In 2019, the EU adopted Regulation 2019/452 (the FDI Screening Regulation), laying the foundation for cooperation among the European Commission (Commission) and European Member States on foreign direct investment (FDI) screening. Since then, many Member States have introduced national screening mechanisms. However, until now, the EU’s framework for screening FDI has been largely decentralised, with diverse regimes, each possessing its own characteristics across the Member States. In this regard, it should be noted that rather than creating a centralised EU-level screening system, the FDI Screening Regulation sets minimum standards for national screening mechanisms and introduces a process for coordinating reviews across Member States. While the FDI Screening Regulation encouraged coordination, screening remains optional, and coverage therefore varied widely. This fragmented approach left gaps in protecting critical sectors from potential harmful foreign influence. The revision of the FDI Screening Regulation seeks to close these gaps and establish a more robust, harmonised framework to safeguard critical sectors against harmful foreign influence.

Please refer to our Quoted for further background regarding the current FDI Screening Regulation and FDI screening in the Netherlands.

Revision of the FDI Screening Regulation

In January 2025, the Commission presented a proposal for a new FDI Screening Regulation to the Council and the European Parliament. On 6 June 2025, the Council adopted its negotiating position, marking a major milestone in the legislative process. This was followed by the first trilogue consisting of informal negotiations between Parliament, the Council, and the Commission. On 11 December 2025, the Council presidency and Parliament representatives reached a provisional political agreement on revising the FDI Screening Regulation.

The updated framework is designed to enhance the EU’s capacity to identify, evaluate, and manage risks associated with certain foreign investments, while continuing to support openness to global trade and investment. It builds on the existing system by introducing mandatory screening mechanisms with a common minimum scope for all Member States and extending coverage to foreign investments made through EU-based subsidiaries.

The agreement also aims to improve consistency across national systems, reduce administrative complexity for investors, and ensure that potential cross-border security implications of foreign investments are appropriately considered.

Elements of the agreement

A common minimum scope for screenings

To promote greater harmonisation across the EU, co-legislators agreed that all Member States will establish screening mechanisms covering a targeted set of sensitive areas. The minimum scope includes:

  • Dual-use items and military equipment;
  • Hyper-critical technologies, such as artificial intelligence (aligned with the EU AI Act, focusing on general-purpose AI relevant to space or defence), quantum technologies, and semiconductors;
  • Critical raw materials;
  • Critical entities in energy, transport, and digital infrastructure, based on a risk assessment by the Member State where the EU target is located;
  • Electoral infrastructure, including voter databases, voting systems, and electoral management systems;
  • A limited set of financial system entities, restricted to central counterparties, central securities depositories, operators of regulated markets, payment system operators (excluding central banks), and systemically important institutions.
Enhanced cooperation and accountability

Screening decisions remain the sole responsibility of the Member State where the investment occurs. In this respect, Member States retain full discretion to authorise, condition, or prohibit investments. This reflects the principle, enshrined in EU law, that safeguarding national security is an essential element of sovereignty of the Member States. The agreement strengthens transparency and coordination among the national authorities of the Member States and the Commission.

When comments from other Member States or an opinion from the Commission on a screening of a Member State are issued, the screening Member State must explain how these were considered, including reasons for any disagreement, while respecting national security sensitivities. The Commission may assist in gathering information when needed.

Streamlined processes and interoperability

The agreement introduces several operational improvements:

  • EU‑level database for screening authorities: a central platform that prevents circumvention and makes exchange of relevant experience easier between authorities, making it easier to share insights and detect patterns.
  • Optional Union‑wide filing portal: if at least nine Member States opt in, a single electronic gateway will be created for submitting investment notifications, simplifying procedures for both businesses and regulators.
  • Clearer risk assessment criteria: the agreement refines the factors used to evaluate foreign investments, ensuring greater consistency in how potential security and public‑order risks are identified.

Together, these measures aim to harmonise processes, enhance transparency, and strengthen the EU’s ability to safeguard its economic security.

Next steps

The provisional agreement will move to formal endorsement by the Council and the European Parliament in the first half of next year (2026). Once adopted, the new rules will take effect 18 months after the regulation enters into force.