The European Defence Fund is the Commission's initiative to support collaborative defence research and development, and to foster an innovative and competitive defence industrial base. The Fund promotes cooperation among companies and research actors of all sizes and geographic origin in the Union, in research and development of state-of-the-art and interoperable defence technology and equipment. The Fund supports competitive and collaborative projects throughout the entire cycle of research and development for a bigger impact on the European defence capability and industrial landscape. It strongly encourages participation of SMEs in collaborative projects and fosters breakthrough innovative solutions. A budget of close to €8 billion for 2021-2027 is dedicated to the European Defence Fund: - €2.7 billion to fund collaborative defence research to address emerging and future challenges and threats;
- €5.3 billion to fund collaborative capability development projects complementing national contributions.
With an aim to achieve the goals of this Fund and promote cooperation in defence domain, special incentives’ have been introduced in its Regulation. In particular, the EDF contains specific provisions in favour of involving SMEs and middle-capitalisation companies and it will incentivise the cross-border participation of SMEs by providing higher financing rates and favouring projects by consortia, which include SMEs. The European Defence Fund promotes support all along the lifecycle, from research to prototype development up to certification. Only collaborative projects are eligible. Research actions can receive up to 100% of EU funding of the eligible costs, mainly in grants, while development actions are co-funded. The Fund will complement Member States’ investment by co-financing up to 20% of the costs for prototype development and up to 80% of ensuing certification and testing activities. | 
