Johannes Barbist and Regina Kröll (Binder Grösswang) authored this publication

Introduction

The Austrian Investment Control Act (Investitionskontrollgesetz ("ICA")) entered into force on July 25, 2020, and applies to foreign direct investments. Proceedings under the ICA are administered by the Austrian Federal Minister for Economy, Energy and Tourism (Bundesminister für Wirtschaft, Energie und Tourismus ("BMWET")). With an average of 90 investment screening procedures concluded annually, the Austrian FDI regime has had a significant impact on the requirements and timelines for M&A processes with an Austrian nexus.

Summary of major changes in 2025

No major changes were made to the ICA during 2025.

Who files?

The Austrian FDI regime applies to foreign investors: both natural and legal persons who are not citizens of, or do not have their seat or headquarters in, the EU, the European Economic Area ("EEA") or Switzerland.

The primary responsibility to submit an application for clearance under the ICA rests with the acquirer. To determine whether an investor qualifies as foreign within the meaning of the ICA, the BMWET looks beyond the direct acquirer and its ultimate beneficial owner ("UBO"). Any non-EU, non-EEA or non-Swiss entities or persons in the vertical chain may result in the investor being deemed a foreign investor.

In other words, while the direct acquirer may not be considered foreign because it is EU-, EEA- or Switzerland-based, a foreign investment may still occur where an entity at any level in the ownership structure, or the UBO, is a non-EU, non-EEA or non-Swiss entity or person.

To submit a filing and for formal communication with the BMWET, a foreign investor must notify an authorized recipient in Austria. The Austrian target has a secondary obligation to notify the BMWET if the investor fails to submit an application for clearance of a notifiable transaction.

Types of deals reviewed

For an investment to trigger Austrian FDI control, referred to as a "relevant investment," the following conditions must all be met.

First, the investment must be made by a foreign investor. There is no broad exemption for companies that are publicly listed in the EU, EEA or Switzerland. Based on a decision by the BMWET, the foreign shareholders of a publicly listed company need not be taken into account, provided they do not play any active role in the transaction and have not entered into any kind of agreement at the shareholder level that points toward a joint acquisition of the Austrian target or a joint exercise of voting rights, directly or indirectly, over the Austrian target.

The target must be a company or business in Austria pursuing a commercial activity that may pose a threat to security or public order, including crisis prevention and services of public interest, within the meaning of Articles 52 and 65 of the Treaty on the Functioning of the European Union.

Additionally, the investment must concern the direct or indirect acquisition of an Austrian business or legal entity; the acquisition of material parts of an Austrian business resulting in a controlling influence over those parts; the acquisition of a controlling influence over an Austrian business or legal entity; or the acquisition of a shareholding in which at least 10 percent of the voting rights (if the target is active in a highly sensitive sector) or 25 percent of the voting rights (if the target is active in a "normal" sensitive sector) is reached or exceeded.

The ICA does not apply to greenfield investments or the acquisition of mere branch offices or material parts thereof.

Furthermore, clearance under the ICA is not required if the target is a microenterprise. A microenterprise is defined as an enterprise with fewer than 10 employees (full-time equivalents) and an annual turnover or annual balance sheet below €2 million.

Scope of the review

The scope of the Austrian FDI regime is very wide, and its interpretation by the BMWET arguably even wider, particularly with regard to the sectors considered sensitive.

The ICA distinguishes between particularly sensitive sectors, as set out in Part 1 of the Annex to the ICA, and normal sensitive sectors, set out in Part 2 of the Annex.

Particularly sensitive sectors include defense goods and technologies; operation of critical energy infrastructure and operation of critical digital infrastructure, in particular 5G infrastructure, water and operating systems that guarantee the data sovereignty of the Republic of Austria. If an investment concerns a particularly sensitive sector, the relevant threshold of voting shares is 10 percent.

Normal sensitive sectors include critical infrastructure, including information technology, health, data processing and storage; critical technologies and dual-use goods, including artificial intelligence ("AI"), robotics and semiconductors; security of supply of critical resources, including energy and food; and access to, and the ability to control, sensitive information, including personal data. If an investment concerns a normal sensitive sector, the relevant threshold of voting shares is 25 percent.

While the term "critical" is defined in the Annex to the ICA, the sectors explicitly listed within the respective categories of critical infrastructures, critical technologies or critical resources are inherently considered critical. The degree of criticality is therefore not part of the jurisdictional assessment of whether an investment is notifiable to the BMWET. The BMWET uses the term "critical" as a "catch-all clause" for sectors that are not explicitly listed in the Annex to the ICA but may nevertheless pose a risk to security or public order.

