Published: 20-10-2026
On 26 June 2026, Regulation (EU) 2026/1386 of 17 June 2026 on the screening of foreign investments within the Union, which repeals Regulation (EU) 2019/452, was published in the Official Journal of the European Union. The Union is thus moving from a system based on cooperation and information-sharing between Member States to mandatory screening with harmonised minimum requirements across all Member States.
What changes compared to the 2019 framework?
Regulation 2019/452 did not require Member States to have a screening mechanism in place and only covered investments made directly from third countries. The new Regulation addresses both shortcomings:
- All Member States must have a national screening mechanism in place (Art. 3).
- It covers intra-EU investments made through an EU subsidiary directly or indirectly controlled by a foreign investor (Arts. 2.1 and 2.7).
- It establishes a minimum common scope of sectors in which prior authorisation will be mandatory throughout the Union (Art. 4.15).
Which transactions are covered?
A foreign investment is one that establishes or maintains lasting and direct links with an EU company and enables the investor to participate effectively in its management or control (Art. 2.1). A foreign investor is a natural person who is not a national of a Member State, or an undertaking or entity established or otherwise organised under the laws of a third country (Art. 2.5).
Portfolio investments made without any intention of influencing management fall outside the scope (Recital 14). Likewise, transactions carried out under resolution procedures and internal restructurings are excluded, unless they introduce into the ownership chain a third-country entity not previously present (Art. 1.5). Investments in new projects (greenfield) fall within the scope of the Regulation but are not subject to mandatory prior authorisation (Art. 4.17).
Sectors subject to mandatory prior authorisation
Member States must require prior authorisation where the EU target company:
- Develops, produces or markets dual-use items or defence-related products;
- Produces or carries out R&D in semiconductor or quantum technologies, or carries out R&D in certain artificial intelligence technologies (Annex I);
- Operates in the transport, energy or digital infrastructure sectors and is deemed critical by the Member State following a risk-based assessment;
- Carries out activities relating to strategic raw materials (exploration, extraction, processing, recycling, recovery or stockpiling);
- Is a financial market infrastructure or a systemically important entity, among other matters.
Procedure, time limits and penalties
- Two-phase review: an initial review within a maximum of 45 calendar days from the complete filing and, where necessary, an in-depth review (Art. 4.2).
- Suspensory effect: in sectors within the minimum common scope, the investment must be filed and screened before completion (Art. 4.9).
- Ex officio review: authorities may review, for at least 24 months after completion, transactions subject to prior authorisation that were not filed or were filed only after completion (Art. 4.5), and, in all other cases, within a period of between 15 months and 5 years, as set by each Member State (Art. 4.4).
- Penalties that are effective, proportionate and dissuasive for failure to file or non-compliance with mitigation measures (Art. 4.11).
In addition, the cooperation mechanism is strengthened: Member States must notify the Commission and the other Member States of, among others, investments within the minimum common scope made by investors controlled by third-country governments or subject to EU sanctions (Art. 5).
Entry into force, application and transitional regime
Pursuant to Art. 31, the Regulation entered into force twenty days after its publication, on 16 July 2026, but will apply generally from 17 January 2028. Certain instrumental provisions (information systems, forms, delegated and implementing acts) have applied since 16 July 2026.
Art. 30 repeals Regulation 2019/452 and lays down a transitional regime: the latter will continue to apply to investments under screening or completed by the date of application of the new Regulation, and the new framework will not affect investments completed before that date.
Impact in Spain
Spain already has a prior authorisation regime in place (Article 7 bis of Law 19/2003 and Royal Decree 571/2023), which also covers EU investors whose beneficial owners are resident outside the EU/EFTA, so it starts from an advanced position. Nevertheless, national legislation will need to be adapted to the sectors, time limits and procedural rules of the new Regulation by 17 January 2028 (Art. 3.2). It should also be borne in mind that the transitional regime subjecting certain investments by EU/EFTA residents in strategic sectors (listed companies or transactions exceeding EUR 500 million) to prior authorisation has been extended until 31 December 2026.
In practice, it is advisable to review now the beneficial ownership structure of investors, the sector of the target company and the inclusion of authorisation-related conditions precedent in sale and purchase agreements, particularly in transactions involving several Member States.
If you require advice on foreign investment screening or prior authorisation of a transaction, at Gentile Law we have a team of experts in this field ready to assist you.
Contact:
Ana García Ginés
Senior Associate Tax at Gentile Law
+34 604 51 21 60
Ana Urkia Alcázar
Paralegal at Gentile Law