On 10 February 2026, the EU released the agreed compromise text of the new Regulation on the screening of foreign investments in the EU (the “New FIR Regulation”). The three EU institutions (Commission, Parliament and Council) reached the compromise on the text in December 2025 (see our blog) following several months of trilogues (see our blog). The text, while not yet officially published, is expected to remain unchanged. The New FIR Regulation will repeal and replace the current FDI Screening Regulation (EU) 2019/452 (the “2019 FDI Regulation”). The New FIR Regulation further integrates the EU’s investment screening framework into the EU’s economic security strategy.
Against the backdrop of rising geopolitical friction, the New FIR Regulation aims to address the risk that investors structure transactions to get access to the EU market by anchoring their investments in Member States with lighter FIR controls. To do so, the New FIR Regulation establishes a unified minimum screening framework across the Member States (e.g., through mandatory national screening mechanisms, harmonised review timelines, and strengthened cooperation obligations), whilst preserving Member States’ ultimate sovereignty on matters of national security. This will be a major evolution from the 2019 FDI Regulation, which was limited to establishing an information-sharing mechanism while leaving Member States wide discretion as to whether and how to screen foreign investments.
This post discusses the five major areas of change for prospective investors, before offering a few forward-looking considerations.
I. Five major changes brought about by the New FIR Regulation
A. Pan-EU Mandatory National Screening System with Two-Tier Review Process
The New FIR Regulation requires all Member States to have a mandatory pre-closing screening regime for foreign investments. This marks a significant change from the 2019 FDI Regulation which only encouraged, but did not require, Member States to have mandatory screening. Until now, the lack of a common minimum standard led Member States to adopt disparate approaches to foreign investment screening, with some having no screening regime at all (though now they virtually all do), some having only voluntary regimes, others having post-close regimes, and yet others operating a hybrid regime (mixing voluntary/mandatory/pre- and/or post-close).
Member States have also taken very different approaches when it comes to the possibility to call in below-thresholds transactions for ex-officio review. Presently, only a few Member States have such powers. The New FIR Regulation requires all Member States to have powers to call-in such cases, at least for investments meeting certain requirements. This will inevitably mean more deal uncertainty, and require investors to think tactically about mitigating that uncertainty, e.g. through voluntary notifications, “springing conditions” (i.e., provisions which elevate a given jurisdiction as a condition precedent where certain circumstances (e.g., a call-in) are met).
B. Harmonised review timelines
The New FIR Regulation introduces greater procedural alignment, notably by requiring that all national regimes have two distinct review phases: an initial assessment (“Phase 1”) and, where appropriate, a more in-depth investigation (“Phase 2”). It sets the duration of the Phase 1 review to 45 calendar days across all Member States. Both the introduction of a two-tier process, as well as the harmonisation of the Phase 1 review timeline, mark a significant change from the 2019 FDI Regulation (currently timing and review processes differ significantly across Member States).
The New FIR Regulation introduces an additional timeline alignment of relevance for investors as it requires that investors “shall endeavour” to file transactions subject to filing obligations in multiple Member States on the same day. This softens the approach seen in previous drafts of the New FIR Regulation, which required parallel notifications to be filed the same day, and generated concern from investors.
Although harmonisation is welcome and improves legal certainty for investors facing FIR review in several Member States, some unknowns remain. In particular, the New FIR Regulation only requires the statutory timeline to begin once the authority has deemed the filing complete, thereby leaving significant discretion to national authorities to issue several rounds of information requests to deem the filing complete and start the clock. The New FIR Regulation also does not specify whether and to what extent Member States may stop the clock in Phase 1 or 2. Together, these subtleties could create meaningful differences between Member States’ reviews in practice, and in turn result in deals filed in several Member States proceeding on different review timelines.
C. Clarified and Expanded Concept of Foreign Investment
The New FIR Regulation both clarifies and broadens the concept of “foreign investments” that will require screening. This increases legal certainty in some respects, whilst expanding filing obligations for prospective investors. These changes also generate additional uncertainty in other respects. Specifically, the New FIR Regulation:
- Makes it clear that Member States must screen investments by EU-based companies controlled by non-EU investors. This clarification seeks to address the uncertainty created by the EU Court of Justice’s Xella ruling as to the conditions under which Member States could screen such investments.
- Confirms that FIR screening regimes must cover investments establishing lasting links between a foreign investor and an EU target, including acquisitions conferring decisive influence or meaningful participation in management. The New FIR Regulation, however, does not define these concepts in operational terms (e.g., voting thresholds or shareholding percentages), meaning that their application will continue to vary across Member States.
- Leaves it to each Member State to determine whether to screen: (i) purely financial investments without management influence, (ii) internal restructurings, and (iii) greenfield investments. Investors will therefore continue to face a patchwork of national approaches to these types of investments.
D. Detailed but Narrow Mandatory Screening Scope Complemented by Substantive Assessment Criteria
The New FIR Regulation identifies several core sectors which must be covered by Member States’ mandatory screening frameworks.
These include investments connected to advanced technologies identified in its Annex I (e.g., semiconductor, artificial intelligence, and quantum technologies), as well as investments involving strategic raw materials, dual-use and military items, certain electoral systems, and key transport, energy, or digital infrastructure.
The New FIR Regulation, however, leaves open the possibility for Member States to include additional sectors in their mandatory screening frameworks. The New FIR Regulation therefore sets a screening floor, but not a ceiling.
E. Stronger EU Cooperation Mechanism
The New FIR Regulation retains the cooperation mechanism between Member States and the Commission and significantly strengthens its operation. Although national authorities will continue to make the final decisions, the enhanced information-sharing framework increases the practical influence of EU-level scrutiny and reinforces the expectation of coordination among Member States. The New FIR Regulation creates a complex cooperation process to allow Member States and the Commission to comment on investments screened in another Member State, where certain criteria are met. It remains to be seen whether national authorities will have sufficient resources to keep up with the fixed timeframes for this cooperation to take place. Delays in the cooperation process will inevitably translate into longer review periods.
II. Outlook and Strategic Considerations
We anticipate the agreed text to go through the final formal steps for official publication relatively quickly, after which the New FIR Regulation will enter into force following a transitional period of 18 months. It will then become an integral part of the EU’s economic security toolbox, alongside export controls, sanctions, and the Foreign Subsidies Regulation.
One remaining area of uncertainty relates to the announced draft Industrial Accelerator Act, which is expected to contain provisions relevant to foreign investment screening in certain sectors such as batteries. Leaked versions have created significant controversy about these provisions, and the Commission has delayed the proposal several times, reportedly due to lack of internal consensus.
For companies pursuing acquisitions or strategic investments in Europe, the key takeaway is clear: screening of investments into the EU is becoming more integrated, more structured, and more consequential. In combination with enhanced merger control and Foreign Subsidies Regulation requirements, transaction planning will increasingly need to reflect an EU-wide regulatory perspective rather than a purely national one. The foreign investment screening regime in the EU is also further expected to evolve based on the upcoming Industrial Accelerator Act which is anticipated to introduce further screening requirements.