As artificial intelligence becomes increasingly embedded in economic, public and social systems, the European Union has moved to ensure innovation aligns with safety, ethical principles and public trust. Under Article 57 of the EU AI Act, Member States are mandated to establish at least one AI regulatory sandbox by August 2026. These sandboxes offer a structured environment for testing and refining AI applications under the oversight of competent national authorities. By supporting experimentation and legal certainty, these mechanisms are designed to stimulate AI development while ensuring compliance. The varying approaches adopted by different countries offer insights into the opportunities and complexities of implementing such frameworks across a diverse regulatory landscape.
Purpose and Function of Regulatory Sandboxes
AI regulatory sandboxes are experimental frameworks where AI systems can be developed, tested and validated in a controlled setting. They allow providers to engage with regulators early in the product lifecycle, facilitating compliance with legal and ethical standards before full-scale market deployment. These environments are especially valuable for small and medium-sized enterprises and startups, which may lack the internal capacity to navigate complex regulatory obligations. Participants benefit from regulatory guidance and are protected from administrative fines as long as they adhere to sandbox rules, though they remain liable for any damage caused to third parties. Beyond compliance, sandboxes offer a practical way to gather evidence that supports regulatory evolution, building trust in AI deployment.
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The EU sees these mechanisms not just as tools for oversight, but as engines of innovation. Lessons drawn from sectors like fintech, where regulatory sandboxes have reduced time to market and increased investment, reinforce their value. To enhance the efficacy of this model, national sandboxes are supported by EU-wide initiatives such as Testing and Experimentation Facilities (TEFs) and European Digital Innovation Hubs (EDIHs), which provide training, technical infrastructure and advisory services to innovators. The EUSAiR project is another example of pan-European support, aimed at harmonising sandbox practices and facilitating collaboration across borders.
Varied Implementation Across Member States
While the AI Act sets common objectives, its decentralised nature allows for flexibility in national implementation. As a result, Member States are at different stages of progress, with a wide range of institutional models. Countries like Denmark and Spain have already launched operational sandboxes. Denmark’s programme, run jointly by its Data Protection Authority and the Agency for Digital Government, focuses on data protection with plans to integrate AI Act compliance. Spain’s sandbox, formalised through Royal Decree 817/2023, stands out for its robust legal framework and detailed operational procedures tailored to high-risk AI systems.
Conversely, other Member States are still in planning or exploratory phases. For example, Austria is evaluating the concept through its AI Service Desk but lacks a formal sandbox. Similarly, Bulgaria and Ireland mention sandboxes in strategic documents but provide no concrete frameworks. Some states, like Germany and Italy, are leveraging broader regulatory innovation strategies. Germany’s draft Regulatory Sandboxes Act allows for experimentation clauses and central coordination through an innovation portal, while Italy’s ‘Sperimentazione Italia’ predates the AI Act but offers a functional prototype for future sandboxes.
Implementation strategies also differ in centralisation. Some countries, such as Finland and the Netherlands, are coordinating efforts through central authorities, while others, like Belgium and Slovakia, allow for regional experimentation. This diversity highlights the challenge of ensuring consistency in AI governance across the EU, even as subsidiarity remains a guiding principle.
Support Structures and Operational Models
To function effectively, sandboxes require legal clarity, institutional coordination and technical support. Operational models across Member States range from data protection-focused environments to full-scale AI testing ecosystems. Luxembourg’s Sandkëscht, for instance, is a regulatory sandbox operated by its national data protection authority, with a strong emphasis on legal guidance rather than infrastructure. In contrast, Malta plans to operate two sandboxes: one focused on regulatory exemptions and another on personal data use.
Admission processes typically include application screening, risk assessment and development of a test plan. Most sandboxes prioritise high-risk AI systems, particularly those in sectors like healthcare, law enforcement or public administration. Successful participation often culminates in compliance documentation, which can streamline market authorisation and facilitate cross-border trust.
EU support mechanisms aim to standardise and enhance national capabilities. TEFs, operating in sectors like health (TEF-Health) and agriculture (agrifoodTEF), provide large-scale testing infrastructure and foster regulatory alignment. EDIHs extend regional assistance, offering training, testing environments and investment advice to local innovators. Together, these instruments complement the sandbox model by providing both practical and strategic support to AI developers across the EU.
The development of AI regulatory sandboxes marks a significant step in the EU’s ambition to balance innovation with robust governance. As each Member State advances toward the August 2026 deadline, their varied approaches reveal a rich landscape of experimentation, adaptation and cooperation. These sandboxes are not just regulatory tools; they are catalysts for responsible innovation, supporting ethical AI development while enabling startups and SMEs to thrive. Strengthened by EU-wide initiatives and aligned with broader goals of competitiveness and trust, AI regulatory sandboxes could become a cornerstone of Europe’s digital future.
Source: EU Artificial Intelligence Act
Image Credit: iStock
