New draft EU FDI Screening Regulation: what it means for national regimes in CEE

The regime represents a significant step towards strengthening the EU's FDI screening ambitions not only on paper but also in practice. However, it leaves the central elements of the EU screening architecture unchanged, i.e. the power to screen investments remains with the national screening authority. That said, the Regulation will increase the degree of harmonisation substantially, which will also affect investments in Central Eastern Europe. We explore these effects below. For our overview, we focus on changes to the scope of local CEE regimes and set aside procedural aspects at both the national and EU levels (such as time limits and mandatory cross-border cooperation). Notably, this Legal Insight is based on the provisional draft of the Regulation, and there may be further changes prior to final adoption.

Key timeline for investors

The Regulation is expected to enter into force as early as this summer. Member States will have 18 months to harmonise their national regimes, meaning that a wave of changes at the national level may already occur during 2027. The new cooperation process, together with all national regimes complying with the minimum harmonisation requirements, is then expected to become fully applicable as early as Q1/2028.

Foreign investments completed before the application date will be subject to the old regime and transactions undergoing screening at the application date will continue under the current Regulation (EU) 2019/452. Transactions planned before but notified after the date of application will have to be screened under the new regime.

Mandatory ex-ante reviews and call-in screening powers

First, the new Regulation introduces a mandatory screening mechanism for all EU countries. In practice, however, this objective will soon be achieved anyway: as of 2 April 2026, Cyprus' regime will enter into effect, while Croatia's regime is expected to become fully operational by the end of 2026, meaning that all EU Member States will have a screening regime in place by then.

Above that, the new Regulation will require all screening authorities to gain call-in powers for completed but non-notified transactions, with the screening period set between 15 months and up to five years post-closing. This will require amendments to several screening regimes in CEE, including those of Austria, Croatia, Poland and Slovenia.

Mandatory screening in prescribed sectors

Perhaps the most significant change is that all Member States will now be required to establish and maintain a screening mechanism covering enumerated sectors. The new Regulation establishes a common minimum scope of foreign investments that all Member States must screen. This includes prior authorisation requirements for investments where the Union target is active in:

• dual-use items listed in Annex I to Regulation (EU) 2021/821;
• military goods and technologies listed in the Annex to Directive 2009/43/EC;
• semiconductors and quantum technologies, as well as certain artificial intelligence technologies;
• critical infrastructure in transport, energy or digital sectors, as determined by Member States through a risk-based assessment;
• strategic raw materials (exploration, extraction, processing, recycling, recovery or stockpiling);
• financial market infrastructure and systemically important entities, including central counterparties, central securities depositories, operators of regulated markets and payment system operators; and
• voter registration databases, voting systems and electoral information systems.

The scope of screening regimes in the CEE region currently diverges significantly. Some are already much wider than the required minimum harmonisation – Austria and Romania being two such examples. Others, such as Czechia, Slovakia, Poland or Hungary, will need to expand the sectoral scope of their mandatory regimes, e.g. with semiconductors, quantum technologies and AI technologies newly subject to screening. For other regimes like Croatia, this may result in a departure from a regime fully based on designations by competent authorities to one requiring self-assessment by targets (for some parts).

Moreover, the new Regulation requires prior screenings of certain investments. Unlike most CEE countries, Slovenia does not already have a standstill obligation; therefore, the introduction of a prior authorisation requirement will arguably represent one of the main changes for the Slovenian screening architecture going forward.

Investments in scope

First, the Regulation defines "foreign investment" as one enabling effective participation in the management or control of a Union target. Importantly, Member States retain discretion to cover other levels of participation by the investor. Typically, the types of investments covered by CEE screening regimes are already wider, capturing minority investments often at the level of 10 % or even lower.

Second, the scope of the EU regime now extends beyond direct foreign investments to cover intra-Union investments made through a subsidiary established in one Member State that is controlled, directly or indirectly, by a foreign investor (indirect investments). The national regimes in CEE already typically cover indirect investments, with one notable exception: recall the Xella judgment – Hungary will newly see indirect investments mandatorily screening, which we expect will lead to a major increase in locally notified investments.

Third, the new minimum harmonisation will eliminate investor exemptions based on their home country. Namely, Poland will have to remove its OECD exemption, which is anticipated to result in a significant increase in investments falling within scope.

Fourth, while the new Regulation exempts certain internal reorganisations, a notable caveat applies: the introduction of a new legal entity established in a non-EU country in the upstream chain of control above the subsidiary that meets the sectoral requirements will fall within the scope of the regime and be notifiable. Similar administrative practices already exist in countries such as the Czech Republic and Bulgaria. However, it remains to be seen whether other jurisdictions will align their reorganisation rules accordingly. For Poland and Romaniafor example, this would expand the scope of their respective regimes to capture new types of transactions.

Overview of main impact on national regimes in CEE

The changes required in national screening regimes will vary significantly across the region. Below, we provide a brief overview of the main practical takeaways, focusing on the scope and nature of these regimes:

• Austria: Limited sectoral impact but substantial changes in the procedural architecture, including ex officio screening powers, required.
• Bulgaria: Narrower internal restructuring scope, removal of acquisition thresholds for additional or all covered sectors, uncertainty regarding "low-risk" status, and mandatory filings for minimum sectors.
• Croatia: Potential removal of the designation principle for many sectors, framework requiring targeted amendments for critical raw materials, ex-post review limitations.
• Czech Republic: Extension of the sectoral scope to semiconductors, quantum and AI systems, and raw materials, as well as modifications to the screening of greenfield investments.
• Hungary: Significant sectoral expansion, detailed assessment criteria, and greenfield investment clarification.
• Poland: Elimination of OECD exemption, internal reorganisations brought into scope, expanded sectoral requirements, adjustment of call-in powers.
• Romania: Sectoral scope clarification, tighter treatment of internal restructurings treatment.
• Slovakia: Modification of sectoral scope extending to semiconductors, quantum and AI technologies, raw materials, tighter treatment of internal restructurings treatment, changes regarding greenfield investments.
• Slovenia: Prior authorisation system, extension of call-in powers.

Summary

The new EU FDI Screening Regulation marks a watershed moment for foreign investment control in the European Union, including countries in the CEE region. We expect that many Member States will (widely) overhaul their regimes as part of their efforts to align their screening rules with the Regulation. The new system will contribute to much greater alignment of previously unharmonised regimes and, ideally, to more targeted interventions, potentially making it easier for foreign investors to navigate their notification obligations. However, as we have learned over the years, the devil is in the details: similar provisions may exist across jurisdictions, but their interpretation by local authorities often varies. Even under the new regimes, strong local know-how will be required to comply with the rules effectively.

authors: Jan Kupčík, Evelin Hlina, Volker Weiss, Yoana Strateva, Ana Mihaljevic, Adrian Menczelesz, Pawel Kulak, Agnieszka Stawiarska, Georgiana Badescu, Cristiana Manea, Michal Lucivjansky, Matej Crnilec, Aljosa Kalacanovic