What's new in FDI: Spotlight on Germany

In February 2026, the Federal Ministry for Economic Affairs and Energy (BMWE) published the annual investment screening statistics on foreign direct investment (FDI) screenings in Germany in 2025. 

The German government has also confirmed that it plans to publish a consolidated FDI Screening Act by mid-2026. The anticipated legislative changes have important implications for corporate acquirers and private equity firms planning transactions involving German target companies.

What you need to know

• Germany plans to publish a consolidated FDI Screening Act by mid-2026, which is expected to expand the sectors subject to review. The Act is also expected to introduce faster review timelines, new rules for greenfield and intellectual property transactions, a shift from residence-based to nationality-based assessment of foreign investors, and broader exemptions for intragroup restructurings.
• The German Federal Ministry of Defence has signalled heightened governmental scrutiny of foreign investment in Germany's security and defence industry. 
• In 2025, Germany reviewed 339 national FDI cases, with cross-sectoral screening procedures comprising approximately 76% of filings. This robust activity is expected to continue, with cross-sectoral procedures likely to remain the predominant category. Sectors such as information and communication technology (ICT), health and biotech, engineering, and energy are expected to continue to attract regulatory scrutiny. 
• FDI screening has become a baseline consideration in cross-border transactions. Parties should factor FDI screening requirements from the outset, including assessment of potential implications, careful structuring, and proactive engagement with authorities.

Navigating Germany's evolving investment Screening Landscape

As the EU moves to strengthen its FDI oversight, Germany is actively adapting its own well-established screening framework. Currently, Germany's FDI regime is governed by the Foreign Trade and Payments Act (Außenwirtschaftsgesetz (AWG)) and its implementing ordinance (Außenwirtschaftsverordnung (AWV)) and encompasses both cross-sectoral screening (which applies to acquisitions in companies affecting public order or security) and sector-specific screening for security-related transactions. In recent months, significant developments (such as a statement by the Federal Ministry Defence and confirmation that the government intends to publish a consolidated FDI Screening Act in the coming months) have signalled heightened regulatory attention. Together, these developments underscore the importance of early FDI planning for investors targeting German companies.

On 29 January 2026, the Federal Ministry of Defence issued a rare public statement outlining its approach to foreign investments in the German security and defence industry. In the statement, the Ministry:

• confirmed its involvement in the investment screening process, focusing on two risk dimensions: (i) the potential impact on security of supply for the German Armed Forces, including indirect or sub-contractor relationships within the supply chain, and (ii) risks to Germany's defence capability through outflows of sensitive know-how to non-allied states, potentially eroding Germany's technological edge.
• provided an indicative checklist with relevant factors for acquisitions of at least 10% of voting rights in defence companies. These include the investor's ownership and governance structure, security-related risk indicators, direct or indirect Bundeswehr supply relationships, the uniqueness and military relevance of the target's products (current and future), the robustness of know-how protection measures, and participation in German or EU-funded R&D programmes.
• acknowledged that FDI screening does not capture all channels of technology transfer and highlighted risks linked to greenfield investments, recruitment of skilled personnel, financial sponsorships, and competitive dynamics where foreign-controlled EU entities may gain trust and market access before leveraging that position strategically.

The statement highlights heightened governmental scrutiny of foreign investments in the defence industry. Investors considering acquisitions within the defence supply chain (including suppliers and subcontractors) should anticipate similar regulatory attention.

FDI screening activity in Germany

Alongside these policy signals, the recently published screening statistics highlight key trends in FDI reviews in Germany. 2025 saw continued high levels of foreign investment and regulatory activity in Germany. In 2025, BMWE processed 339 national FDI cases (a significant increase from 106 in 2019) and received 451 notifications from other EU Member States under the EU cooperation mechanism that did not trigger a separate German screening procedure. Following the end of the Brexit transition period, UK investors became subject to full cross-sectoral screening, contributing to continued filing volumes from the United Kingdom.

Transatlantic flows have dominated the geographic profile of investors. The United States accounted for approximately 47% of national filings in 2025. The United Kingdom (including the Channel Islands) followed with approximately 12%, and China with approximately 10%. Other notable jurisdictions included EU / EFTA states (approximately 9%), Japan (approximately 5%), and Singapore, Australia, Bermuda/Cayman Islands, and Canada (each approximately 2%).

