The EU Commission’s sixth annual report: Record screening numbers and reform on the horizon
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On 14 October, the European Commission (EC) issued its Sixth Annual Report on FDI screening in the Union, providing an overview of FDI trends in the 27 EU Member States in 2025. The Report covers national and Union-wide activity in 2025 and shows that while foreign investors have a steady appetite for M&A transactions in the Union, they must navigate increasing FDI scrutiny to complete them.
FDI in the EU: The investment environment
FDI inflows
In terms of the EU investment landscape, FDI inflows including both M&A and greenfield investments increased by nearly 9% compared to 2024. Foreign M&A transactions in particular saw an increase of 12% in FDI stock compared to 2024, although greenfield uplifts were more modest at nearly 7%. The total number of deals remained flat, however, in line with 2024 trends. Taken together, these activities would seem to indicate that M&A has rebounded faster than greenfield investments following a marked slump in 2023.
Investor origin
The US remained the principal ex-EU M&A investor in the period covered by the Report, representing 30% of FDI acquisitions, followed by the UK with 24%. The strongest growth in M&A deals since 2024 was observed for India (+42%), the UAE (+37%), and Canada (+23%). The US (38%) and the UK (20%) were also the leading origins for greenfield investors, although the growth picture compared to 2024 shows some very significant increases in particular for Israel (+230%) and the UAE (+56%).
FDI destinations
Germany (20%) and France (14%) represent the top destinations for M&A FDI in the Union, both with growth of around 8% compared to 2024. Italy ranked third (12%) with growth of 27%. Ireland recorded the strongest increase in M&A activity in 2025 (+20%), although there were declines in Poland (-36%), Spain and Sweden (both -17%). Poland's decline in foreign M&A is mirrored by its experience with greenfield transactions, where it experienced a decline of 21%.
National FDI screening by the Member States
National review – The statistics
The EC's Annual Report, now in its sixth year, amalgamates data reported by all 27 Member States on the operation of their national FDI regimes over the previous 12 months. During 2025, these national regimes reviewed 4,773 requests comprising all notifications as well as reviews that were initiated by national FDI authorities on an ex officio basis – this represents an increase of over 52% compared to 2024.
One note is that the steep uptick in reviews during 2024 and 2025 is at least partially explained by the coming into force of the new regime in Sweden, which is attracting a large number of reviews. Further, during 2025, the Union achieved the EC's goal of operational FDI screening in all 27 Member States although those in Croatia, Cyprus and Greece were only adopted during 2025 so their national statistics can be expected to rise.
Screening outcomes
Formal or in-depth reviews
Ahead of the application of the new FDI Screening Regulation as of January 2028, the approach taken to screened transactions remains varied between Member States. For example, the notion of what a transaction being "subject to formal screening" means can differ between Member States and influence the statistics.
In 2025, 38% of transactions screened at a national level fell into the category of 'subject to formal screening'. This is a slight decrease since 2024 (41%), although the overall number of formal screenings is higher, not least given the number of new and updated regimes that became operational.
Formal screening outcomes
Overall, the statistics show that the EU remains open to foreign investment, with interventions remaining an exception. Of all the transactions that were formally screened the "overwhelming majority" (87%) were cleared without conditions. From the remaining transactions, 9% were subject to conditions, 3% were withdrawn and 1% were blocked.
Measured against the respective number of cases reviewed, screening outcomes have remained fairly consistent over the last five years, as set out below. Prohibitions, in particular, remain consistently rare, representing only 1% of formally screened transactions between 2021 and 2025 (although withdrawals due to concerns communicated by the authorities may not be reflected in the prohibition statistics).
However, as more regimes proliferated and the scope of existing regimes expands, the number of transactions being blocked, withdrawn, and subject to conditions has increased commensurately in real terms even as overall percentages have trended towards unconditional clearance. Since 2020, the number of cases being formally screened by Member States annually has more than quadrupled from 362 in 2020 to over 1,800 in 2025. In absolute terms, therefore, over 160 cases were subject to conditions in 2025 (an increase of nearly 50 transactions compared to 2024), over 50 were withdrawn during formal review, and around 18 were blocked. Annual figures are illustrated below on this basis.
The EU cooperation mechanism
Although the EC does not operate its own screening mechanism, the EU Cooperation Mechanism created by Article 7 of the EU FDI Regulation is a forum whereby Member States can comment on notified deals, and the EC can ask questions and issue opinions. There are two stages of this review: a Phase 1, which is a 15-calendar day review, and a Phase 2 review, which involves a more detailed review of those transactions that "could affect security or public order in more than one Member State or create risks to projects or programmes of EU interest".
In these cases, the EC will typically pose questions and can issue an opinion including its assessment, its recommendations on conditions, and/or any other information it deems relevant. That opinion is not made known to the notifying parties. Indeed, it may not be apparent at all to the notifying parties that the EC has become involved in their assessment as questions from the EC are posed via the national FDI authorities on behalf of the EC. In practical terms, this will almost invariably manifest in some delays as the national authority awaits questions, review of the responses and any further input.
The approach on which cases to refer to the EU Cooperation Mechanism varies widely between Member States. Nevertheless, there is a clear trend towards referral – the Report details that 667 cases were referred in 2025, an increase of 40% from the 477 referred in 2024. This has been by far the highest annual rise in the number of FDIs notified to the EU Cooperation Mechanism. The new FDI Regulation (see below) will have further implications regarding the number of deals screened through the Cooperation Mechanism.
In 2025, around 80 cases were subjected to Phase 2 scrutiny by the EC, a doubling in the number compared to 2024.
Legislative developments and outlook
The new FDI Regulation: Reform on the horizon
Although Member States are not (yet) obliged to operate a national screening mechanism, all have now heeded the EC's call with 27 screening regimes now in place across the Union. The first requirement of the EU's New FDI Regulation has therefore already been fulfilled.
The New FDI Regulation (outlined in detail in our previous alert here) will become applicable to transactions from 17 January 2028. The New FDI Regulation will set minimum standards for all national FDI screening regimes, including requirements that suspensory reviews will apply to reviews involving targets in designated sensitive sectors such as dual-use, defence, semiconductor and critical infrastructure. The New FDI Regulation will also seek to harmonise the disparate processes across the Union and outlines universal risk assessment 'factors' in a bid to achieve some level of consistency in the reviews that will be undertaken.
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