Draft bill implementing a national screening mechanism for foreign direct investments (FDI)
Currently, no prior approval is required when foreign investors invest in Luxembourg. However, because of the potential risks that certain investments in sensitive industries could cause to national security, the Minister of Foreign Affairs filed in 2021 a bill of law, aimed at setting up a national screening mechanism for FDI.
The bill envisages a screening mechanism based on a prior notification obligation and pre-evaluation procedure for certain FDI that may affect national security or public order made by a foreign investor (i.e., from a non-EU or EEA country) in a Luxembourg entity, conducting activities in a critical sector on Luxembourg territory.
The impact of a screening mechanism in Luxembourg should however be less significant than in other jurisdictions given the structuring and financing position of Luxembourg in cross-border investments.
