Investment screening

Trade topics

Investment

Key information about the EU framework for foreign direct investment screening

The objective of the EU's Foreign Direct Investment (FDI) Regulation is to make sure that the EU is better equipped to identify, assess and mitigate potential risks to security or public order, while remaining among the world’s most open investment areas. It fully applies since 11 October 2020.

Main features of the EU investment screening framework

The EU framework for investment screening is part of the Commission's commitment to a Europe that protects its companies, workers and citizens. Due to the high degree of integration within the EU, foreign direct investment* in one Member State could pose risks to security or public order in another Member State, or in the whole Union.

Stepping up information sharing and cooperation in the EU is necessary to identify new challenges and to react accordingly. For that purpose, the new framework:

creates a cooperation mechanism where Member States and the Commission are able to exchange information and raise concerns related to specific investments;
allows the Commission to issue opinions when an investment threatens the security or public order of more than one Member State, or when an investment could undermine a strategic project or programme of interest to the whole EU, such as Horizon 2020 or Galileo;
encourages international cooperation on investment screening, including sharing experience, best practices and information on issues of common concern;
sets certain requirements for Member States that wish to maintain or adopt a screening mechanism at national level (Member States also have the last word on whether or not a specific investment operation should be allowed on their territory), and;
takes into account the need to operate under short business-friendly deadlines and strong confidentiality requirements.

Factsheet on the EU investment screening regulation

To improve the functioning of the cooperation mechanism set up by the EU investment screening framework, the services of the Commission, at the initiative of DG Trade, have developed a form for providing information to be submitted under the cooperation mechanism (the form is also available in a format that complies with web accessibility standards).

The use of this form speeds up the examination by the 26 recipient Member States and the Commission and enables the notifying Member State to finalise its investigation without delay.

*'Foreign direct investment' means investments of any kind by a foreign investor aiming to establish or to maintain lasting and direct links between the foreign investor and the entrepreneur to whom or the undertaking to which the capital is made available in order to carry on an economic activity in a Member State, including investments which enable effective participation in the management or control of a company carrying out an economic activity.

Revision of the FDI Screening Regulation

On 24 January 2024, the Commission adopted five initiatives to strengthen the EU’s economic security amid growing geopolitical tensions and rapid technological shifts. One of these initiatives proposed an upgraded framework for screening foreign investments to better protect the EU’s security and public order. This was built on the experience gained from reviewing more than 1,200 transactions under the existing Foreign Direct Investment (FDI) Screening Regulation, as well as the Commission’s own evaluation and the findings of the European Court of Auditors.

Interinstitutional negotiations on this proposal were concluded in Brussels on 11 December 2025, with a provisional political agreement between the European Parliament, the Council and the Commission on a new Regulation aimed at strengthening the EU’s economic security by making the current system more effective and more efficient for investors and Member States. With this, the EU will be better equipped to identify and collectively address potential risks from foreign investments to security and public order.

Core elements of the updated screening mechanism

The revised framework introduces a common minimum level of harmonisation across the EU. Key improvements include:

Mandatory screening mechanisms in all Member States, supported by more harmonised national rules to ensure consistent application and more harmonised deadlines.
A common minimum sectoral scope, ensuring that all Member States screen foreign investments in sensitive and strategic areas.
Broader coverage of indirect foreign control, extending screening to intra-EU investments where the investor is ultimately owned or controlled by individuals or entities from non-EU countries.
Strengthened national procedures, including a two-phase review process, and the power to screen unnotified transactions retroactively.
Improved cooperation mechanisms, particularly for unnotified investments.
New EU-level digital tools, including an online filing portal (on request of at least nine Member States) and an EU-level database accessible to national screening authorities with information on previously notified cases and screening outcomes.
Filtering criteria to ensure that the network of national authorities and the Commission only review potentially sensitive cases.
Transparency improvements: for example, a requirement for Member States to publish guidance on the scope of their screening mechanisms.
Harmonisation of key procedural and substantive elements that should facilitate investments into corporate groups present in several Member States.

This provisional agreement represents an important step toward strengthening the EU’s collective resilience and ensuring that foreign investments support, rather than undermine, the EU’s long-term security and economic interests. Formal adoption will follow once the co-legislators complete their internal procedures, and once the final text has been translated into all EU official languages.

Factsheet - New regulation on the screening of foreign investments

Screening mechanisms of Member States

Under the revised regulation, all Member States will be required to operate a national FDI screening mechanism, in line with harmonised minimum standards. The new Regulation will only achieve ‘minimum harmonisation’: Member States may maintain or develop their systems further, provided they comply with these requirements.

