Ensuring sustainable consumption of water, which is essential for human development, is not sufficient, therefore, there is an urgent need to improve reuse of treated wastewater. This paper reviews the newest EU legislation related to reclaimed water reuse, which is the main driver for change. While there are some positive developments in the EU, the paper argues that the current EU legislation does not sufficiently encourage circular solutions, especially on how to deal with any bottleneck effects, which prevent to fully utilise wastewater. This reflection is noted based on the national and regional developments in Italy with some comparison with other Southern countries, such as Greece and Spain in attempt to identify good practices as well as any barriers for the reclaimed water to be reused.