On 11 December 2025, the Council and European Parliament reached political agreement to revamp the EU’s Foreign Investment Screening Regulation. The revamp aims at responding to perceived growing risks to national and economic security in the EU. It forms part of the EU’s recently unveiled Economic Security Doctrine. While the full text has not yet been published, public sources offer some initial insights into key elements of the upcoming new regime. This post identifies the three main knowns and unknowns that warrant monitoring. For more details about the most debated aspects of the revamp, please read our previous posts here and here.
The knowns
- Pan-EU mandatory screening of investments into listed sectors. All Member States will have to put in place mandatory screening mechanisms for investments in certain sensitive areas, including dual-use items, military equipment, AI, quantum technologies, semiconductors, critical raw materials, key energy, transport and digital infrastructure, electoral systems, and a limited list of financial entities. Member States will retain the ability to screen investments in other sectors.
- Screening to cover indirect investments into the EU. The new regime will extend to investments made by EU subsidiaries controlled by a non-EU entity. This clarification seeks to address the uncertainty introduced by the EU Court of Justice’s Xella ruling.
- Strengthened cooperation between Member States and European Commission. Final decision-making authority on whether to allow screened investments will remain with the Member States, a position that the Council fought hard to maintain. However, the new regime will require greater cooperation between Member States and the European Commission to share information about the investments, the potential creation of an optional single portal for electronic filings (if at least nine Member States request it), and shared guidance on risk factors bearing on the national security assessment of investments.
The unknowns
- Deadlines and procedural timelines. The new regime will set common deadlines across Member States for submission of filings and review of the notified investments. It remains to be seen what those deadlines will be. These timelines will be critical for deal planning, as they will impact how quickly investments can proceed and whether additional clearance steps will affect deal execution.
- Greenfield investments. It also remains to be seen whether the new regime will require Member States to screen greenfield investments in strategic sectors, something the Parliament was seeking. We expect the Council’s position of leaving this decision to each Member State’s preference to prevail. That said, the devil will be in the details, and investors should consider closely the final text on this point once it is published.
- Local workforce and technology transfers requirements. The EU’s new Economic Security Doctrine and statements from EVP Séjourné indicate that the EU may require certain investments to include the employment of a local workforce and transfers of technology to European partners. It remains unclear, however, to what extent those considerations will be addressed in the new regime.
Next steps The actual text of the EU’s revamped Foreign Investment Screening Regulation should become available in the coming weeks, once the Council and the European Parliament have formally endorsed it. Once the Regulation enters into force, the new rules will apply after an 18-month transition period, meaning implementation is expected towards the end of 2027. During this time, all 27 Member States will need to align their national laws with the revised framework.
With thanks to Martin Allende Pagadigorria for his assistance in drafting and researching this piece.