In August 2025, the European Parliamentary Research Service (EPRS) released a paper that provides an overview of the implementation of Regulation 2020/2092 on the general regime of conditionality for the protection of the Union budget (the "Conditionality Regulation"). The Regulation aims to protect the EU budget from breaches of the rule of law in Member States (→eucrim 3/2020, 174-176). The paper is intended as input for the joint report of the EP's Committees on Budgets (BUDG) and Budgetary Control (CONT) on the implementation of the Conditionality Regulation, which came into effect four years ago. The paper deals with the following:

• Potential legal gaps within the framework of Regulation 2020/2092, and of the challenges and opportunities that arise from its application.
• The possibilities to implement a "smart conditionality mechanism", which could enable EU funds to reach final beneficiaries directly, bypassing a government whose management affects or risks affecting EU financial interests.
• The link between the implementation of the Conditionality Regulation and the European Commission's annual rule of law report.

The EPRS concludes that several challenges exist that may hinder the effective implementation of the Conditionality Regulation. Several improvements are proposed with regard to the conditionality process, the measures to be taken for financial sanctions, and the European Parliament's involvement throughout the process.