EU ministers back digital business wallets as talks with MEPs loom

European Union telecoms ministers gave their backing on 9 June to a Council general approach on the proposed European Business Wallets regulation, setting the stage for trialogue negotiations with the European Parliament and paving the way toward what officials hope will be a final legislative agreement before the year closes.

The regulation, designed to establish a digital identity framework tailored specifically for companies operating across the European single market, builds directly upon the eIDAS 2.0 infrastructure that underpins the bloc’s emerging digital identity architecture. European Business Wallets would allow firms to verify identities, exchange authenticated documents and interact with public authorities throughout the Union without physical presence or paper-based procedures.

The framework promises to digitalise a range of corporate processes that currently require in-person handling, including notarisation, corporate registration formalities and authentication procedures that often vary significantly between member states. The shift from analogue to digital is expected to reduce administrative burdens and streamline cross-border business operations, particularly for small and medium-sized enterprises lacking the resources to navigate divergent national requirements.

Central to the Council’s position is a digital sovereignty clause that would require providers of these wallets to be established within the European Union and free from control by third-country entities. The provision, which has received support from the rapporteur steering the Parliament’s draft report, reflects broader concerns within EU institutions about maintaining autonomy over critical digital infrastructure amid heightened geopolitical tensions and data security anxieties.

The Parliament’s draft report goes further still, proposing that all data stored within business wallets be held exclusively on servers located within Union territory. Such a stipulation would represent a significant departure from the data residency practices of many global cloud service providers and could require substantial technical adjustments from prospective wallet operators.

The European Business Wallets initiative runs parallel to the roll-out of the European Digital Identity Wallet for citizens, which is also being deployed during the current calendar year under the revised eIDAS regulation. While the citizen wallet focuses on personal identity verification and access to public services, the business equivalent addresses corporate identity, legal representation and commercial documentation needs.

Economic operators will not face mandatory participation requirements under the proposed regulation. Use of the wallets remains voluntary for businesses, allowing firms to weigh the benefits of streamlined digital operations against any costs or operational changes required to adopt the new system. This voluntary approach mirrors the structure of the citizen wallet scheme and reflects the Commission’s broader preference for market-driven adoption of digital public infrastructure.

During the same ministerial session, the Council also received progress reports on two other significant pieces of digital legislation currently moving through the EU’s legislative machinery. The Digital Networks Act, which seeks to modernise telecommunications network regulation, and the second iteration of the Cybersecurity Act both received updates, though neither advanced to the formal negotiation stage.

With the Council position now fixed, attention shifts to the trialogue format negotiations between Council, Parliament and Commission representatives. The institutions are working to an ambitious timeline that would see a final compromise text agreed and formally adopted before year-end, allowing implementation measures to commence in early 2027. Whether technical disagreements over data residency requirements and sovereignty provisions can be reconciled within that timeframe remains an open question, particularly given the complexity of integrating business identity frameworks with existing national corporate registries and authentication systems.