Introduction

The German FDI regime has undergone numerous revisions over the past years, significantly tightening the review of FDI into Germany. Since 2023, the government has taken a break from incremental, piecemeal updates to evaluate the status quo more holistically. It found the current rules provided effective protection of German and European security interests without calling into question Germany's general openness toward foreign investors.

While the German Federal Ministry for Economic Affairs and Energy ("BMWE") was planning significant updates to German FDI rules to meet evolving geopolitical concerns and reflect its practical experience reviewing hundreds of cases per year, the anticipated timing has slipped, and the revisions have not yet been implemented. While a revision is still anticipated following the change of government in 2025, the exact scope and direction under the new German government are further developing.

The number of cases that the BMWE reviewed saw an increase to 339 cases in 2025 (from 261 in 2024 and 257 in 2023), with 45 proceedings initiated in 2025 still pending at the end of January 2026, compared to only 19 at the end of January 2025.¹ The vast majority of cases concluded in 2025 continue to be cleared swiftly, with an average review time of fewer than 40 days, less than 10 percent of cases undergoing an in-depth review in Phase II, and only 2 percent being subject to mitigation measures imposed by the BMWE.

At the same time, the BMWE continues to take a strong stance on investments from Russia and China and has increased its scrutiny of investments by state-owned entities, particularly from the Middle East. The changing geopolitical environment has further led to increased scrutiny of US investors, in particular in relation to defense-related investments.

Summary of most recent changes

• There have been no major changes regarding the German FDI framework since 2023. The most important revisions relate to information to be provided in a filing, as well as the switch to a digital filing system.
• The BMWE continues to evaluate the current German FDI regime, with significant updates expected later in 2026. The exact scope and direction under the new German government remain to be determined.
• The BMWE charges a fee for FDI filings. For simple cases cleared in Phase I, the fee is €800 and can be up to €36,000 for complex and time-consuming matters. The fees are payable within 30 days of receiving the order closing the matter (typically the clearance decision).
• As part of its China Strategy published in 2023, the German government highlighted the specific issues faced when assessing Chinese investments due to China's civil-military integration. This approach is also reflected in the BMWE's 2024 and 2025 decision making practice. For example, the BMWE intervened against the proposed sale of MAN Energy Solutions' gas turbine division to Chinese CSIC Lingjiang GH Gas Turbine Co, a subsidiary of the China State Shipbuilding Corporation ("CSSC"). Based on limited intelligence available on the matter, the sale was blocked due to the CSSC's involvement in building warships for the Chinese navy. Remarkably, the deal was prohibited even though an expert report confirmed that the gas turbines in question could not be used to power warships. In addition, the publicly listed Italian gas network operator Snam has abandoned its plans to acquire a 24.99 percent stake in German competitor Open Grid Europe due to concerns raised by the BMWE. The German government had expressed concerns about the minority investment held by Chinese state-owned network operator State Grid in CDP Reti, a holding company for the Italian state-owned investment bank and Snam's controlling shareholder.
• The BMWE has identified increased investment activity from the Middle East, in particular by state-owned investors. While the general posture remains positive, deals are subject to increased scrutiny, especially with a new focus on the security of German citizens' personal data, which may result in longer review durations. More generally, access to (personal) data, which as such is currently not an FDI trigger in Germany, has gained a more prominent role in the BMWE's review of transactions, increasingly requiring in-depth review and remedies.
• While in the past investments by US investors were generally nonissue deals for the BMWE, there is now increasing scrutiny of US investors. In particular, the BMWE no longer seems to consider supplies from the US or companies with US involvement as a reliable source.
• The BMWE continues to pursue an approach of unilaterally imposing orders to safeguard public order and security, which can speed up the process because the review timeline is not suspended and orders can be imposed without the approval of the full Cabinet, rather than making use of mutually agreed mitigation agreements.
• Following its first major court losses in 2023, the BMWE has started addressing the shortcomings identified by the courts in its administrative practice, including by granting an express right to be heard ahead of any decisions being taken or formal information requests being issued. More substantive corrections of the shortcomings, for example regarding the possibility of closing proceedings without a final decision or the restart of review deadlines, have yet to be addressed.

