Explanatory Memorandum to COM(2025)84 - Amendment of Regulations (EU) 2015/1017, (EU) 2021/523, (EU) 2021/695 and (EU) 2021/1153 as regards increasing the efficiency of the EU guarantee under Regulation (EU) 2021/523 and simplifying reporting requirements - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2025)84 - Amendment of Regulations (EU) 2015/1017, (EU) 2021/523, (EU) 2021/695 and (EU) 2021/1153 as regards increasing the efficiency ... |
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| source | COM(2025)84  |
| date | 26-02-2025 |
1. CONTEXT OF THE PROPOSAL
• Reasons for and objectives of the proposal
The Commission emphasises the importance of investing in key technologies and sectors to drive growth and competitiveness in the Union. Commission President von der Leyen, in her Political Guidelines for the 2024-2029 Commission, pairs investment with the ambition of making business easier through reducing administrative burden and reporting obligations. Following up on these strategical milestones, the Commission published ’A Competitiveness Compass for the EU’ 1 in January 2025 which announces a Clean Industrial Deal aimed at securing the Union as an attractive location for manufacturing, and promoting clean tech and new circular business models, in order to meet its agreed decarbonisation objectives.
Against this backdrop, the InvestEU programme, the Union’s largest risk-sharing instrument to support priority investments within the Union, as also pointed out in the Draghi report, has been successful in mobilising investments where market failures would inhibit them otherwise. Thanks to its partial provisioning and multiplier effect, InvestEU offers a budget-wise efficient instrument to address large investment needs in priority areas by leveraging public and private investment. This is particularly relevant in the context of constrained public finances. While InvestEU targets a broad range of key policy areas, a strong focus is set on investments which can support the objectives of the Competitiveness Compass, the Clean Industrial Deal and the digital innovation and transition including support to start-ups and scale-ups. In fact, InvestEU is a versatile instrument and can support investment activity in different policy areas according to the evolving and emerging priorities of the Union.
The interim evaluation of the InvestEU programme, published in September 2024 2 , highlighted the need to consider ways to enhance the financial capacity of InvestEU in the remainder of the programming period and to reduce the administrative burden on key stakeholders. Moreover, the interim evaluation recommended ensuring continuity in the financial products offered to the market and avoiding a stop-and-go situation, as this would create not only a gap in the much-needed Union support to policy priorities but would also add complexity to the financial intermediaries and final recipients.
As of June 2024, InvestEU is estimated to have mobilised investments of EUR 280 billion, of which EUR 201 billion (close to 70 %) stemming from the private sector. InvestEU plays a key role in addressing financial barriers and driving the investments needed for competitiveness, research and innovation, decarbonisation and environmental and social sustainability. Close to 45 % of the volume of operations signed under InvestEU are supporting the climate objective.
In light of these developments, a legislative amendment to the InvestEU Regulation 3 is proposed to allow the use of existing resources more efficiently by increasing the size of the EU guarantee and its provisioning through the use of reflows from the European Fund for Strategic Investments (EFSI) and from legacy instruments 4 and by combining the InvestEU portfolio with support from the Union budget under EFSI and other legacy financial instruments (CEF Debt Instrument and InnovFin Debt Facility) portfolios, thus providing continued support to businesses and projects in the last two years of this programming period. These combinations potentially reduce the budget revenues (in relation to reflows or surpluses from legacy instruments). However, they would also trigger substantial financial efficiency gains by creating the possibility for an increased volume of guarantee cover to be provided for strategic investments in key Union priority areas leading to an additional investment of around EUR 25 billion that can be expected to be mobilised and by leading to an increased diversification of risks underpinned by the same provisioning. They would also lead to reporting streamlining for the EIB and the EIF, albeit with certain specific data to be provided to the Commission for the accounting.
