On 1 July 2023, the Belgian Foreign Direct Investment (“FDI”) screening mechanism entered into force. One year later, the Federal Public Service of Economy (“Federale Overheidsdienst Economie” / “Service Public Fédéral Economie”) published its first annual report on the screening mechanism (“Report”).
I. Key figures
A. Notifications
The Interfederal Screening Commission (“Interfederale Screeningscommissie” / “Comité de filtrage interfédéral”) (“ISC”) received 68 notifications in the first year, and 1 was initiated retroactively via the ex officio procedure.
Of the 68 notifications, 15 are still under review, while the remaining 53 have been approved. No foreign investments have been rejected to date.
In 5 instances, the notification led to a screening procedure following the assessment phase. 4 are still ongoing, while 1 was concluded after 52 days, with the investment being approved.
B. Turnaround (assessment phase)
As regards turnaround, in 44.1% of the cases, the assessment phase was initiated the same day or the day after the notification. On average, it took 6 days to initiate the assessment phase (often due to missing information).
The assessment phase lasted 31 days on average, just one day longer than the legal maximum of 30 days (due to weekends and holidays).
C. Insights on targets, investors and sectors
Only 23.5% of notified investments involved Belgian entities as the primary target, meaning the majority involved targets located outside Belgium but with a Belgian subsidiary.
Regarding the types of notified investments, 11 of the 68 notifications (16.2%) concerned internal restructurings, most often (81.8%) not resulting in a new ultimate beneficial owner.
In terms of sectors, data and health each represented 15.1% of the notifications, followed by digital infrastructure (11.6%), transport (10.5%), and electronic communications (8.1%).
Geographically, the ultimate beneficial owners of the foreign investors were mostly from the USA (43.4%), followed by the UK (29%). Switzerland was third (5.3%), followed by India (4%), and lastly Canada, China, Singapore and Turkey tied at 2.6% each.
The total investment amount for all notified investments was 173 billion euros, with the Belgian component representing approximately 2 billion euros.
II. Future developments
A. Proposed revision of EU FDI Regulation
In January 2024, the European Commission proposed revisions to the EU FDI Regulation, aiming to:
- require all EU member states to implement screening mechanisms aligned with certain harmonised procedural rules;
- define a minimum common sectoral scope for national screening mechanisms; and
- extending screening of investments by European investors whose ultimate beneficiary is from a third country.
Once the new European parliament is in place following the recent European elections, the proposal is likely to move forward.
Once finalised, the Belgian Cooperation Agreement of 30 November 2022 establishing a foreign direct investment screening mechanism (the “Cooperation Agreement”) will require a review to identity which aspects of the Belgian screening mechanism may need to be reviewed to ensure compliance with the updated European legal framework.
B. OECD project “Supporting FDI screening reforms in Europe”
The OECD’s “Supporting FDI screening reforms in Europe” project, launched in September 2024, aims to help EU member states reform their screening mechanisms by better managing security risks without deterring foreign investors. It intends to identify and address inefficiencies and gaps and, in addition, aims to promote harmonisation and cooperation in the EU. The project is expected to run for 30 months.
III. Outlook for the second year of the screening mechanism
The Report includes the ISC’s outlook for the second year of the screening mechanism. The ISC emphasises the impact of geopolitical instability on how foreign investments are dealt with globally. As geo-economic tensions persist, investment screening is only expected to grow in importance.
With Belgium’s economy projected to grow by 1.2% in 2024 and 2025, the ISC expects a slight increase in notifications.
The ISC is working to improve the practicalities of the screening mechanism, including updates to the notification forms (a new form was introduced in August 2024) and enhancements to the IT application used when submitting notifications.
IV. Main takeaways
Based on the first year’s figures, it appears that most investments were approved during the assessment without a formal screening procedure.
Although the number of cases remains limited, a preliminary conclusion seems to be that only investments posing a significant risk to security and public order are under scrutiny and give rise to a screening procedure.
At this early stage, it remains difficult to identify specific high-risk sectors or countries of origin, given the small sample size of notifications which do not have much in common (different sectors and different countries of origin). As such, the advice (as confirmed by the ISC) therefore remains to “notify when in doubt”.
V. Conclusion
The first year of the FDI screening mechanism indicates that while the threshold for initiating a screening procedure (following the assessment phase) appears relatively high, the broad scope of application of the screening mechanism remains an important source of uncertainty.
No investments have been rejected so far, but it is still too early to draw definitive conclusions about trends or high-risk sectors.
The wide application of the FDI screening mechanism poses an administrative burden on foreign investors, and it is hoped that discussions about refining and possibly narrowing the scope of the screening mechanism will take place, especially after the EU FDI Regulation is revised.
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This newsletter is not a legal advice or a legal opinion. You should seek advice from a legal counsel of your choice before acting upon any of the information in this newsletter.
