Key Considerations ^ Belgium’s second annual report on Screening of Foreign Direct Investment revealed how the new foreign direct investment screening mechanism is functioning with a focus on economic openness and strategic vigilance. ^ The acquisition of either 10% or 25% of the voting rights by non-EU investors in certain sectors crucial to Belgium’s public order, national security and strategic interests is subject to ex ante screening by the Interfederal Screening Commission (ISC). ^ Investments meeting the Belgian screening mechanism thresholds must account for the ISC review in deal documentation, although the actual timing and efficiency of the screening mechanism by the ISC remains vaguely defined.
FDI Regime Overview On February 14, 2023, the Belgian government promulgated a single screening mechanism for foreign direct investments (the FDI Regime), which entered into force on July 1, 2023, as per the Cooperation Agreement of November 30, 2022 (Cooperation Agreement). On April 4, 2024, the ISC published updated FAQ-style draft guidelines to further clarify the Regime’s scope and procedure (the Guidelines). No additional guidelines have been issued since then. Investments made after July 1, 2023, must be notified to the ISC under the FDI Regime before completion if the following conditions are met. First, the investment must be made by a non- EU investor in a Belgian entity. An investor is from outside the EU if it is an individual with its primary residence outside the EU. Alternatively, in the case of a legal entity: (i) the entity has its registered seat or main activities outside the EU, or (ii) one of its ultimate beneficial owners has his primary residence outside the EU. Legal entities include states, state agencies, public and private companies, associations and foundations. Second, the investment must be a direct investment in a legal entity (a “target company”) that is established or active in Belgium, or an investment in a non-Belgian legal entity that
controls a company that has its registered seat or head office in Belgium. Greenfield investments are not covered by the FDI Regime, while a foreign legal entity with a branch office in Belgium may be considered an entity subject to the FDI Regime. Third, the investment must result in a direct or indirect, active or passive acquisition of: ^ At least 25% of the voting rights in, and/or the acquisition of control over, a target company active in one of the following seven areas: y Critical infrastructure for energy, transport, water, health, communications, media, data processing or storage, aerospace, defense, electoral or financial infrastructure and sensitive facilities, and land and real estate crucial for the use of such infrastructure; y Technologies and raw materials that are essential to safety, including public health safety, defense and public order control, military equipment subject to the “Common Military List” and national control, dual-use items, artificial intelligence, semiconductors, robotics, cybersecurity, aerospace, defense, energy storage, quantum and nuclear technologies and nanotechnologies;
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FDI and National Security Review
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