How Sandboxes Differ Across Europe

Regulatory sandboxes have become a foundational instrument in Europe’s strategy to govern emerging technologies without stifling innovation. They provide a controlled environment where novel products, services, or business models can be tested under regulatory supervision, often with temporary derogations or tailored guidance. The concept is not new, but its application has expanded rapidly across sectors—artificial intelligence, fintech, medical devices, and autonomous systems—driven by both EU-level initiatives and national strategies. Yet, despite a shared objective, sandboxes in Europe are far from uniform. They differ significantly in design, eligibility, oversight, and expected outcomes. For professionals working in AI, robotics, biotech, and data systems, understanding these differences is not merely academic; it determines where and how to test innovations, what compliance pathways to follow, and how to scale across jurisdictions.

EU-Level Frameworks and the Role of Harmonization

At the European level, regulatory sandboxes are increasingly embedded in legislative instruments, but they are not uniformly mandated across all sectors. The Artificial Intelligence Act (AI Act) introduces a formal framework for AI regulatory sandboxes, which will be operational across all Member States once the law is fully applicable. These sandboxes are designed to support the development, testing, and validation of innovative AI systems under the supervision of national competent authorities. Participation is voluntary, and the AI Act provides a common legal basis for derogations, data protection safeguards, and liability considerations. However, the Act leaves significant room for national implementation, including the specific governance structures, application procedures, and supervisory practices.

Similarly, the European Health Data Space (EHDS) regulation establishes a sandbox for secondary use of health data, enabling researchers and companies to test data-driven solutions in a controlled environment. The EU Cyber Resilience Act (CRA) also contemplates sandboxes for cybersecurity testing, though its implementation is still evolving. These EU frameworks set minimum standards and principles, but they do not prescribe a single model. Member States must transpose or adapt these rules into their national systems, leading to a patchwork of approaches that reflect local legal traditions, institutional capacities, and policy priorities.

The AI Act Sandbox: A Common Core with National Variations

The AI Act’s sandbox framework is perhaps the most significant EU-wide initiative for AI developers. It aims to foster innovation while ensuring that high-risk AI systems remain compliant with fundamental rights, safety, and data protection rules. Key features include:

• Legal certainty: Participants receive guidance on conformity assessment and can request derogations from certain obligations, provided they implement appropriate safeguards.
• Data protection: Processing of personal data in the sandbox is allowed under specific conditions, including pseudonymization and limited retention periods.
• Liability: The Act clarifies that participation does not exempt providers from liability for damages caused by their systems.

However, the AI Act does not specify the exact procedures for application, selection, or oversight. Member States must designate national authorities and establish operational rules. This leads to variations in:

• Selection criteria: Some countries prioritize projects with high societal impact, while others focus on technological novelty or economic potential.
• Supervision models: Sandbox oversight may involve periodic audits, real-time monitoring, or advisory committees.
• Outputs: While the AI Act encourages regulatory feedback and potential market access support, national programs may offer additional services such as matchmaking with investors or access to testbeds.

For example, Germany is leveraging its existing “AI Test Fields” (KI-Testfelder) to implement the AI Act sandbox, integrating them with its national AI strategy. France, through its data protection authority CNIL, has long operated sandboxes for AI and data processing, focusing on GDPR compliance and algorithmic transparency. Spain has launched a national AI sandbox under the Ministry of Digital Transformation, emphasizing interoperability and public-sector AI applications.

Financial Services: The Longstanding EBA and EIOPA Sandboxes

Financial services have the longest tradition of regulatory sandboxes in Europe, driven by the need to balance innovation with financial stability and consumer protection. The European Banking Authority (EBA) and European Insurance and Occupational Pensions Authority (EIOPA) have issued guidelines for sandboxes and innovation hubs, but these are not binding. National regulators retain full discretion over design and operation.

In the United Kingdom (prior to Brexit and still relevant for comparison), the Financial Conduct Authority (FCA) sandbox was a global benchmark, offering a structured process with clear entry criteria and exit reports. Post-Brexit, the UK continues to operate its sandbox, while EU Member States have developed their own models.

