Tighter EU FDI rules affect USA and other non-EU investors

The EU is proposing to tighten its current foreign direct investment (FDI) rules. Since those rules came into effect in 2019 over 1200 transactions have been screened, with the EU Commission stepping-in and expressing an opinion in just under 3% of cases. USA investors were one of the largest  sources of foreign investment into the EU.

The proposed changes reflect new geopolitical and security challenges, as well as gaps and shortcomings identified in the current regime. If the proposal is accepted all EU Member States will have to have an FDI regime, and there will be greater coordination between Member States and the EU where concerns have been raised about a proposed investment.

Member States' FDI regimes apply at least in relation to targets engaged in certain EU funded projects (e.g., the EUR13.5 bn. R&D 'Horizon 2023-24' programme) or targets active in areas such as critical technologies, infrastructure, or which have access to sensitive information.

The EU's FDI rules are separate to other regimes that may apply to transactions such as the EU merger regulation and the Foreign Subsidies Regulation.

If accepted the new rules might lengthen the current length of time it takes to obtain FDI clearance and will mean FDI rules will be applied in all EU Member States.

The proposal is part of a broader package of proposals centred on EU economic security.

There is fierce competition worldwide for the technologies that we need the most


This information is for general information purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. Please contact us for specific advice on your circumstances. © Shoosmiths LLP 2024.



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