The EU regulations to look out for in 2025

Several EU regulations passed in recent years are about to come into force — and startups across the continent will have to start following new rules, around AI and data in particular.

What’s more, the implementation of each regulation may look different depending on where a company is based, or operates.

So, which regulations do startups need to have on their radar?

European Innovation Council board member Ana Barjasic and EU AI Act watchdog and EU parliamentarian Arba Kokalari talk through the EU regulations to look out for in 2025.

EU AI Act will ban social scoring and other prohibited AI systems

In December 2023, the EU AI Act was agreed upon among member states, and it was finally passed in the European Parliament on March 13, 2024. As with all EU laws, it takes time for the legislation to come into effect.

In February 2025, the part of the act prohibiting AI systems with unacceptable risks will come into force. Under the AI Act, practices such as social scoring systems and certain forms of emotion recognition will be banned.

By August, requirements for general-purpose AI (GPAI) models will also take effect, ensuring safe and trustworthy AI systems. Companies that already have a model on the market need to be compliant with the AI Act by August 2, 2027. These include rules on transparency, copyright and risk assessment for models that may carry systemic risks. However, the act has its challenges.

“The issue is that the AI Act does not clearly define what constitutes ‘high risk,’ and it overlaps with many other EU laws. More and more legislation is being layered on top of each other, making it even harder for businesses to navigate,” says Kokalari.

In August, member states will also be required to appoint national AI authorities, and the Commission will have the power to expand the list of prohibited practices.

“Member states have a responsibility to correctly implement and apply the legislation. We cannot have a situation where different countries interpret the laws differently. It is crucial to have clear and harmonised rules across the EU,” adds Kokalari.

However, member states can decide how strictly to implement the AI Act, leading to potential differences across countries. Entrepreneur and EIC board member Ana Barjasic sees this as a problem.

“Let’s say in some countries, the regulation is very quick to adapt. In other countries, it’s much slower,” she says, adding that companies may choose to move to “the most developed or least regulated countries in the EU, or even to another continent.”

“If we so desperately want to keep companies in the EU, then we need to make sure that the recommendations and initiatives facilitate them staying and don’t create another hurdle,” Barjasic adds.

The AI Act directly impacts AI developers and startups, requiring the rapid classification of AI systems and compliance with requirements based on risk level.

EU Data Act — Easing data sharing

The EU Data Act is designed to facilitate the sharing and use of data across the EU. It aims to improve data access for startups and AI developers, fostering innovation and competitiveness.

The act ensures businesses can access and share data generated by connected devices and systems. It also prevents unfair terms in data-sharing contracts, particularly benefiting smaller companies, and encourages cross-border collaboration by standardising rules.

For startups, the Data Act creates opportunities to innovate and monetise data, supporting growth in industries like IoT, AI and smart systems. Although compliance with interoperability and data protection requirements may pose challenges, the Act ultimately reduces barriers for cross-border expansion.

The EU Data Act came into force on January 11, 2024 and will start being applied in 2025.

The 28th Regime — Towards a European single market

The concept of the 28th Regime, originating from a report by former Italian prime minister Enrico Letta, seeks to create an optional regulatory framework for businesses — known as a European single market. Instead of navigating the varying laws of individual member states, companies could choose to operate under a unified set of rules.

“This is perhaps the most important change for startups and scaleups in Europe,” says Barjasic. “It’s extremely important and so timely.”

Although similar discussions have arisen before, Barjasic believes “this time it seems like Europe is ready for something like this.” However, individual member states must still agree on the proposal.

“It’s a great step because this is one of the reasons so many companies go to the US. They go to Delaware — it’s one market. You don’t need to operate in 27 different countries [like in Europe]. So, [the 28th Regime] is going to be great,” Barjasic adds.

The idea of a single market has also been supported by numerous startups, startup organisations and VCs across Europe following Letta’s report. On October 14, the EU Inc. Petition, advocating for the creation of a pan-European standardised legal entity under the 28th Regime, was launched and gathered 13k signatories by December last year.

The new regime is expected to be introduced in 2025.

SME Regime — VAT exemption for small companies

Starting on January 1, 2025, a specific VAT regime (SME Regime) will come into effect. It offers small businesses with annual turnover below €100k the ability to sell goods and services without charging VAT — a so-called VAT exemption.
The regime is optional and also reduces VAT reporting obligations, simplifying tax compliance. It is expected to level the playing field for small businesses across the EU.

European startup and scaleup strategy

This strategy, expected in 2025, aims to establish a European forum for startups and scaleups, focusing on accelerating innovation by addressing regulatory and administrative hurdles.

During her confirmation hearing in November 2024, European Commissioner for Startups Ekaterina Zaharieva emphasised the importance of implementing this strategy quickly. She also pledged to propose a European Innovation Act to push member states to meet the 3% target for research and innovation (R&I), combat brain drain, defend research freedom, invest in infrastructure and expand the European Research Council.

Having a European Commissioner for Startups is more than just symbolic, says Barjasic.

“This shows real emphasis and attention on this topic. She has the potential to play a critical role in advancing initiatives like the 28th Regime. I think implementation is key, so I’m quite optimistic for now.”

Keep your files stored safely and securely with the SanDisk 2TB Extreme Portable SSD. With over 69,505 ratings and an impressive 4.6 out of 5 stars, this product has been purchased over 8K+ times in the past month. At only $129.99, this Amazon’s Choice product is a must-have for secure file storage.

Help keep private content private with the included password protection featuring 256-bit AES hardware encryption. Order now for just $129.99 on Amazon!

Help Power Techcratic’s Future – Scan To Support

If Techcratic’s content and insights have helped you, consider giving back by supporting the platform with crypto. Every contribution makes a difference, whether it’s for high-quality content, server maintenance, or future updates. Techcratic is constantly evolving, and your support helps drive that progress.

As a solo operator who wears all the hats, creating content, managing the tech, and running the site, your support allows me to stay focused on delivering valuable resources. Your support keeps everything running smoothly and enables me to continue creating the content you love. I’m deeply grateful for your support, it truly means the world to me! Thank you!