EU FDI Screening - Fifth Annual Report

On 14 October 2025, the European Commission released its Fifth Annual Report on the screening of Foreign Direct Investments (FDI) into the European Union (EU), providing a comprehensive picture of how the EU and Member States have assessed inbound investments in 2024 to safeguard security and public order. The report confirms that FDI screening remains a core risk-management tool for safeguarding the EU’s collective security from transactions that may pose genuine risks, while keeping Europe open to capital. Bottomline is that investment screening is a targeted filter—not a barrier.

Key takeaways

• Investment flows – Spain leads on greenfield investments

In 2024, the United States remained the leading origin of investments subject to screening (30% of total M&A deals and 37% of greenfield), followed by the United Kingdom (23% of total M&A deals and 24% of greenfield). On investment destinations, Germany led for M&A deals (21%), while Spain was the top greenfield investment destination (24% of all greenfield investment into the EU). Lastly, looking at the specific sectors, manufacturing (27%) was the top sector for M&A dealmaking, while retail (31%) led greenfield investment activities.

• Legislative developments

By the end of 2024, the EU’s FDI screening landscape continued to mature and converge, with 24 Member States operating national regimes and a wave of targeted reforms to sharpen the scope, speed and coverage of investment screening across the block.

New screening mechanisms entered in force in Bulgaria and Ireland, while Croatia, Cyprus and Greece advanced legislative processes to establish screening frameworks.

A significant group of Member States revised existing screening regimes to address evolving security and critical-technology risks: he Czech Republic, Denmark, France, Hungary, Lithuania, the Netherlands, Poland, Slovakia, and Sweden.

Taken together—with the European Commission’s (the Commission) parallel effort to refine the EU cooperation mechanism— these national measures point to a clear trajectory: a more comprehensive, technology-aware and operationally sophisticated FDI screening architecture in Europe that remains open to investment. 

• Member States’ screening activities during 2024

Caseloads increased significantly, but outcomes and intervention levels remained stable and investor-friendly. Only about 41% of cases were subject to formal screening and, within those cases, 86% were cleared unconditionally, while 9% were cleared subject to mitigation measures and only around 1% were prohibited. 4% were withdrawn. These steady ratios—broadly in line with 2023—confirm that authorities intervene only where serious security and public order concerns arise; most investments continue to be cleared.

• The role of the Commission. Focus on the manufacturing sector

Under the EU cooperation mechanism, the Commission acts as a coordinator and risk advisor, not a decision-maker on national outcomes. In 2024, it closed 92% of notified transactions in Phase 1 within 15 days, with only 8% proceeding to a more detailed Phase 2 assessment and fewer than 2% resulting in a Commission opinion.

The Commission’s in-depth reviews were highly targeted and centered predominantly on manufacturing, where half of Phase 2 cases arose in the fields of critical technologies, critical infrastructure, and supply of critical inputs.

This confirms that the Commission’s role remains narrowly scoped to exceptional, security-relevant cases, particularly in manufacturing value chains, while Member States retain exclusive authority to approve, condition or block investments.

• What’s next?

The EU is set to upgrade the FDI Screening Regulation. In January 2024, the Commission proposed a revision to: (i) ensure that all Member States operate screening mechanisms; (ii) introduce a common minimum scope and core features to reduce fragmentation; (iii) bring within scope EU-based investors ultimately controlled by non-EU persons; and (iv) strengthen cooperation and accountability under the EU cooperation mechanism. The proposal is advancing through the legislative process and once adopted, should yield a more predictable, interoperable screening framework across the Union.

In parallel, on 15 January 2025 the Commission adopted a Recommendation on outbound investment review (EU) 2025/63, launching a time-limited, risk-mapping exercise focused on three sensitive technology areas: semiconductors, artificial intelligence and quantum technologies. Member States are invited to assess past and ongoing outbound investments, designate single contact points, share findings with the Commission, and deliver a progress report by mid-2025 and a comprehensive report by mid-2026. The outcome will inform any future EU policy choices on outbound investment controls, complementing inbound FDI screening in a coherent economic-security toolkit.