The proposed changes are expected to mobilise around EUR 50 billion in additional public and private investment. The increased InvestEU capacity will be mainly used to finance higher risk activities in support of priority Union policies, such as the ones outlined in the Competitiveness Compass – covering tech sectors that will matter in tomorrow’s economy such as digital frontier technologies –, the Clean Industrial Deal, as well as any potential new initiatives in priority areas such as defence industrial policy including space assets, dual-use activities or military mobility. Such increased investment capacity across the four compartments will contribute to the Union of Skills and Quality Jobs. More specifically, the incremental capacity can be used to support equity and quasi-equity in highly innovative and risky projects, higher risk debt such as certain forms of subordinated debt, guarantee instruments, and other instruments to support the scaling up of innovative companies in synergy with the European Innovation Council, as well as guarantee products targeting innovation, digitalisation, digital technologies and infrastructures, the green transition of smaller firms, social investments and skills, and investments into funds that support clean-tech and deep-tech start-ups and scale-ups and decarbonation of firms. The precise product mix, policy mix and risk-sharing arrangements will be developed and agreed between the Commission and the InvestEU implementing partners and reflected accordingly in the InvestEU guarantee agreements, aiming at targeting current challenges and policy priorities.
The possibilities under the Member State compartment for Member States to deploy funds under shared management, under the Recovery and Resilience Facility or from other national budgetary funds are proposed to be reinforced, to allow Member States to also contribute through a financial instrument in addition to existing option of contributing to the EU guarantee.
Reporting simplifications are needed for InvestEU, EFSI and legacy financial instruments under investment support programmes to reduce the reporting burden on implementing partners, financial intermediaries and final recipients. The proposal contributes to meeting the commitments of the Commission to reduce the administrative burden and reporting obligations by at least 25 % for all business and by 35 % for small and medium-sized enterprises. It is set to produce significant benefits, with spillover effects on the different actors (implementing partners, financial intermediaries, final recipients) given the multilayered setup of InvestEU.
In summary, in support of the Competitiveness Compass, the Clean Industrial Deal and contributing to the Union’s economic growth and competitiveness, skills and quality jobs, the proposed amendments to the InvestEU Regulation aim to: i) increase the size and efficiency of the EU guarantee; ii) increase the attractiveness of the InvestEU Member State compartment; and iii) simplify the administrative burden notably caused by reporting requirements.
More specifically, the proposal is set to provide:
–An increase in the EU guarantee by EUR 2.5 billion under the current financing period, with the corresponding budgetary resources required for provisioning stemming from EFSI surpluses and reflows from other legacy instruments becoming available in 2025, 2026 and 2027. This increase of the EU guarantee will support the mobilisation of around EUR 25 billion in additional private and public investment.
–Enhanced possibilities of combinations of available support from the Union budget under three legacy programmes (EFSI, CEF Debt Instrument and InnovFin Debt Facility) with InvestEU Fund to improve the efficiency of InvestEU Fund and support the mobilisation of around EUR 25 billion of additional investment.
–A possibility for Member States to contribute in a fully funded manner to a financial instrument. This is in particular a valuable addition for funded equity products and for debt products which can be deployed in currencies other than the euro without exposing the Union budget to currency risk. While the proposal is at this stage done under InvestEU and usable for national funds in accordance with Recovery and Resilience plans, provided all necessary steps can be finalised before August 2026, and for other national budgetary funds, the application of this possibility to funds under shared management would necessitate limited subsequent changes to sector specific rules be effective, so it would not be immediately available for those funds.
–Reporting simplification, notably for small and medium-sized enterprises (SMEs) and social economy enterprises. Such simplifications are expected to save around EUR 350 million.
Efficiency gains and simplifications will also be achieved through non-legislative measures. Such measures include the possibility for implementing partners to rely on management declarations covering more than one Union programme they are implementing, including InvestEU, while the Commission could in this context also rely on equivalent level of assurance through other independent means than an audit opinion or the possibility for implementing partners to rely on their own positively pillar assessed rules and procedures in the selection of financial intermediaries. In parallel, the Commission is engaging with the implementing partners of legacy investment support programmes to reduce the reporting burden through contractual simplifications where no legislative amendment is needed. In addition, the Commission is exploring further simplification opportunities in relation to legislation on legacy financial support programmes, to the extent reporting requirements were laid down therein, and intends to present further legislative simplification measures, as appropriate. Additional cost savings could be realised in that context.