Who files?

The direct acquirer is obliged to submit the filing, even if it is a mere special purpose vehicle ("SPV") or if it is incorporated in Germany. The BMWE accepts filings by legal counsel on behalf of the direct acquirer with a valid power of attorney. If the direct acquirer has not yet been determined or established, for example in cases of a shelf company or a new SPV, the BMWE normally accepts the filing by the indirect acquirer.

Types of deals reviewed

The activities of the target and the "nationality" of the investor determine the review process. German FDI review covers both direct and indirect acquisitions by foreign investors, meaning that even an indirect foreign shareholder high up in the holding chain can trigger a filing and, as evidenced again by the BMWE's decisional practice in the past year, even concerns on substance. The BMWE is also entitled to review all types of acquisitions, including share deals and asset deals.

Acquisitions of at least 10 percent of the voting rights by any foreign (non-German) investor in certain highly sensitive industries such as arms and military equipment, encryption technologies, and other key defense technologies, are subject to a mandatory "sector-specific review" and trigger a filing and a standstill obligation.

Any other type of investment may be scrutinized only if the investor is based outside the EU or EFTA, a "cross-sectoral review", and acquires a share of at least 10, 20, or 25 percent of the voting rights, depending on the industry in question. Whether a filing is required and a standstill obligation applies depends on the target's activities.

Sectors that trigger a mandatory cross-sectoral filing include critical infrastructure and software for critical infrastructure; telecommunications monitoring; cloud computing; telematics infrastructure; the media industry; services for state communication infrastructure; the medical and pharmaceutical industries; other critical industries, including AI, robotics, semiconductors, nuclear, aviation and aerospace, quantum, satellite, additive manufacturing, and IT; critical raw materials; and security of food supply, greater than 1,000 hectares.

In all other cases, the government has a call-in right for any transaction involving the direct or indirect acquisition of at least 25 percent of a German company's voting rights by a non-EU/EFTA investor if the government is concerned the transaction may impede public order or security in Germany, another EU Member State, or certain EU programs.

Scope of the review

A transaction must be filed with the BMWE if the foreign investor acquires voting rights in a German entity active in a critical business sector and reaches certain investment thresholds, 10 or 20 percent, depending on the industry, or a certain scope of assets of such an entity.

In assessing investment thresholds, the BMWE takes a broad approach and looks at all entities in the entire acquisition chain, without any dilution of the shareholding, from the direct acquirer to the ultimate parent, and arguably also at shareholders such as limited partners, to be assessed on a case-by-case basis. Even rather distant shareholders far up the holding chain without controlling influence can potentially raise concerns, as shown in the above-mentioned indirect minority investment in gas network operator Open Grid Europe.

Additional mandatory filings are triggered when reaching thresholds of 20 percent, if the initial threshold was 10 percent, 25, 40, 50, and 75 percent. All transactions triggering mandatory filings are subject to a standstill obligation. The transaction must not be completed before it is cleared by the BMWE. In particular, it is prohibited to allow the acquirer to directly or indirectly exercise voting rights or grant the acquirer access to certain sensitive data before clearance has been or is deemed to be granted.

Outside the scope of mandatory review, the BMWE can call in acquisitions of at least 25 percent subject to cross-sector review and in cases of "atypical" control, a somewhat vague threshold that takes into account any influence beyond the shareholding acquired by the investor, in particular by means of additional board seats, veto rights, or access to certain information. In certain settings, the BMWE can also call in acquisitions that allow for an aggregation of shareholdings, such as shareholdings held by several different investors controlled by the same foreign state.

