While prohibitions of deals on foreign investment grounds have become more common in recent years, the BMWE has also been inclined to discuss remedies to mitigate security concerns in certain sensitive transactions. The multitude and magnitude of recent developments in relation to FDI screening has led to a heightened sense of uncertainty among foreign investors contemplating transactions in Germany. The German government is actively preparing a new standalone Investment Screening Act (Investitionsprüfungsgesetz), with a first draft for public consultation expected in summer 2026. The draft Act is intended to consolidate the existing patchwork of regulations into a single statute and to implement the revised EU FDI Screening Regulation. Key anticipated reforms include: a shortening of the Phase I review period from two months to 45 days; expansion of mandatory notification to cover all dual-use goods (considerably broadening the number of notifiable cases); introduction of electoral infrastructure development and operation as a new mandatory notification category; a broadened mandatory notification requirement for AI activities; an expanded concept of “atypical control” with mandatory filing requirements across all case groups; broader exemptions for internal restructurings; and clarifications regarding asset deals and procedural matters. EFTA investors from Switzerland, Norway, Iceland and Liechtenstein are expected to be brought within scope of the German FDI regime, amending the current exemption. Whether and how license agreements, greenfield investments and equity investments without voting rights will be covered remains under discussion. The FDI landscape is likely to grow more – not less – complex in the near term. On December 11, 2025, the Council and the European Parliament reached a provisional political agreement on the revision of the current EU FDI Screening Regulation, requiring all Member States to maintain FDI screening regimes covering dual-use items and military equipment, “hyper-critical” technologies (including AI, quantum and semiconductors), critical raw materials, essential infrastructure and electoral systems. On May 19, 2026, the new EU FDI Screening Regulation was approved by the European Parliament and now awaits its formal approval by the Council. The new framework will apply 18 months after its formal adoption. A further layer of scrutiny may arise from the European Commission’s March 4, 2026 proposal for an Industrial Accelerator Act (IAA), which would introduce a fourth M&A-related screening mechanism – alongside merger control, national FDI screening and foreign subsidy control – for foreign investments in strategic manufacturing sectors (initially including battery technologies, certain electric vehicles, solar PV technologies and critical raw materials extraction and processing). While not yet law and subject to ongoing legislative review by the European Parliament and Council, the Draft IAA could add meaningful additional regulatory burden for foreign investors in Germany and across the EU, and the process should be monitored for future transaction planning. Finally, the European Commission issued a recommendation in 2025 calling on all Member States to monitor outbound investments related to semiconductor technologies, AI and quantum technologies until mid-2026, with a view to considering further policy measures thereafter. The German government’s approach to implementing any future outbound investment controls has yet to be determined.
Germany
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