• Consistency with existing policy provisions in the policy area
This proposal is consistent with existing policy objectives in the policy areas of investment, industry, and economic growth, including the most recent ones. The InvestEU programme is consistent with the Union’s sustainable economy and industrial policy strategies. It aims to promote the competitiveness of the European economy and the development of key industries and technologies and is a key component of the Union’s investment policy as presented in the Competitiveness Compass and the Clean Industrial Deal. The proposal should also continue to foster the development of investment ecosystems and the emergence of market-based funding solutions in support of European competitiveness.
Following up on Commission proposal COM/2023/593 5 and in line with the Political Guidelines of the Commission President 6 , the proposed simplification amendments aim to enhance further the effectiveness and efficiency of the programmes concerned, hence contributing to meeting the commitments of the Commission to reduce the administrative burden by at least 25 % for all business and by 35 % for small and medium-sized enterprises.
• Consistency with other Union policies
The proposal is aligned with the Union’s overall objective of promoting economic growth, competitiveness, and job creation, as outlined in the Treaties. In supporting the objectives of the Clean Industrial Deal to nurture competitive manufacturers who drive decarbonisation through innovation, the proposal is also consistent with Europe’s ambitious framework to become a decarbonised economy by 2050 and the intermediate 2040 target of 90 %.
Helping to de-risk private investments and feeding support through the Union’s (public and private) financial system, the proposal is also consistent with the objectives of the European Savings and Investment Union to connect savings to the most productive investment, with a focus on the Union’s strategic objectives, including innovation, decarbonisation, digital technologies and defence.
The proposed amendments will further enhance the impact in these areas.
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
• Legal basis
The same legal basis (Article 173 (Industry) and Article 175, third paragraph, (Economic, Social and Territorial Cohesion) of the Treaty on the Functioning of the European Union (TFEU)) is being used for this proposal to amend the InvestEU Regulation than what was used for the version in force.
The amendments to other Regulations are in the same manner based on their original relevant legal bases, that is: i) Articles 172 and 173, Article 175, third paragraph, and Article 182(1) for the EFSI Regulation; ii) Articles 172 and 194 for the CEF Regulation; and iii) Articles 173(3), 182(1), 183 and 188, second paragraph, for the Horizon Europe Regulation.
• Subsidiarity (for non-exclusive competence)
The objectives of the proposal cannot be sufficiently achieved by the Member States and can therefore be better achieved by the Union.
The multiplying effect and the impact on the ground will be much higher than could be achieved by investment programmes in individual Member States. The amendments would support the industrial policy of the Union in line with the Competitiveness Compass Communication. The Union’s Single Market will provide for greater attractiveness for investors and better risk diversification across sectors and geographies.
The strengthening of the Member State compartment would allow addressing country specific market failures and investment gaps while drawing on financial products designed at central level providing a tested and well-functioning distribution channel for the use of budgetary funds while leveraging private sector financing. It would in particular help Member States channel the financial support to investments under the Recovery and Resilience Plans, provided all necessary steps can be finalised before August 2026, thereby also speeding up their implementation.
• Proportionality
The Draghi report calls for more investment support to close the investment gap and recognises InvestEU as the key risk-sharing instrument to use.
An intervention at Union level ensures that a critical mass of resources can be leveraged so as to maximise the impact of investment on the ground. The proposal reinforces the existing EU guarantee that has enabled supporting innovative financing solutions attracting also private financing in support of key Union policies. It does not replace investments by Member States but is – on the contrary – complementary to such investments. The Union level provides for economies of scale in the use of innovative financial products by catalysing private investment in the whole Union and making best use of the European institutions and their expertise for that purpose.
Intervention at Union level is the only tool to effectively address investment needs linked to Union-wide policy objectives.
It does not go beyond what is necessary to achieve the objectives pursued.
• Choice of the instrument
The objectives pursued require amending the current InvestEU Regulation, EFSI Regulation, CEF Regulation and Horizon Europe Regulation through a legislative proposal.
3. RESULTS OF EX POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
• Ex post evaluations/fitness checks of existing legislation
The InvestEU interim evaluation 7 recognised the notable successes already achieved and the potential of InvestEU to be even more impactful, while referring to the fact that the budget is inadequate relative to the high demand and significant investment needs.