Under the regulation, national screening mechanisms must ensure:

transparency of rules and procedures;
non-discrimination among foreign investors;
protection of confidential information;
the possibility of recourse against screening decisions, and;
effective measures to detect and prevent circumvention.

Using notifications submitted under the Regulation, the Commission maintains an up-to-date list of screening laws in the EU.

Consult the list of screening mechanisms notified by Member States

Annual reports

The regulation requires the Commission to submit a report on the implementation of the regulation to the European Parliament and to the Council on a yearly basis.

The Commission’s fifth 'Report on the Screening of Foreign Direct Investments into the Union' was adopted on 14 October 2025. The report includes:

figures and trends for FDI into the EU;
legislative developments in Member States;
screening activities by Member States, and;
an assessment of the EU cooperation mechanism on FDI screening in 2024.

The report also has a Staff Working Document with additional details on the legislative developments in all Member States.

Group of experts on screening foreign direct investment

The Commission in 2017 established a group of experts from Member States. The objective of the group is to discuss issues relating to investment screening, share best practices and lessons learned, and exchange views on trends and issues of common concern relating to foreign investments. Pursuant to Article 12 of the new regulation, the group may also discuss systemic issues relating to the implementation of the regulation.

Commission Decision of 29.11.2017 setting up the group of experts on the screening of foreign direct investments into the European Union C(2017)7866 final
Register of Commission Expert Groups

Data protection under the EU investment screening mechanism

Joint Controllership Arrangement (JCA)

Under the EU cooperation mechanism set up by the FDI Screening Regulation, Member States and the Commission exchange information about foreign direct investments. This may involve the processing of personal data (e.g. names and addresses of natural persons involved in a transaction).

Hence, the Member States and the Commission have concluded a Joint Controllership Arrangement (JCA) in line with data protection rules, notably the GDPR (Article 26), the EDPR (Article 28) and the EU FDI Screening Regulation (Article 14) and the underlying Commission Decision. The JCA is an agreement between Member States and the Commission on the processing of these personal data. It sets out the allocation of the respective roles, responsibilities and practical arrangements between Member States and the Commission: both being joint controllers of these data.

The document entered into force on 28 April 2022. The main elements of the JCA are available in the EU Register of the Data Protection Officer (DPO).

International cooperation on investment screening

The regulation encourages Member States and the Commission to cooperate with the responsible authorities of like-minded third countries on issues relating to the screening of foreign direct investments on grounds of security and public order.

Such administrative cooperation should aim to strengthen the effectiveness of the framework for screening of investment by Member States and the cooperation between Member States and the Commission. The EU pursues international cooperation bilaterally or in a wider format.

In particular, the EU is supporting the ongoing work of the OECD on Investment policies related to national security and public order.

Since 2021, cooperation with the US on investment screening is also ongoing in Working Group 8 of the Trade and Technology Council (TTC). Stakeholders may provide inputs on Futurium, which is a virtual space for businesses, public authorities, innovators, researchers, civil society, and policymakers to shape the EU and US discussions in the Trade and Technology Council together.

EU-US Trade and Technology Council Inaugural Joint Statement (Pittsburgh, 29 September 2021)
Website of the TTC Investment Screening Working Group on Futurium

Outbound investment monitoring

On 15 January 2025, the Commission adopted a Recommendation calling on EU Member States to review outbound investments of companies into non-EU countries. The Recommendation applies to three technology areas of strategic importance as well as the highest risk – semiconductors, artificial intelligence and quantum technologies – and calls on Member States to assess risks to economic security potentially arising from such transactions.

This review of outbound investments will inform decisions on whether further action is needed – at EU and/or national levels - to address any risks identified. The Commission's ultimate objective is to prevent EU outbound investments from negatively impacting the economic security of the EU by ensuring that key technologies and know-how do not fall into the wrong hands.

The Recommendation on outbound investments builds on a White Paper and subsequent public consultation, which confirmed the need to assess potential risks to the EU's security related to outbound investments. It forms part of the EU's Economic Security Strategy, in tandem with ongoing work on inbound foreign direct investment screening, inter alia.

Next steps

The Recommendation asks Member States to review, together with relevant stakeholders, outbound investments made by EU investors in the three key technologies in third countries. This review process covers both ongoing and past transactions, going back to 1 January 2021.

Member States are asked to provide comprehensive reports on their implementation of this Recommendation and any risks identified by 30 June 2026.