Digital Europe: the underrated EU funding programme for AI projects in SMEs

Most SMEs know about BAFA funding and the digitalization grants offered by the German states. The EU level, however, is almost always overlooked. Yet the Digital Europe programme provides EU funding for AI projects in SMEs, running until 2027 and offering grants of up to 75 percent. Anyone who knows this programme adds a third source of funding alongside federal and state support.

What is the Digital Europe programme?

Digital Europe (DIGITAL) is the EU funding programme for the digital transformation of business and administration, equipped with around EUR 8.1 billion for the period 2021 to 2027 (European Commission). Of this, around EUR 2.1 billion is earmarked specifically for artificial intelligence (Austrian Federal Chancellery). The programme builds shared computing capacity, data spaces and algorithms that companies and public authorities can use. Unlike classic consulting grants, it does not fund individual consulting days but focuses on infrastructure and the broad deployment of technology within companies.

How much funding is available for SMEs?

For small and medium-sized enterprises, the funding rate is up to 75 percent depending on the type of grant, reducing the own contribution to as little as 25 percent. Which rate applies depends on the type of application:

• Simple grants: cover 50 percent of eligible costs, regardless of company size.
• SME support actions: here small and medium-sized enterprises only bear 25 percent themselves, with 75 percent funded. Other consortium partners remain at 50 percent.
• EDIH funding: the innovation hubs are funded half by the EU and half by member states. For individual companies, the services there are usually free of charge.

These rates are also confirmed by the Bavarian Research Alliance in its programme overview (BayFOR). As a rule, the grant does not go to a single company alone but is channelled through consortia or the hubs, which tends to make access easier rather than harder for smaller companies.

What exactly does Digital Europe fund?

The programme does not fund the purchase of software, but rather the development of AI capabilities and their real-world testing within companies. The five focus areas are:

• Artificial intelligence: shared data spaces and algorithms that smaller companies can also use, the largest AI block at around EUR 2.1 billion.
• Supercomputing: access to high-performance computers, for example to train your own models.
• Cybersecurity: tools and advice so that AI projects do not become a gateway for attacks.
• Digital skills: training staff, without which any implementation runs into the sand.
• Broad technology deployment: support to actually bring AI and automation into everyday operations instead of leaving them at the pilot stage.

European Digital Innovation Hubs: free AI consulting

The most practical way to access the programme is through the European Digital Innovation Hubs, or EDIH for short: Germany has around 16 of these contact points, and most of their services are free of charge (BayFOR). A hub operates as a one-stop shop with four service areas. The most important is called Test before Invest: in a lab environment, you try out an AI idea with experts before committing your own money. This is complemented by training, help accessing funding, and connections to a network of research institutions and other companies. For an SME that first wants to find out whether an AI project is worthwhile, this is often the cheapest first step of all.

How does Digital Europe complement BAFA and state funding?

Digital Europe sits one level above national funding and does not exclude it, but rather covers different phases. BAFA funding and state programmes typically pay for the concrete consulting and implementation within your company. The EU level finances the preliminary stage, i.e. testing, infrastructure and skills development through the hubs. Anyone planning an AI project can combine both: first test for free at an EDIH, then carry out the funded implementation with a federal or state consulting programme. What remains important throughout is the legal framework, such as the EU AI Act for SMEs, which applies regardless of the funding source.

What the next step is for your company

For most companies, the sensible starting point is a clearly defined use case, not a large programme. In our projects, we therefore start with a single, measurable bottleneck, such as automatically processing recurring email enquiries with n8n, and clarify in parallel which funding level fits. An EDIH test costs nothing and gives an honest answer as to whether the effort is worthwhile. We guide you step by step as such a project develops from an idea into running AI agents. This article is meant as guidance, not funding or legal advice: the binding assessment in individual cases is a matter for the responsible authority.

Frequently asked questions

How much longer will the Digital Europe programme run?

The programme is part of the EU's multiannual financial framework and runs until the end of 2027. Within this period, funding is allocated through regular work programmes and calls, so deadlines differ from call to call.

Can small companies without a consortium also take part?

Yes. The simplest route for an SME is not through its own application but through a European Digital Innovation Hub. Its services, such as Test before Invest, are usually free of charge and do not require a separate funding application.

Does Digital Europe exclude BAFA funding?

No. Both levels cover different phases. The EU level funds testing and infrastructure, while BAFA funding covers concrete consulting and implementation. In practice, they can be combined one after another, as long as the same costs are not funded twice.

How much exactly is the grant for SMEs?

For simple grants it is 50 percent of eligible costs, for special SME support actions up to 75 percent. The own contribution is therefore as low as 25 percent in the best case.