It concluded that the InvestEU guarantee features high additionality, enabling the implementing partners to engage with higher risk counterparts, deploy riskier financial products or conditions and finance activities with inherently higher risk. The interim evaluation also recognised the meaningful crowding-in effect of InvestEU. Based on the operations approved as end-June 2024, the InvestEU Fund is estimated to mobilise around EUR 280 billion in additional investment, with EUR 201 billion (71 %) stemming from private sources. Furthermore, the InvestEU – as a budgetary guarantee – was seen as an inherently efficient way of using and leveraging the Union budget.
At the same time, the evaluation concluded that the current budget was inadequate relative to the high demand and significant investment needs and suggested considering ways to enhance the financial capacity of InvestEU in the remaining programming period.
• Stakeholder consultations
Extensive consultations were carried out in the context of the InvestEU interim evaluation, through interviews with approximately 150 key stakeholders, survey feedback from project promoters, deep dives, thematic case studies, and participation in relevant events. While stakeholders for instance praised the additionality of the programme, several stakeholders pointed out that the InvestEU budget was much too limited to provide sustainable support to target beneficiaries and in most cases the budget was close to exhausted already. In addition, most implementing partners highlighted the demanding nature of the reporting requirements, which they find burdensome due to their frequency and complexity, and they advocated further streamlining of reporting procedures. Furthermore, the Commission is in regular contact with the EIB Group and other InvestEU implementing partners and financial intermediaries who have voiced similar issues bilaterally and also through letters sent by the European Association of Long-Term Investors (ELTI) representing 13 out of the 17 implementing partners to the Commission.
Both the need for additional guarantee capacity and simplifications in terms of reporting are being catered for in the legislative proposal.
• Collection and use of expertise
An external independent interim evaluation 8 was conducted in 2024 in line with Article 29(2) of the InvestEU Regulation. Please see the main messages derived from the interim evaluation relevant for this proposal under the sub-heading ’Ex post evaluations/fitness checks of existing legislation’ above.
• Impact assessment
This proposal does not create a new instrument. The proposal draws on the impact assessments done in the context of the original proposal for the InvestEU Regulation on the benefits of a budgetary guarantee instrument and on the interim evaluation carried out in 2024, which demonstrated the usefulness and budgetary efficiency of InvestEU. Investment needs that InvestEU was designed to tackle exceed by far the available financing under the current programme.
No additional impact assessment was done for the amendment proposal which builds on the same risk-sharing structure already being successfully implemented and is able to cater for investment support in multiple sectors in line with the policy priorities of the Union, including the evolving and emerging ones.
• Regulatory fitness and simplification
The proposal reflects the general simplification exercise pursued by the Commission. It aims to alleviate the administrative burden on the final recipients of the investment support, on the financial intermediaries and on the implementing partners by: i) reducing the frequency of reporting; ii) removing the requirement on implementing partners to produce an annual report on investment barriers; iii) reducing the number of items to be reported in relation to small transactions; iv) adjusting the application of the SME definition. In particular, items iii) and iv) will exempt small businesses and thus reduce their costs. The ensuing cost reductions should have a positive impact on the competitiveness.
No additional reporting items are being proposed. The Commission has already established a digital tool (the InvestEU Management Information System) that the implementing partners use when submitting operational, financial and risk-related reporting data to the Commission.
• Fundamental rights
The proposal does not have an impact on fundamental rights.
4. BUDGETARY IMPLICATIONS
The EU guarantee under InvestEU is being proposed to be increased by EUR 2.5 billion which is expected to mobilise additional investment of around EUR 25 billion. This would require additional provisioning of EUR 1 billion. The resources for the provisioning would come from reflows from legacy financial instruments listed in Annex IV to the InvestEU Regulation, from EFSI, from InvestEU itself and from surpluses in the Common Provisioning Fund relating to the EFSI compartment. The amount of reflows from EFSI surpluses and from legacy financial instruments for the period 2025-2027 is expected to be in excess of EUR 2 billion.
