Denmark has EU approval for a 18 km undersea road-rail tunnel that will cut journey times to Germany.
The €8.7 billion Fehmarn Belt project will get €589 million of EU funding.
The EU Commission said it complied with EU state aid rules and would boost transport links between central Europe and Scandinavia.
When completed, it will be one of the world's longest road tunnels.
The tunnel will connect the Danish island of Lolland with Germany's Fehmarn island. Construction will start in January, and it should open in 2024.
There will be a double-track railway alongside a four-lane motorway, with differently coloured illuminated zones to show motorists how far they have driven.
The link will provide a fast corridor between Copenhagen and Hamburg. It is expected to slash that rail journey from just under five hours currently to little more than two hours.
An EU contribution to the Fehmarn tunnel will come from the Connecting Europe Facility, a scheme for modernising Europe's transport infrastructure.
In a statement on Thursday, the Commission said the new tunnel would be integrated with Denmark's public transport and it was "neither liable to distort competition nor to affect trade between member states".
The tunnel will be built by Denmark's state-owned Femern A/S.