The Council of the European Union and representatives of the European Parliament have reached a provisional political agreement to revise the EU’s foreign direct investment (FDI) screening regulation, reinforcing the bloc’s ability to identify and mitigate security and public-order risks linked to foreign investments.
The updated framework builds on the existing FDI screening system introduced in 2020 and responds to growing geopolitical, technological and supply-chain vulnerabilities. Under the agreement, all EU member states will be required to operate national screening mechanisms with a common minimum scope, ensuring that sensitive investments are assessed consistently across the bloc. Foreign investments made through EU-based subsidiaries will also fall within scope.
The revised rules target a clearly defined set of sensitive sectors, including dual-use and military items, artificial intelligence, quantum technologies, semiconductors, critical raw materials, energy, transport and digital infrastructure, as well as key elements of electoral and financial market infrastructure. The aim is to harmonise approaches, reduce fragmentation between national regimes and lower administrative burdens for investors, while safeguarding cross-border security interests.
While cooperation between member states and the European Commission will be strengthened, final decisions on whether to approve, condition or block an investment will remain the exclusive responsibility of the host member state. Where comments or opinions are issued by other member states or the Commission, the host country will be required to explain how these were taken into account.
Operational improvements include plans for a shared EU database to prevent circumvention of screening rules, an optional single electronic filing portal for investors if requested by at least nine member states, and clearer risk assessment criteria.
Denmark’s Minister for Industry, Business and Financial Affairs Morten Bødskov said the agreement strikes a balance between security and openness, focusing on the most sensitive technologies and infrastructure while keeping Europe attractive to global investors.
The provisional deal now requires formal endorsement by both the Council and the European Parliament. Once adopted, the revised regulation will apply 18 months after its entry into force.
