Piraeus: For seven years, Europe screened foreign investment the way it does most things, which is to say unevenly. Some member states ran full statutory regimes with binding conditions. Others ran nothing at all, and an investor blocked in one capital could simply enter through another. The revised Foreign Direct Investment Screening Regulation, adopted by the Council on 8 June and now in force, ends that arrangement.
Every member state must operate a screening mechanism. That single sentence carries more consequence than the technical amendments around it, because the old regime treated screening as optional and cooperation as the point. The new one treats screening as compulsory and sets a floor beneath what each national system has to cover: dual-use items, critical technologies, critical raw materials, financial services, transport, energy and electoral infrastructure.
Two extensions of scope will occupy transaction lawyers for the next two years. The regulation now reaches indirect investment, meaning ownership chains routed through a holding company in a third jurisdiction no longer escape review. It also reaches EU-established investors that a non-EU person or entity ultimately controls. Under the old text, a Luxembourg vehicle owned from outside the Union frequently fell through the gap. That gap has closed.
Capitals have eighteen months to transpose the harmonisation requirements, which puts full application at the end of January 2028. Governments that already run mature regimes will spend that period trimming rather than building. Those starting from scratch face a harder task, because screening is not simply a legal text. It requires a unit that can read a shareholder register, assess a technology, and reach a defensible conclusion inside a statutory deadline while a deal waits.
The cooperation mechanism survives largely intact. Member states notify each other and the Commission of transactions under review, comments flow back, and the final call still belongs to the host state. The Commission can issue an opinion. It cannot block. Several members of the European Parliament argued for a genuine Union veto over transactions touching Union-funded programmes and lost that argument, and the Council’s own account of the deal is candid about where competence remains.
Outbound investment is the piece still missing. A January 2025 recommendation asked capitals to gather data on European money flowing into semiconductors, artificial intelligence and quantum technologies abroad. Data collection is not control, and officials concede the exercise has produced patchy returns.
What the reform genuinely delivers is predictability. An investor now knows that a qualifying acquisition faces review somewhere in Europe, on a broadly common list of sensitive sectors, with a broadly common definition of who counts as foreign. That is less dramatic than a Union-level veto. It is also considerably harder to arbitrage.