BMWE's report provides sectoral breakdowns that are particularly relevant for investors targeting German companies in sensitive industries. ICT represented the largest sector by case volume with 64 filings, followed by health and biotech (45), engineering (33), energy (31), optics, sensorics, optronics and radar (17), metal and steel (16), cybersecurity (15), automotive (14), defence (13), logistics and transportation (12), aerospace (11), and semiconductors (10).

Cross-sectoral reviews accounted for approximately 76% of national cases, with sector-specific procedures representing approximately 24%. This split is broadly consistent with recent years and reflects the wide scope of the cross-sectoral regime.

Review timelines provide important planning considerations for transaction parties. Of the 339 national cases filed in 2025, 41% were cleared within 30 days. A further 18% concluded within 31 to 40 days and 12% within 41 to 50 days. Extended reviews were less common: 4% concluded within 51 to 60 days, 5% within 61 to 70 days, and 7% exceeded 70 days. As of 15 January 2026, 13% remained pending. In 11 cases, the Phase I deadline was extended by mutual agreement, allowing clearance without escalation to Phase II.

In 2025, approximately 9% of cases proceeded to Phase II following an opening decision, broadly in line with previous years. Only 2% resulted in restrictive measures (including prohibitions, conditions, public-law contracts, or administrative orders) compared with 11% in 2019. Although absolute case volumes have increased markedly, the proportion of cases resulting in remedies has declined. These figures do not capture transactions abandoned due to governmental concerns, nor do they reflect the outcome of the 45 cases still pending as of mid-January 2026.

In 2026, parties should expect German authorities to maintain a broad view of transactions potentially affecting public order or security, with cross-sectoral screening volumes likely to remain high. Technology-intensive and critical infrastructure sectors (particularly ICT, health and biotech, and energy) will continue to be focal points for regulatory scrutiny. While most cases are expected to be resolved within 30 to 40 days, parties should anticipate that a meaningful proportion of cases will require extended review periods or in-depth Phase II review. Deal timelines and conditionality provisions should be structured accordingly, particularly for acquisitions in sensitive sectors or involving investors from countries that attract heightened scrutiny. The rate of restrictive measures has declined as a proportion of total cases and this trend is expected to continue in 2026 as transaction parties increasingly incorporate early engagement with regulatory requirements, proactive deal structuring, and mitigation measures into their planning.

Looking ahead, the regulatory landscape is poised for further evolution. The German government has confirmed that it plans to publish a consolidated FDI Screening Act by mid-2026. The reform is intended to streamline Germany's investment review framework by creating a single, more efficient screening process while strengthening protections for national security interests. This effort aligns with the provisional agreement on the revised EU FDI framework, which will require minimum sectoral coverage and greater procedural consistency across Member States. Following publication of the draft legislation in mid-2026, the Bill will proceed through parliamentary debate and may undergo further amendments before enactment. 

The Act is expected to introduce the following changes:

• Expanded sector coverage: certain sectors may be defined more broadly and face heightened scrutiny. The Act will also need to be consistent with the minimum sectoral scope mandated by the forthcoming EU FDI Screening Regulation.
• Greenfield and IP transactions: while Germany is not expected to apply blanket screening to greenfield investments, selective sector-specific rules may be introduced for high-sensitivity areas. The regime may also extend to certain contractual licensing and intellectual property arrangements where these could facilitate transfers of sensitive know-how without equity changing hands.
• Nationality-based assessment: the test for determining whether a natural person qualifies as a foreign investor is expected to shift from place of residence to nationality.
• Broader restructuring exemption: internal group reorganisations may benefit from a wider exemption, reducing the compliance burden for purely intra-group transactions.
• Faster review timelines: the initial review period in Phase I is expected to be shortened from two months to 45 days, reflecting requirements under the forthcoming EU FDI Screening Regulation.

What this means for investors

The developments outlined above underscore the growing importance of FDI screening as a critical factor in cross-border transactions. For corporate acquirers and private equity sponsors alike, early engagement with FDI requirements is now a core element of deal planning. Transactions in sensitive sectors (particularly defence, critical infrastructure, and advanced technology) require careful assessment of both EU-level coordination mechanisms and national screening obligations. As regulatory frameworks continue to converge and expand, parties should build sufficient flexibility into deal timelines, anticipate potential conditions or undertakings, and ensure that FDI strategy is integrated into due diligence from the outset. Failure to do so risks delays, transaction uncertainty, or, in more serious cases, prohibition. In this evolving landscape, proactive compliance and informed structuring will be essential to securing successful transaction outcomes.

Want to know more? 

• Investing in the German Defence Sector, 7 January 2026.