ESA’s Design 2 produces cross-cutting initiative includes digitalisation, process automation, interoperability, and harnessing smart embedded sensors to achieve a seamless data cycle (SDC). The SDC in digital engineering covers requirements and design, production, assembly, integration, and testing as well as in-flight operations including recycling. Nevertheless, central data and legal challenges lie in the joint research addressed Europe-wide (geo-return) and the partner network constraints covering agency, large system integrator (LSI), research and development (R&D), and high-tech SME interests. Either way, a legal enabler for digitization of the European space business can be seen in ESA's strict compliance policy with regard to the acceptance of their general terms and conditions. In fact, it is reasonable to assume that ESA declares data to be a common deliverable in the future and that the contractors accept this too. However, there are technical challenges like portability, interoperability, interconnectivity, and the need for a federated infrastructure, while all these aspects have to be solved across company and national borders. The European Gaia-X project tackles the aforementioned challenges while targeting an open, transparent, and secure digital ecosystem in which data are stored, processed, and used while retaining data sovereignty. This paper deepens these framework conditions, addresses them from the perspective of real space applications, and presents key opportunities and challenges at the implementation level. Moreover, it shows how the seamless data cycle contributes to increase freedom of design, improve overall performance, and reduce cost and lead time from concept to manufacturing while creating new high-performance space products.