This article explains how EU sanctions are adopted and enforced, how designation and delisting work, and what trends businesses should prepare for.

How EU sanctions are adopted

EU restrictive measures are anchored in the Common Foreign and Security Policy (CFSP) and implemented through Article 215 TFEU. The process starts with a proposal from the High Representative for Foreign Affairs, which is then examined by Council bodies and adopted unanimously by the Council.

When asset freezes or financial restrictions are involved, a Council Regulation is enacted alongside the Council Decision and enters into force immediately. These regulations are directly applicable in all Member States, meaning no national transposition is needed. The European Commission oversees uniform application and can initiate infringement proceedings against Member States that fail to comply.

An important constraint: all EU sanctions must respect the Charter of Fundamental Rights. The Court of Justice has confirmed that international commitments cannot override the EU Treaties or the fundamental rights of listed individuals.

Designation, ownership, and control

Persons and entities can be designated for asset freezes or other restrictions through Council Regulation. The criteria are defined in the relevant sanctions regime (for example, Regulation 833/2014 for Russia).

Two concepts are particularly important for businesses:

• Ownership: the EU applies a “50% or more” rule. Entities that are 50% or more owned by a designated person are themselves treated as sanctioned. Holdings by multiple designated persons are aggregated.
• Control: assessed on a case-by-case basis, covering powers such as appointing management, exercising dominant influence, or maintaining consolidated accounts.

These rules mean that compliance requires looking beyond the sanctions lists themselves. Companies need to understand the ownership and control structures of the parties they do business with.

Delisting and judicial remedies

Listed persons or entities can apply for delisting or challenge their designation before the General Court (Article 263 TFEU). The Court reviews whether designations are based on specific, precise, and consistent evidence, and whether they remain proportionate.

Annulment is possible where procedural or substantive defects are found. Compensation for unlawful listing requires proof of a “sufficiently serious breach.” These safeguards ensure that EU sanctions remain subject to meaningful judicial oversight.

Licences and exemptions

Enforcement and licensing are national responsibilities. National competent authorities can issue licences for otherwise prohibited activities, but only where the relevant EU regulation provides an explicit legal basis.

Common grounds for derogation include humanitarian needs, public safety and health, diplomatic operations, and pre-existing legal obligations. The European Commission insists on case-by-case consideration and has made clear that general authorisations are not consistent with EU law.

Enforcement across Member States

Enforcement has historically varied between Member States, but the trend is clearly towards more active prosecution. Recent examples include criminal prosecutions in Germany for sanctions breaches, including in connection with dual-use exports. In the Netherlands, the FIOD and the Public Prosecution Office have prioritised sanctions enforcement, with the Damen Shipyards case as the most prominent example. Spain has shifted from administrative to criminal prosecution for sanctions violations.

A major development is Directive (EU) 2024/1226, which requires Member States to criminalise sanctions breaches, harmonise penalties, and introduce special investigation tools. The Directive also mandates cooperation with Europol and Eurojust. However, implementation is uneven, and the Commission has already initiated infringement proceedings against Member States that are falling behind.

What to watch: emerging trends

Several developments are shaping the next phase of EU sanctions.

The extraterritorial reach of EU sanctions is expanding. The “best efforts” obligation under Article 8a of Regulation 833/2014 requires EU parent companies to prevent circumvention via their non-EU subsidiaries. Designations are also being extended to non-EU parties that materially support Russian aggression.

Sectoral and technological restrictions are broadening, particularly in energy, AI, and quantum technology. Companies in these sectors should be reviewing their supply chains and compliance processes.

Circumvention strategies are becoming more sophisticated, and the EU is responding by extending the extraterritorial application of its measures and strengthening rules on ownership and control verification.

Despite the direct applicability of EU regulations, enforcement quality still depends heavily on national authorities. The new Directive aims to close this gap, but full alignment across all Member States remains a work in progress.

What this means for businesses

The expanding scope of EU sanctions raises the compliance bar for all EU operators. Companies should strengthen their compliance programmes, invest in proper due diligence on counterparties and ownership structures, and maintain thorough documentation, especially in sensitive sectors and cross-border trade.

For a complete overview of the EU sanctions regime, read our contribution to GIR’s Guide to Sanctions.