The enhanced combinations are expected to mobilise in the area of another EUR 25 billion of investment. The financial impact of these combinations implies delayed and potentially reduced budget revenues (in relation to reflows from legacy financial instruments) and surpluses from the provisioning of EFSI.
No additional budget is requested for staff or administrative costs.
A legislative financial and digital statement with further budgetary information is included.
5. OTHER ELEMENTS
• Implementation plans and monitoring, evaluation and reporting arrangements
The InvestEU Fund (the EU guarantee) is implemented through indirect management. The Commission currently has a network of 17 implementing partners already in place, expected to increase to 24 implementing partners following the latest call for expression of interest, that ensure the implementation of the proposal in the whole Union.
The monitoring, evaluation and reporting arrangements already in place will remain, except for those reporting requirements which will be reduced or removed due to the simplification explained under the sub-heading ’Regulatory fitness and simplification’ above.
Performance will be measured against indicators laid down in the InvestEU Regulation and in the guarantee agreements with the implementing partners in order to gather harmonised reporting from them.
• Detailed explanation of the specific provisions of the proposal
The specific provisions are explained with reference to each Regulation being proposed to be amended.
Contents
The EU guarantee is proposed to be increased to EUR 28 652 310 073 in current prices (increase of EUR 2 500 000 000). Consequently, the 75 % of the EU guarantee allocated to the EIB Group will amount to EUR 21 489 232 555 and the financial contribution of the EIB Group is proposed to be increased in proportion to EUR 5 372 308 139.
The indicative distribution of the EU guarantee between the four policy windows laid down in Annex I is increased proportionately to the increase of the EU guarantee. This is without prejudice to initiatives that may be taken in the coming months to meet compelling and urgent financing needs in priority areas such as defence industrial policy including space assets, dual-use activities or military mobility.
The provisioning rate of 40 % will remain.
In addition, the provisions relating to combinations of EFSI and two legacy instruments with InvestEU to enhance the efficiency of the programme are adjusted to allow for most effective combinations.
An InvestEU financial instrument is proposed to be included under the Member State compartment to make more efficient the deployment of certain financial products (in particular for equity investments) under that compartment and hence increase its versatility. Furthermore, the InvestEU financial instrument can be deployed by the implementing partner in currencies other than the euro, further increasing efficiency and versatility, chiefly to the benefit of contributing Member States whose currency is not the euro.
The introduction of the InvestEU financial instrument to the Regulation has led to numerous consequential changes in the definitions of certain terms and in Articles, which previously referred only to the EU guarantee. It is being proposed that the InvestEU financial instrument in general follows the same rules as the EU guarantee, to the extent applicable and appropriate. For clarity, the mention of the InvestEU financial instrument is usually explicitly added to the relevant Articles, while cross-refences are only used in limited provisions, where it is justifiable. In this context, very minor other adjustments were made to the provisions relating to the EU guarantee under the Member State compartment relating to the content of the guarantee agreement implementing a contribution agreement.
In terms of simplification, a revised SME definition is being proposed and for small-size operations not exceeding EUR 100 000 the reporting requirements laid down in Annex III are alleviated by reducing the number of indicators on which the implementing partners will need to report, which will also have a positive impact to financial intermediaries and final recipients. The purpose is to make the requirements more proportionate while not hampering the objectives of the InvestEU programme. As a more general simplification measure, the frequency of reporting under EFSI from the EIB to the Commission is reduced to annual from semi-annual 9 and reporting on investment barriers is no longer obligatory to any implementing partner.
In addition, a number of provisions are updated technically to refer exactly to current legislation in cases where the adoption of those legislative acts was pending at the time of adoption of the InvestEU Regulation.
To mirror the adjustments made in the InvestEU Regulation for combinations, adjustments were also made to the EFSI Regulation.
In terms of simplification, the frequency of reporting from the implementing partners to the Commission is reduced to annual from semi-annual and reporting on investment barriers is removed since the investment period under EFSI has ended. For the same reason, two types of reporting are discontinued.
Amendments to these two Regulations aim at allowing the combinations of the support of these instruments with the EU guarantee under InvestEU Fund as provided for in Article 7 of the InvestEU Regulation.
It is proposed that the amending Regulation enters into force on the day following publication to allow for swift implementation.