European Union: European Parliament and Council of the EU reached provisional agreement on Digital Omnibus on AI Regulation (2025/0359) including artificial intelligence authority governance

On 7 May 2026, the European Parliament and the Council of the EU reached a provisional agreement on the Digital Omnibus on AI Regulation (2025/0359). The Digital Omnibus on AI Regulation would clarify the competences of the AI Office for supervising AI systems based on general-purpose AI models where the model and the system are developed by the same provider, listing specific exceptions where national authorities remain competent, including law enforcement, border management, judicial authorities, and financial institutions. The AI Office's enforcement powers would extend to cover AI systems embedded in very large online platforms and very large search engines. The Digital Omnibus on AI Regulation would also extend access to AI regulatory sandboxes, including an EU-level sandbox, and set the deadline for national competent authorities to establish AI regulatory sandboxes at 2 August 2027. SME exemptions from certain rules would also apply to small mid-cap enterprises (SMCs). The provisional agreement must be formally adopted by both the European Parliament and the Council of the EU before 2 August 2026.