Germany’s BaFin runs a “FinTech Sandbox,” but it is less formalized than the FCA’s and focuses on advisory support rather than regulatory relief. France’s ACPR and AMF jointly operate an innovation hub that provides informal guidance but does not grant formal exemptions. The Netherlands has a more experimental approach, allowing live testing of payment innovations under specific conditions.

These differences matter for fintech firms. A company testing a blockchain-based payment system may find the Dutch sandbox more accommodating for live pilots, while a firm focused on regulatory clarity may prefer the German model for its structured guidance. The Irish Central Bank has emphasized consumer protection and anti-money laundering (AML) compliance in its sandbox criteria, reflecting national regulatory priorities.

Key Differences in Financial Sandboxes

Country	Focus	Oversight	Output
Germany (BaFin)	Advisory, limited exemptions	Periodic reviews	Regulatory feedback
France (ACPR/AMF)	Guidance on licensing	Innovation hub model	Opinion letters
Netherlands	Live testing	Conditional permits	Market access support
Ireland	AML and consumer protection	Supervised pilots	Compliance roadmap

Health and Biotech: Data-Driven Sandboxes

In health and biotech, sandboxes are often tied to data access and clinical validation. The EHDS regulation establishes a framework for the secondary use of electronic health data, including a sandbox for testing AI models and digital health solutions. However, national implementations vary significantly in terms of data governance, ethical review, and cross-border interoperability.

Estonia, a pioneer in digital health, offers a sandbox environment where developers can test health AI models using anonymized data from the national health registry. The process is highly automated, with strong emphasis on data protection and audit trails. Finland has a similar model but requires a more rigorous ethical review, especially for projects involving patient-facing applications.

Spain has launched a health data sandbox under the EHDS framework, focusing on rare diseases and cancer research. The Spanish model emphasizes public-private partnerships and requires participants to commit to data-sharing agreements. Italy has a more fragmented approach, with regional health authorities operating separate sandboxes, leading to inconsistencies in data access and oversight.

For biotech firms, these differences affect not only time-to-market but also the feasibility of certain projects. A company developing an AI-based diagnostic tool may find Estonia’s streamlined data access attractive, while a firm working on personalized medicine may need to navigate Italy’s regional variations.

Clinical Validation and Regulatory Pathways

Health sandboxes often intersect with the Medical Device Regulation (MDR) and In Vitro Diagnostic Regulation (IVDR). In Germany, the Paul-Ehrlich-Institut (PEI) and BfArM have launched a sandbox for AI-based medical devices, offering joint guidance on clinical evaluation and post-market surveillance. France’s ANSM provides a similar framework but places greater emphasis on real-world evidence (RWE) generation during the sandbox phase.

These differences reflect national interpretations of EU regulations. Germany tends to prioritize conformity assessments and technical documentation, while France encourages iterative development with continuous data collection. For developers, choosing the right sandbox can mean the difference between a smooth path to CE marking and a prolonged regulatory dialogue.

Industrial and Robotics Sandboxes: Testing Physical Systems

For robotics and autonomous systems, sandboxes must accommodate physical testing, safety certifications, and sometimes public interaction. The EU Machinery Regulation and AI Act both apply, but national implementations vary in how they handle real-world pilots.

Germany has established “Test Fields for Autonomous Driving” (Automatisiertes Fahren), which function as sandboxes for connected and automated mobility. These are regulated by the Federal Ministry for Digital and Transport (BMDV) and require specific insurance and liability arrangements. France has a similar initiative, the “Sandbox for Autonomous Mobility,” but it is more centralized and coordinated by the Ministry of Transport.

The Netherlands is known for its “Living Labs,” which allow testing of delivery drones and autonomous vehicles in designated urban areas. These labs operate under a flexible regulatory framework, with real-time monitoring and adaptive rules. Sweden has a more liberal approach, allowing broader testing under general safety principles, with minimal formal oversight.

These differences affect deployment strategies. A company testing autonomous shuttles may find The Netherlands’ living labs ideal for urban integration, while a firm focused on highway automation may prefer Germany’s test fields.

