Foreign investment in France: Takeaways from 2025 and regulatory changes in 2026

Upcoming changes to the EU FDI Screening Regulation

The Revised EU FDI Screening Regulation is scheduled to enter into force in 2027. The main changes are as follows:

• Standardization of Phase 1 of the review process to 45 calendar days;
• Regulation of cross-border transactions, requiring notification on the same day in all jurisdictions, with each Member State also required to notify the cooperation mechanism of the request on the same day;
• Extension of the cooperation mechanism deadlines to approximately 10 calendar days;
• Extension of the Phase 2 deadline in France (which currently involves nearly systematic use of the maximum review period of 45 business days), as the submission of the proposed commitments will be delayed pending feedback from other Member States; and
• Expansion of the scope of mandatory FDI screening to:
  • All dual-use goods and technologies (DUGs) listed in Annex 1 of EU Regulation 428/2009 of 5 May 2009, including research, marketing, and production activities related to these DUGs (previously subject to FDI screening only for DUGs listed in Annex 4);
  • Electoral infrastructure;
  • Financial services (e.g., payment systems); and
  • Critical technologies, including AI, semiconductors, and quantum technologies, which the regulation will define precisely. Both R&D and the production of these technologies are subject to mandatory screening (as opposed to only R&D currently).

Lessons learned from 2025

Regarding the content of applications

The IEF welcomes the fact that fewer and fewer applications are incomplete.

However, it would like a more detailed and precise description of the targets’ activities – the main lever for reducing review times. This detail should be provided on a subsidiary-by-subsidiary, product-by-product, and service-by-service basis, and it should be stated from the outset whether any research and development activities exist. A balance must be struck between the technical nature and the accessibility of the information provided – but, in any case, it is unnecessary to provide strictly promotional material.

With regard to investment funds, the IEF confirms that it is not necessary to provide the identity of the subscribers from the outset and that the identity of the manager and the individuals who control it should be provided. However, the IEF emphasizes that the identity of the subscribers may be requested at any time if it deems the information necessary.

The IEF recommends providing:

• A clear description of the acquired rights (particularly when they are less than 50%);
• A step-by-step plan identifying when the investments covered by the application will take place;
• A more precise and concrete description of the investor’s strategy, e.g., existing investments in the sector, in France, and the projected duration.

Regarding the review of applications

The IEF reiterates the rules applicable to IEF authorization applications, which are governed, like requests for the revision of IEF authorizations, by Article L. 151-3 et seq. of the French Monetary and Financial Code (CMF).

The IEF regrets the large number of transactions submitted with timelines that are incompatible with regulatory deadlines. While the administration strives to expedite the process in cases where urgency is substantiated precisely and objectively, due to a particularly critical situation of the target, it is not sufficient to merely cite penalties that the investor would incur if a deadline is exceeded.

The IEF notes that there is no specific procedure for safeguard proceedings and that the administration should be contacted in advance of the submission of bids.

Finally, the IEF emphasizes that while it understands investors’ use of public affairs or public relations consultants, the administration recognizes lawyers as the primary legal channel of communication for the processing of IEF requests.

Regarding the scope of IEF authorizations

The IEF reviewed sectors where the scope of the authorizations is still not well understood. It reminds stakeholders that it is always possible to consult the administration prior to a transaction to save time.

Renewable energy

Regarding renewable energy, the administration notes that applications involving solar or wind power are most often outside the scope. The IEF reminds that the following are subject to authorization:

• Operational activities as of the date the project is implemented: projects, building permits, and rights related to future operations are not considered sensitive;
• Sites in operation where the cumulative installed capacity exceeds 50 MW;

These criteria apply when the activity constitutes the main activity of the operation. When the activity is ancillary to the main activity (offshore wind, storage, etc.), the need for authorization will depend on whether the operation is “essential” to ensuring the country’s energy supply, as defined in Article R. 151-3 of the CMF.

Agriculture

In the agricultural sector, applications often fall outside the scope. Paragraph 9 of Section II of Article R. 153-1 of the CMF is intended to include within the scope only infrastructure and production that are essential to ensuring national food security.

The following are therefore specifically excluded:

• The trading of grains and raw materials when they are substitutable by European competitors and the business has a small market share;
• Food packaging, unless it involves a highly specialized activity.

However, large-scale industrial activities involving chemical inputs used by farmers are included when the market share is significant and there is little competition.

It is important to note that critical raw materials (Article R. 153-1(II)(11) of the CMF) were defined in the guidelines published in July. This definition remains in effect.

Software and data

With regard to software, the administration notes that IEF regulations apply to activities carried out in France by entities governed by French law.

The following are not included within the scope:

• After-sales service or intra-group marketing activities without sales to third parties in France – unless they involve cryptographic elements or methods of intercepting communications as defined by the French cybersecurity agency (ANSSI);
• Pure HR management activities without any specific characteristics, without dedicated hosting or storage (including dedicated cloud-based storage).

Data center colocation is generally ineligible for authorization, unless the clients involve a particular degree of sensitivity, which would make the operation eligible on other grounds.

Post-authorization

The IEF reiterates the obligation to notify the administration within two months of fulfilling the requirement.

The IEF also emphasizes the current inadequacy of annual reports, which must explain how investors have complied with the conditions attached to the authorization and the evolution of the scope of sensitive clients. To address this, the IEF is considering a proposal to introduce a standardized format for annual reports in the future.

The IEF should also be informed as early as possible of any difficulties encountered in meeting the conditions to facilitate dialogue.

Key questions

• Does a change in the nationality of an investment fund require a review?
  No. As long as the change in the investor’s nationality does not impact sensitive activities, a notification is sufficient. If the chain of control becomes entirely French, a necessary condition for the authorization is no longer met, and the authorization expires.
• Has the scope of cultural products covered by the FDI regime been modified?
  The regulation provides that Member States may take into account media freedom and pluralism. This point is expanded in the draft revision of the regulation to better align with various key sectors, but this point appears to still be under consideration.
• In the case of a foreign lender holding a security interest, with a French pledge, must a change of control be notified to the IEF?
  If the lender is never the holder, there is no transaction to be notified. Notification to the IEF is only required once the transaction is certain.
• Is there an intra-group exception for the use of continuation funds?
  No. This scenario does not benefit from any specific provisions regarding the IEF (outside the scope of the intra-group exception already provided for in the Monetary and Financial Code).