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On 11 December 2025, the Council of the European Union and the European Parliament have reached a provisional political agreement on the revision of the Regulation establishing a framework for the screening of foreign direct investments into the Union (the FDI Screening Regulation).
The revised text aims to remedy the fragmentation of the current system by introducing a mandatory screening requirement for all Member States. This development marks a shift from the cooperation-based framework established in 2020 toward a minimum harmonization directive.
Key Developments
1 Mandatory Screening Mechanisms
Under the current Regulation (EU) 2019/452, Member States are encouraged but not required to maintain a screening mechanism. In the Netherlands, this screening mechanism was introduced in 2023 under the Investments, Mergers and Acquisitions Security Screening Act (Wet veiligheidstoets investeringen, fusies en overnames - Vifo Act). The new political agreement introduces an obligation for all EU Member States to establish a national screening regime.
2 Anti-Circumvention
Addressing a critical jurisdictional gap, the revised Regulation extends the definition of foreign investment to cover transactions carried out by EU subsidiaries of non-EU investors. This provision is designed to prevent circumvention of screening procedures through intra-EU corporate structures. The Vifo Act applies to
3 Harmonized "Minimum Scope" of Sensitivity
To ensure consistency across the Internal Market, the co-legislators agreed on a mandatory "minimum scope" of sectors that national mechanisms must cover. This includes:
- Hyper-critical technologies (semiconductors, quantum technologies, and Artificial Intelligence)
- Critical Infrastructure (energy, transport, and digital infrastructure)
- Financial Market Infrastructure (a limited list comprising central counterparties, central securities depositories, operators of regulated markets and operators of payment systems)
- Dual-use items, military equipment, and critical raw materials.
Most of the minimum scope for investment in the Netherlands is already covered by the Vifo Act.
4 Procedural Accountability
While the ultimate decision to authorize, condition or prohibit an investment remains the exclusive competence of the Member State where the investment takes place, the revised Regulation enhances the cooperation mechanism. Member States will be required to provide an explanation if they do not follow an opinion issued by the European Commission or comments from other Member States.
Implications for the Dutch Vifo Act
This European development coincides with the Dutch government's
recent announcement regarding the modification of the scope of the
Vifo Act. We anticipate that amendments to the Vifo Act will
require close alignment with these new EU definitions to ensure
compliance with the final "common minimum scope".
Next Steps
The provisional agreement is subject to formal endorsement by the
Council and the Parliament. Following entry into force, the new
rules will apply after a transition period of 18 months.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