Safety and Liability in Industrial Sandboxes

Industrial sandboxes often require participants to demonstrate compliance with the Machinery Regulation and AI Act’s high-risk classification. In Italy, the Ministry of Economic Development has launched a sandbox for industrial robotics, focusing on CE marking and risk assessments. Poland has a more limited framework, primarily offering advisory support through its national standards body.

Liability is a critical issue. In Germany, participants must provide evidence of insurance coverage for potential damages. In France, the sandbox agreement may include temporary liability waivers, provided strict safety protocols are followed. These variations require careful legal planning.

Data Protection and GDPR: The Cross-Cutting Challenge

GDPR compliance is a prerequisite for most sandboxes, but national data protection authorities (DPAs) interpret rules differently. The European Data Protection Board (EDPB) has issued guidelines on sandboxes, emphasizing data minimization, purpose limitation, and accountability. However, DPAs retain discretion over approvals.

Spain’s AEPD is particularly active, offering a dedicated sandbox for AI and data processing with a focus on algorithmic transparency. The UK’s ICO (still relevant for comparison) has a sandbox that emphasizes privacy-by-design and DPIA integration. Germany’s BfDI is more conservative, requiring explicit consent for any personal data processing and limiting sandbox durations.

For AI developers, these differences affect data availability and model training. A project relying on large-scale personal data may face stricter scrutiny in Germany than in Spain, influencing where to conduct initial testing.

Cross-Border Data Flows and Sandbox Portability

A key question is whether sandbox approvals are portable across Member States. The AI Act provides a basis for mutual recognition, but in practice, national authorities may require separate applications. Finland and Estonia have signed a bilateral agreement to recognize each other’s sandbox outputs, facilitating cross-border AI testing. France and Germany are exploring similar arrangements under the “Franco-German AI Cooperation.”

However, most sandboxes remain nationally bound. Companies planning multi-country pilots must navigate separate legal and technical requirements, which can increase costs and complexity.

Selection Criteria and Participation Models

Selection criteria vary widely. Some sandboxes are open-access, while others are highly competitive. Germany’s AI Test Fields require a detailed technical dossier and proof of societal relevance. Spain’s AI Sandbox prioritizes projects with public-sector impact. The Netherlands uses a lottery system for its living labs to ensure fairness.

Participation models also differ. Some sandboxes offer one-on-one supervision (e.g., France’s CNIL), while others use cohort-based programs with workshops and peer learning (e.g., Ireland’s Central Bank). These models affect the level of support and the speed of iteration.

Costs and Resources

Most sandboxes are free of charge, but participants must cover their own compliance costs. However, some countries offer grants or subsidies. Finland provides funding for health sandbox participants through its innovation fund. Belgium offers tax incentives for companies joining its AI sandbox. These financial considerations can influence location choices.

Outputs and Exit Strategies

What happens after the sandbox? Outputs range from regulatory feedback letters to market access support. Germany provides a “regulatory roadmap” that outlines steps for full compliance. France offers a “compliance certificate” that can expedite future licensing. The Netherlands helps participants connect with investors and commercial partners.

However, not all sandboxes guarantee market access. In Italy, sandbox participation does not exempt products from full regulatory approval. In Poland, the sandbox is purely advisory, with no formal link to licensing.

Long-Term Impact on Innovation

Sandboxes can accelerate innovation, but their effectiveness depends on design. Countries with clear exit pathways and strong supervisory support (e.g., Germany, France, Estonia) tend to see higher success rates. Those with vague criteria or limited resources (e.g., some Eastern European countries) may struggle to attract participants.

Practical Implications for Cross-Border Projects

For companies operating across Europe, the sandbox landscape requires strategic planning:

• Choose the right sandbox: Align with your sector, data needs, and regulatory priorities.
• Understand national nuances: A sandbox in one country may not be recognized in another.
• Plan for multiple sandboxes: For cross-border scaling, consider parallel testing in different jurisdictions.
• Engage early with authorities: Pre-application consultations can clarify expectations and improve acceptance.

Ultimately, sandboxes are a tool, not a solution. Their value lies in the quality of regulatory dialogue, the clarity of compliance pathways, and the ability to translate sandbox learnings into real-world deployment. Europe’s sandbox ecosystem is rich but fragmented; success depends on navigating its diversity with precision and foresight.