 and 188 TFEU all provide for more than one procedure for the adoption of legal acts and specifying the precise paragraph provides clarity in terms of the applicable procedure and the respective institutional powers (e.g. under Article 173(3), Article 182(1) and Article 188, second paragraph, measures are adopted under the ordinary legislative procedure while Articles 182(4) and 188, first paragraph, provide for the special legislative procedure and under Article 173(2) TFEU the Commission takes initiatives to promote cooperation between Member States).

In light of the above, the indication of the specific paragraphs of Articles 173, 182 and 188 TFEU is therefore legally sound and appropriate.

Lastly, the appropriateness of other Treaty Articles as legal bases for the proposal is not called into question and there is nothing in the text of the proposal as provisionally agreed during the inter-institutional negotiations that would put into doubt the legal bases in respect of those Treaty provisions.

VI – Conclusion and recommendation

At its meeting on 3 December 2025 the Committee on Legal Affairs accordingly decided, by 22 votes in favour, none against and two abstentions that the legal bases as modified in the text of the proposal as provisionally agreed by the co-legislators during the interinstitutional negotiations – namely the deletion of Articles 114 and 176, and precisions made as to Articles 173(3), 182(1) and (4) and 188, second paragraph – seem appropriate.

Yours sincerely,

Ilhan Kyuchyuk