In January 2025, the European Commission submitted 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 key step in the legislative process. The first trilogue — a round of informal negotiations between the Parliament and the Council, with the Commission also present — took place last week.
This initial trilogue primarily served to clarify the respective positions of the institutions. The most significant point of contention in the upcoming negotiations is expected to be the scope of the new regulation. The aim is to reach a final agreement before the end of 2025, under the Danish Presidency of the Council.
Despite its introductory nature, the Council’s negotiating position already provides valuable insight into several key aspects of the Regulation’s scope that are likely to be debated:
- Exclusion of portfolio investments: As in the Commission’s proposal, the Council confirms that ‘portfolio investments’ — e. the acquisition of securities for purely financial purposes, without intent to influence management or control — should remain outside the scope of the Regulation.
- Exclusion of internal restructurings: Importantly, the Council’s position clarifies that internal restructurings should be excluded from the scope, provided they do not lead to a change of the beneficial ownership of the Union target. In other words, if such transactions do not result in control or qualifying participations by new foreign investors, if they do not materially alter the rights of existing foreign investors, they should not trigger FDI screening requirements.
This exclusion is particularly relevant: a significant number of transactions notified under existing FDI screening mechanisms, particularly in Member States like Belgium, concern purely internal restructurings, without any change in ultimate beneficial ownership. It remains unclear why such transactions, where the risk profile remains unchanged, should be subject to the same level of scrutiny.
- Greenfield investments: Under the current Regulation, greenfield investments — where a foreign investor establishes a new business or facility — are excluded from the scope. The Commission proposed to bring them within the Regulation’s reach, but the Council prefers to leave this decision to individual Member States. This question is particularly relevant for sectors such as energy and infrastructure, where greenfield development is common.
- Minimum scope of screening: The Council's position would limit the Regulation’s minimum scope to businesses involved in goods and technologies listed in the EU Common Military List or dual-use items subject to export control. The Commission had proposed a broader scope, including entities involved in Union-interest projects or certain sensitive technologies. The Parliament's proposal goes further still. Defining the Regulation’s minimum scope is therefore shaping up to be a central issue in the negotiations.
- Commission discretion via delegated acts: The draft Regulation grants the Commission significant authority to amend its annexes trough delegated acts. This includes:
- The list of Union-interest projects or programmes, which the Council proposes should be limited to those related to critical infrastructure, technologies, or inputs that are essential for security or public order. Programmes of a more general nature, such as Horizon Europe, have been removed.
- The list of sensitive technologies, which will largely define the Regulation’s material scope. The new draft outlines criteria and risks that the Commission must consider when adding technologies. Compared to the previous Regulation, which broadly referenced areas like AI and semiconductors, the Council’s definitions are significantly more precise.
Conclusion
The ongoing debate over the scope of the FDI screening regulation reflects a necessary effort to refine and focus the EU’s approach. The challenge lies in striking the right balance — ensuring that the mechanism captures transactions with real implications for security and public order, without imposing unnecessary burdens on routine or low-risk investments.
The revision of the FDI screening framework is just one element of the broader European Economic Security Strategy. As the EU seeks to safeguard its economic resilience while remaining competitive in an increasingly complex geopolitical landscape, a clear and effective investment screening mechanism will play a key supporting role.
We will continue to monitor these developments closely and are available to advise clients on navigating the evolving FDI screening landscape in Belgium and across the EU.