Whether an investment may pose a risk to security or public order is part of the substantive assessment conducted by the BMWET. In assessing the risk, the BMWET primarily focuses on two factors.

The first is investor-related: whether the foreign investor is directly or indirectly controlled by the government, including state bodies or armed forces of a third country, including through ownership structure or significant funding; whether the foreign investor has previously been involved in activities affecting security or public order in an EU Member State; or whether there is a serious risk that the foreign investor engages in illegal or criminal activities.

The second factor is the effect of the investment in the sectors listed in the Annex to the ICA. In this context, the BMWET examines the nature and scope of the Austrian target's activities, including the products and services offered, market position, customers, competitors and substitute products.

The BMWET's substantive assessment is not limited to key national security sectors, such as defense or energy, but takes a broader view, including security of supply across a wide variety of sectors. Due to the long list of sensitive sectors and the breadth of the categories, a large number of investments are subject to the ICA and to a requirement to submit an application for approval.

Internal restructurings are not exempt and therefore, in principle, subject to the ICA.

A notifiable relevant investment may be implemented only after approval by the BMWET. Until FDI clearance is granted, a notifiable relevant investment—the underlying transaction agreement—is deemed to have been concluded subject to the condition precedent that approval is granted.

A notifiable relevant investment carried out without FDI clearance is void under civil law until clearance has been obtained.

If the BMWET becomes aware of a notifiable relevant investment for which the foreign investor has not applied for FDI approval, the foreign investor is requested to submit an application within three business days of receiving notice from the BMWET. If no application is submitted within that time, the BMWET must initiate an official approval procedure on its own initiative and inform the foreign investor accordingly. The BMWET often consults the Austrian target to assess the relevance and notifiability of a transaction under the Austrian FDI regime.

Under the ICA, the following outcomes are possible. In Phase 1, outcomes include a decree stating that no approval procedure will be initiated because such procedure would be contrary to obligations under EU or public international law; a decree clearing the transaction; or approval by operation of law (legal fiction) after the expiration of the one-month national review period.

In Phase 2, possible outcomes include a decree clearing the transaction; a decree clearing the transaction subject to commitments, which the BMWET may impose unilaterally; a decree prohibiting the transaction; or approval by operation of law (legal fiction) after the expiration of the two-month national review period. Approval by operation of law has not been of practical relevance to date.

Review process timeline

FDI proceedings in Austria take, on average, one and a half to two months and may take up to five and a half to six months.

Under the Austrian FDI regime, the EU cooperation mechanism is a mandatory step before national proceedings are initiated. Phase 0 takes an average of 15 calendar days but may take considerably longer in the event of comments or questions from the European Commission or other Member States, which stop the clock. This does not include the time the BMWET takes to notify the European Commission that a foreign direct investment within the meaning of the ICA is being made in Austria, which may take up to 10 business days.

Phase 1, national proceedings, takes one month and begins upon conclusion of the EU cooperation mechanism.

Phase 2, the in-depth examination, takes two months, and is initiated only where the BMWET requires further clarification or has substantive concerns.

Requests for information in Phase 1 and Phase 2 do not stop the clock. In practice, the BMWET typically uses the review period close to the maximum allowed.

How foreign investors can protect themselves

Foreign investors should consider FDI issues early in the transaction planning process and assess whether the Austrian target is a branch office or qualifies as a microenterprise and may therefore be excluded from Austrian FDI review.

They should conduct a thorough, case-by-case assessment of the FDI risk in Austria. BMWET's decisions are not published. While no formal pre-screening option is available, such as to determine whether an Austrian target's activities are sensitive within the meaning of the ICA, the BMWET updated its website in December 2025 to provide high-level guidance on the interpretation of the ICA. As of January 1, 2026, this information is available only in German.

Investors should pay attention to internal restructurings. Internal restructurings are not exempt under the ICA and may be notifiable. The BMWET continues to promote a case-by-case analysis to determine the notifiability, and no clear pattern of non-notifiable internal restructurings has emerged from its administrative practice to date.

Investors should also be aware that it remains unclear whether assets of an Austrian company located outside Austria fall within the scope of the Austrian FDI regime.

The "domino effect" should be considered. FDI authorities across the EU obtain information about planned investments through the EU cooperation mechanism and from other public sources, such as merger control authority websites. Some member states, including Austria, submit every application to the EU cooperation mechanism. A multijurisdictional FDI analysis and filing strategy is therefore critical.

Investors should factor FDI risk, for example, the possibility of a prohibition or the imposition of economically unfavorable commitments, into the contractual framework, including appropriate conditions precedent and long-stop dates.

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