Notifications under the mechanism recorded their sharpest annual increase to date, and a greater proportion of cases proceeded to an in-depth EC review. Together with the new Foreign Investment Screening Regulation (FISR), these developments point to increased filing requirements and closer scrutiny of cross-border transactions in sensitive sectors.
FDI screening is now EU-wide
2025 marked a milestone: all 27 member states now have a framework for screening FDI. Croatia, Cyprus, and Greece adopted national FDI screening laws, and Bulgaria’s and Ireland’s regimes became operational. Some regimes are still very new: Cyprus’s law entered into force and Croatia’s detailed filing requirements took effect in the past six months.
Existing regimes continue to evolve. Many member states have amended their rules through 2025 and 2026. Notably, last year, Poland made its screening regime permanent and Spain extended its temporary screening of investments from EU and EFTA residents in strategic sectors until the end of 2026 (with a further extension expected before the end of the year). France’s already expansive FDI regime was further broadened in July 2026 by extending the reduced 10% filing threshold to French sensitive companies listed on certain regulated markets outside the EU/EEA, thereby subjecting a wider range of investments to screening.
Further amendments are also in the pipeline in other member states. In the Netherlands, for example, screening is due to be extended to additional technology areas in early 2027. In Germany, a new critical facilities act entered into force in March 2026, and a consolidated FDI screening act is also in the works. Spain has recently begun the process to amend its FDI rules to adapt them to the FISR and introduce other necessary changes and clarifications.
Higher volumes, stable outcomes
Member states handled 4,773 requests for authorization and ex officio cases under their national regimes in 2025, up a substantial 52% from 3,136 in 2024. Of these, 38% proceeded to formal screening, with the remainder disposed of without formal screening following an initial assessment. As last year, Sweden’s very high case volume (due to its unusually broad notification obligation) skews the figures: excluding Sweden, the share formally screened rises to 65%.
Even excluding Sweden, 35% of notifications were out of scope, potentially reflecting precautionary filings prompted by uncertainty over national rules. The share of out-of-scope cases highlights the potential value of clearer filing guidance and swift, reliable preliminary determinations. Without these, parties may prefer precautionary notification to a consultation that risks adding a separate step to the timetable.
Outcomes, however, remain stable. Of the decided cases:
- the vast majority¾87%¾continued to be cleared unconditionally (86% in 2024)
- 9% were approved with conditions or mitigating measures, unchanged from 2024
- only 1% were blocked, consistent with previous years
- 3% were withdrawn before a decision (4% in 2024).
The EC again describes this as “a stable trend.” In its view, the figures confirm that the EU remains open to foreign investment and that member states only block deals posing serious risks that cannot be mitigated.
Record activity under the EU cooperation mechanism
Activity under the EU cooperation mechanism established by the EU FDI Screening Regulation is where the report shows the clearest change.
Under this cooperation mechanism, member states must inform other member states and the EC when they formally screen an investment that falls in scope. While the final decision remains with the screening member state under its national FDI regime, the EC may open a more detailed phase 2 review and issue an opinion.
Key trends include:
- More notifications: Notifications rose 40%, from 477 in 2024 to 667 in 2025. This is “by far the highest annual rise” since the mechanism began. Notifications were made by 21 member states. Four member states (Austria, France, Italy, and Spain) accounted for 65% of notifications, and seven (Austria, France, Germany, Ireland, Italy, Lithuania, and Spain) for 86%.
- More EC phase 2 reviews: The EC closed 88% of cases in phase 1 (i.e., within 15 calendar days following notification by the screening member state), down from 92% in 2024. The remaining 12% went to phase 2, up from 8% in 2024. The EC describes this as a 50% increase in the phase 2 share, “signalling more transactions having relevance for security and public order.” For parties, it raises the risk that review periods may be extended by EC scrutiny. However, EC opinions were still issued in fewer than 2% of cases.
- More member state engagement: Questions were raised in about 11% of cases (10% in 2024). Comments doubled to about 6% (3% in 2024). The share of member states issuing comments rose from about a third to 57%. This reverses the fall in comments highlighted last year.
- More multi-jurisdictional deals: 27% of notifications involved transactions being screened in two or more member states, up from 19% in 2024.
- Not just large deals: 66% of notified transactions had a value of less than EUR500 million (up from 58% in 2024), and 26% were even below EUR10m.
Sector focus: critical technologies in the spotlight
Five sectors continued to lead FDI notifications in 2025: manufacturing (27%), ICT (19%), financial activities (17%), wholesale and retail (13%), and professional activities (8%).
Manufacturing was again the leading sector for EC phase 2 cases, rising to 53% from 50% in 2024, with ICT a distant second at 19%. Within manufacturing, critical technologies¾including in aerospace, defense, and semiconductors¾remained the main trigger for phase 2 review (37%), while access to sensitive information (including personal data) gained weight, more than doubling its share to 12% (from 5% in 2024).
Investor origin: less concentrated
Notified investments came from a wider range of jurisdictions. The six main jurisdictions of origin (the U.S., the UK, China including Hong Kong, the UAE, Canada, and Japan) accounted for 62% of notified cases, down from 70% in 2024. Investors from elsewhere made up the remaining 38% (30% in 2024), which the EC reads as a marked decrease in concentration.
The U.S. remained by far the largest source of ultimate investors, but its share fell to 33% from 40%. The UK fell to 9% (from 11%) and China (including Hong Kong) to 7% (from 9%). The UAE rose to 5% (from 3%). Canada and Japan each rose to 4% (from 3%).
The new Foreign Investment Screening Regulation
The FISR entered into force on July 16, 2026, and will fully apply from January 17, 2028 (following an 18-month transition period). It will repeal the current FDI Screening Regulation. Its key features include:
- a mandatory screening mechanism in every member state
- a common minimum sectoral scope covering, for example, dual-use and military items, critical technologies (such as semiconductors, quantum, and AI), critical infrastructure in transport, energy, and digital sectors, critical raw materials, and certain systemically important financial market entities
- inclusion of intra-EU acquisitions by EU subsidiaries of non-EU investors
- enhanced cooperation and transparency
- procedural harmonization, including a two-phase review, a maximum 45-calendar-day initial review, and powers to review non-notified transactions retroactively and
- a common set of assessment criteria and mitigation measures.
With all member states now having FDI screening regimes, the more significant changes stem from the minimum scope and procedural harmonization requirements. Most member states will need to amend their existing regimes.
What this means for transactions
Expect EU-wide filing analysis
With FDI screening regimes in all 27 member states and more than a quarter of notifications involving multiple jurisdictions, deal teams should assess filing requirements wherever the target operates. Early clarification of borderline filing requirements can help avoid unnecessary notifications and timing uncertainty.
Build in time for EC phase 2
The increased likelihood of EC phase 2 reviews and more active member state engagement may lengthen review timelines for sensitive transactions, particularly in manufacturing, aerospace, and ICT. Relevant buyers should be ready for questions from authorities and should consider potential mitigation strategies.
Plan ahead for the 2028 regime
During the transition period, many member states will need to expand the scope of their regimes, introduce new filing requirements or extend disclosure requirements, and adopt call-in powers where these do not yet exist. In some cases, however, the new regime may bring good news for parties with, for example, non-sensitive deals benefiting from swifter review timelines.
