The revised framework represents the most significant overhaul of the EU’s foreign investment screening regime since the introduction of the original FDI Screening Regulation in October 2020. The FDI Regulation addresses significant differences which persisted between national screening mechanisms in relation to scope, jurisdictional thresholds, review procedures and timelines. It establishes a more harmonised minimum screening framework across Member States and enhances the EU’s ability to identify, assess and respond to risks arising from foreign investment in strategically sensitive sectors.

Key features of the FDI Regulation

Requirement for mandatory screening regimes

The FDI Regulation requires that all Member States maintain a national investment screening mechanism that complies with minimum EU standards. Although the FDI Regulation does not transfer decision-making powers to the European Commission, it establishes a more consistent framework for national screening and enhances cooperation between Member States and the Commission in cases involving potential security or public order risks. Final screening decisions will continue to be taken by the Member State in which the investment is made.

Common minimum sectors

The FDI Regulation requires Member States to ensure that their screening mechanisms cover a common minimum set of strategically sensitive sectors, namely:

• Military and dual-use technologies
• Specified semiconductor, quantum and artificial intelligence technologies
• Strategic raw materials
• Critical entities operating in the energy, transport and digital infrastructure sectors
• Electoral infrastructure and election management systems
• Certain financial market infrastructures and systemically important financial institutions

The Regulation also introduces specific requirements relating to certain advanced AI technologies, reflecting the growing importance of AI within the EU’s wider economic security agenda.

Clarification on investments subject to screening

The FDI Regulation will also harmonise and broaden the range of investments subject to screening. In particular, the FDI Regulation will capture investments carried out by EU-incorporated subsidiaries that are ultimately owned or controlled by non-EU investors. This change reflects concerns regarding the use of EU-based acquisition vehicles in transactions involving non-EU ultimate investors and is likely to increase the number of transactions subject to coordination between Member States.

Investments by parties that are ultimately owned or controlled by EU persons or entities will remain outside the scope of the EU cooperation mechanism.

Procedural reforms

The Regulation introduces a more structured review process, including:

• A two-stage review procedure
• Harmonised procedural timelines
• A maximum 45 calendar day period for initial reviews
• Enhanced information-sharing obligations between national authorities

In transactions involving multiple jurisdictions, filing parties must endeavour to submit notifications to all relevant Member States on the same day. The FDI Regulation also provides for the creation of an optional electronic filing portal and a secure EU-wide database made available to Member States containing information on notified transactions and screening decisions, which is intended to facilitate greater coordination between national screening authorities.

In addition, all Member States must introduce call-in powers for non-notified transactions. Depending on the applicable national regime and the circumstances of the case, authorities may be able to review completed transactions for periods ranging from at least 15 months to up to five years following implementation.

Implications for FDI screening in Ireland

The FDI Regulation was published in the Official Journal of the European Union on 26 June 2026. It will enter into force 20 days after publication and will apply 18 months thereafter.

During the implementation period, Member States will be required to establish or adapt national screening regimes to ensure compliance with the new framework. On this basis, the revised framework will have important implications for existing national screening regimes, including Ireland’s Screening of Third Country Transactions Act 2023.

The Irish FDI screening regime already incorporates many of the key features reflected in the revised Regulation. However, updates are likely to be required to ensure full alignment with the new framework, including in the following areas:

• Ensuring that all mandatory sectors identified in the revised FDI Regulation are fully covered and subject to review
• The treatment of transactions involving EU subsidiaries ultimately controlled by non-EU investors
• Procedural requirements relating to cooperation and information-sharing
• The timetable for FDI reviews (including to take account of the maximum 45-day period for initial reviews)
• The operation of call-in powers

The extent of any changes will become clearer as implementation progresses.

Statistics from the first year of the Irish FDI screening regime

Coinciding with the adoption of the FDI Regulation, the publication of Ireland’s first Annual Report under the Screening of Third Country Transactions Act 2023 provides the first detailed insight into the operation of the Irish FDI screening regime.

During 2025, the Department of Enterprise, Tourism and Employment (“DETE”) received 102 notifications, with 26 transactions (just over 25%) proceeding to formal screening. The average review period where transactions were screened was 40.5 days.  

No transactions were prohibited during the first year of the regime, but two were approved subject to conditions. The majority (69%) of screened transactions related to critical infrastructure, with energy, telecommunications and ICT representing the most active sectors for notified transactions.

DETE also published updated guidance for investors, providing further clarity on key aspects of the regime, including the concept of “control”, the treatment of asset transactions, the application of the transaction-value threshold and the circumstances in which minority investments, restructurings and other transaction structures may be notifiable. The guidance also confirms that the Minister’s call-in powers remain available even where a transaction falls outside the mandatory notification requirements, highlighting the importance of considering potential FDI screening risks even where a filing obligation does not arise.

The Annual Report highlights the significant number of transactions filed under Ireland’s FDI screening regime, reflecting its breadth of application, but also shows that the large majority of transactions will not raise any substantive concerns on national security or public order grounds. 

Conclusion

The adoption of the revised EU FDI Screening Regulation marks a significant step towards a more harmonised and coordinated investment screening framework across the European Union. While implementation will require amendments at Member State level, including in Ireland, the direction of travel is clear: a more harmonised EU screening framework, enhanced cooperation between authorities and increased scrutiny of investments in strategically sensitive sectors.

Businesses contemplating investments in strategically sensitive sectors should ensure that FDI screening considerations are assessed at an early stage of transaction planning, particularly where transactions may involve multiple jurisdictions or complex ownership structures.

For further information, please contact a member of the Competition and Regulated Markets Group.