EU adopts new EU FDI screening regulation

On 26 June 2026, the Regulation (EU) 2026/1386 was published on the screening of foreign investments in the Union and repealing Regulation (EU) 2019/452 (the “New FDI Regulation”) in the Official Journal of the European Union. 

The New FDI Regulation entered into force on 16 July 2026 and obliges the EU member states to bring national FDI screening regimes into compliance with the new rules by the deadline of 17 January 2028.

The reform is best described as an evolution of the previous regime set out by Regulation (EU) 2019/452 rather than an overhaul. While the New FDI Regulation introduces a common minimum standard for FDI screening mechanisms applicable across member states, it leaves many procedural questions to the legislative discretion of the Member States and it stops short of creating a centralised EU-wide filing system or conferring final decision-making authority on the European Commission. 

Key points

• Minimum standard approach ‑ all 27 EU member states must operate a mandatory screening mechanism in accordance with the common baseline standards set out in the New FDI Regulation but the Member States remain entitled to specify procedural rules and apply the rules to a wider scope of sectors, at their discretion.
• Common minimum scope – member states become free to determine the scope of the strategic sectors where foreign investments shall be subject to FDI screening, but the New FDI Regulation introduces a list of sensitive sectors in which all member states must screen the relevant investments, including:
  • dual-use items and certain military goods and technologies;
  • certain critical technologies, including specific AI technologies, semiconductors and quantum technologies;
  • critical transport, energy and digital infrastructure;
  • strategic raw materials;
  • electoral infrastructure (e.g. voter registration databases or voting systems); and
  • certain financial market infrastructure and systemically important financial entities.

• Intra-EU investments – transactions of investors registered in the EU but having a non-EU entity in their ownership chain will also be subject to screening.
• Exclusion of internal restructurings and portfolio investments - 
  • Internal restructurings will fall outside of the scope of FDI screening subject to three conditions:
    • there is no change in the beneficial ownership of the target company;
    • no new non-EU entity is introduced in the upstream control chain of the target company; and
    • no additional participation or control rights in a company operating in a strategic sector (see above) are granted to any foreign investors.
  • Portfolio investments, where the acquisition is made purely for financial return with no intention to influence the target company’s management or control are excluded from the scope of FDI screening.
• Exclusion right of member states relating to greenfield investments – FDI screening will not be mandatory for foreign investments effected through the establishment of new entities or facilities, but member states remain entitled to make such investments subject to approval.
• More detailed screening of investors – the New FDI Regulation specifies that the screening of foreign investments must extend to any risk factor relating to links to non-EU military capabilities, involvement in human rights violations, previously blocked investments or activities negatively affecting security or public order, including circumvention of EU sanctions that could be associated with any entity in the foreign investor’s ownership chain (up to the level of the ultimate beneficial owners.
• Stronger cooperation and transparency – the framework enhances coordination between member states and the European Commission through established deadlines, cooperation in multi-jurisdictional transactions, and a secure database recording previous filings and their outcomes and urges applicants to coordinate their filings simultaneously in multi-jurisdictional transactions.

Hungary has two FDI screening regimes – established under separate legislation enacted in 2018 and 2025 – that must be examined and applied in parallel when assessing transactions. These regimes differ not only in the scope of strategic sectors targeted by foreign investments but also in their institutional setup since different ministries serve as the approving authorities under each regime. Currently, both acts comply with most of the minimum requirements set out by the New FDI Regulation but certain procedural and administrative adjustments will be necessary for compliance with the new rules.

While the Hungarian legislature may later align existing FDI regimes with the New FDI Regulation, foreign investors should engage legal counsel early on to assess FDI considerations for planned investments in Hungary to ensure that screening measures do not impede transaction flow.

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