The standard of German FDI review is to ensure public order and essential security interests. In its assessment, the BMWE will in particular consider the origin of the investor, any foreign government influence on the investor, and the track record of the involved parties with BMWE filings. General political considerations such as securing supply chains or industrial policy play an increasing role.

In order to safeguard public order or security, the BMWE may, in accordance with other federal ministries, prohibit investments or clear a transaction subject to mitigation measures or remedies. While these have in the past typically taken the form of a trilateral agreement between the ultimate parent of the acquirer, the target, and the German federal government, the BMWE is increasingly resorting to imposing mitigating measures unilaterally.

The contents of the mitigating measures will depend on the concerns to be resolved and can include safeguarding pre-transaction volumes of supply, not relocating facilities or know-how, limiting access to sensitive information, reporting obligations, and so on. To enforce a prohibition, the BMWE can prohibit or restrict the exercise of voting rights in the acquired company or appoint a trustee to bring about the unwinding of a completed acquisition at the expense of the acquirer.

Review process timeline

The review process timeline is split into two phases.

Phase I begins with the BMWE obtaining knowledge of the investment, either by notification or by other means, and lasts up to two months, during which the BMWE will determine whether to open a formal review, Phase II, or clear the transaction. Phase I can be extended by mutual consent of the parties to allow for extra time to determine whether an in-depth review is indeed required.

Phase II begins with the BMWE opening a formal review and requesting further documentation regarding the transaction, the scope of which lies within the broad discretion of the BMWE. The formal review starts upon receipt of that documentation and lasts another four months. However, the BMWE can extend it by another three months in exceptionally complex cases, plus an additional month for defense deals. In addition, the timeline is suspended if there are additional information requests by the BMWE and for as long as negotiations on mitigation measures are conducted between the BMWE and the parties involved. Such considerations outside the official review timeline can therefore have a significant impact on the transaction timetable.

If at the end of Phase I or II the BMWE has not issued a decision, the transaction is legally deemed to be cleared, for Phase II, only in cases subject to cross-sectoral review.

How foreign investors can protect themselves

Parties to transactions should carefully consider the risk of foreign investment control procedures early in the process, ideally starting at the front end of the due diligence process. Given the potential for considerable FDI review risks, it may be appropriate for the parties to initiate discussions with the BMWE even before the signing or announcement of a binding agreement. Moreover, the BMWE closely monitors the press, and if a transaction is notified in another EU Member State, the BMWE will be informed through the cooperation mechanism between Member States, again making a thorough assessment prior to the transaction necessary to avoid any surprises when potentially receiving questions from the BMWE.

In any event, parties should factor in sufficient time for German and potentially other FDI reviews when negotiating long-stop dates. For example, in critical cases, the BMWE has a tendency to wait until Chinese merger clearance has been obtained to factor in any implications of Chinese remedies, which had previously been the long pole in many transaction timetables.

Clearance provides a safe harbor for any transaction. If no filing was submitted, the BMWE can take action ex officio for investments within the scope of German FDI review within a maximum period of five years from signing, but no later than two months after receiving knowledge of the investment, and may even prohibit them retrospectively.

In order to protect themselves from such retrospective review in cases without filing obligations and to obtain legal certainty, in particular where German FDI clearance is a closing condition, foreign investors can voluntarily apply for a certificate of non-objection (Unbedenklichkeitsbescheinigung) as a safe harbor. Outside the scope of German FDI review, the investor can request an informal notice of nonapplicability from the BMWE. The BMWE typically issues such notices as an administrative practice without binding effect or legal basis.

Lastly, any BMWE decision can be challenged before a German court. However, court action is often not a practical option for the parties, sometimes in light of timing or publicity concerns, and the BMWE enjoys broad discretion as to the interpretation of the legal provisions.

_{1 German Ministry for Economic Affairs and Energy, “Investment Screening in Germany: Facts and Figures” (January 15, 2026).}

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_{This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.}

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