If you are an investor from outside the EU buying a German company, expect a government review. This is not a sign of distrust towards you; it is a procedural step with fixed rules and deadlines. Plan for it early and you lose no time. This article explains the current law and the draft of a new Investment Screening Act.
What it is about
The Federal Ministry for Economic Affairs and Energy (BMWE) can review whether a foreign investor’s acquisition of a German company threatens public order or security. The legal basis is the Foreign Trade and Payments Act (AWG) and the Foreign Trade and Payments Ordinance (AWV). The ministry describes the purpose as follows:
“Investment screening by the BMWE creates legal certainty for company acquisitions, safeguards the security interests of the Federal Republic of Germany and at the same time preserves Germany’s attractiveness as a business location.”
Federal Ministry for Economic Affairs and Energy / “Investment Screening” page (our translation)
Do not confuse this review with the statistical reports to the Deutsche Bundesbank. Although they are set out in the same ordinance, they are purely statistical and involve no approval. We have covered them in our article AWV Reporting Obligations . An acquisition can be exempt from screening and still be reportable, and vice versa.
Two procedures under current law
- Cross-sector review (§§ 55 to 59 AWV): applies to acquirers from outside the EU. Investors from the EFTA states (Switzerland, Norway, Iceland, Liechtenstein) are treated like EU investors. The review covers more than share purchases. Buying a separable part of a business or all of its essential operating assets also counts (§ 55 Abs. 1a AWV).
- Sector-specific review (§§ 60 to 62 AWV): applies to military equipment and certain IT security products for classified government information. Here, all foreign acquirers are covered, including those from the EU. The acquisition must always be notified.
Thresholds: when a review applies
The decisive factor is the share of voting rights the acquirer holds directly or indirectly after the purchase (§ 56 AWV):
| Activity of the German company | Threshold | Notification required? |
|---|---|---|
| Critical facilities and infrastructure, critical components, certain cloud, telecommunications and media services (§ 55a Abs. 1 Nr. 1–7 AWV) | 10 % | Yes |
| Other sensitive technologies, such as semiconductors, artificial intelligence, robotics, quantum technology, automated driving, critical raw materials (§ 55a Abs. 1 Nr. 8–27 AWV) | 20 % | Yes |
| All other sectors | 25 % | No, but reviewable |
| Defence, IT security for classified information (§ 60a AWV) | 10 % | Yes |
Later increases in a stake can also be reviewed again, for example on reaching 40, 50 or 75 percent (§ 56 Abs. 2 AWV). Additional seats on supervisory bodies or veto rights can be treated as equivalent to a higher share of voting rights (§ 56 Abs. 3 AWV). The ministry may also take into account whether an acquirer is controlled by the government of a third country (§ 55a Abs. 3 AWV).
Notification requirement and prohibition on completion
Where notification is required, the direct acquirer must notify the BMWE of the signing without delay (§ 55a Abs. 4 and 5 AWV). Until clearance, completion is provisionally invalid. In particular, it is prohibited to exercise voting rights or to share security-relevant company information with the acquirer (§ 15 Abs. 3 and 4 AWG). Intentional breaches are a criminal offence punishable by up to five years’ imprisonment (§ 18 Abs. 1b AWG).
In all other cases, there is no notification requirement. The BMWE can still call in the acquisition, however, for up to five years after signing (§ 14a Abs. 3 AWG). If you want certainty, apply for a certificate of non-objection. If the ministry does not open a review within two months, it is deemed granted (§ 58 AWV).
Two months from becoming aware of the contract to open a review. Then four months from receipt of the complete documents to reach a decision, extendable by three months, and by one further month where defence interests are involved. If the ministry requests additional documents, the clock stops.
What this means for your acquisition
Take the typical case of a Chinese industrial investor that wants to take over a German automotive supplier. If the supplier develops components or software for automated driving, the acquisition must be notified from 20 percent (§ 55a Abs. 1 Nr. 14 AWV). For the purchase agreement, this means:
- Clearance becomes a condition for completion, i.e. for closing.
- The timetable must reflect the review periods, especially for purchases out of insolvency. See our article Buying a Company Out of Insolvency.
- The data room needs clear rules on what information you may see before clearance.
- The acquisition structure should be settled beforehand. How a German holding can be set up is shown in the article Holding structures for international investors.
The planned Investment Screening Act (draft)
The BMWE has presented a ministerial draft (Referentenentwurf) of a dedicated Investment Screening Act (IPG), dated 13 October 2026. A ministerial draft is the first version from the ministry, before it goes to cabinet and parliament. It is intended to consolidate the rules of the AWG and AWV in a single act and to implement the new EU Screening Regulation (EU) 2026/1386. That regulation applies from 17 January 2028. We have not seen the draft itself; the following points are taken from published analyses by the law firms Gleiss Lutz and Linklaters:
- Three procedures: Alongside the sector-specific procedure, a new case-group procedure will cover the sectors that currently require notification. Every procedure ends in a uniform “approval”.
- Thresholds: The 20 percent threshold is set to rise to 25 percent. A new 15 percent threshold is planned for listed companies. Increasing a stake from 75 to 100 percent is also to become reviewable.
- More sectors: Additions are to include semiconductors, quantum technology, certain AI models and critical raw materials. All listed dual-use goods are to require approval from 25 percent.
- Who counts as foreign: The privilege for EFTA investors is to be abolished. Dual nationals holding a passport from a third country would always count as foreign acquirers.
- Deadlines: 45 days for the first phase, 120 days for the in-depth review, extendable by up to 90 days. However, the periods are only to start once the documents are complete. The call-in period is to be cut from five to three years.
- Sanctions: Fines of up to €100,000 for breaches of notification and cooperation duties, and up to €1 million for negligent breaches of the prohibition on completion. Prohibition decisions are to be published.
- New businesses (greenfield investments) remain exempt.
According to Gleiss Lutz, the new law is to apply to contracts signed on or after a cut-off date in 2027 that has yet to be set. Until then, the AWG and AWV apply. Changes to the draft are likely.
A clear line: sanctions
Investment screening and sanctions law are two different things. The EU maintains sanctions regimes against Russia, Belarus, Iran and North Korea, among others. Breaching service bans under EU sanctions is a criminal offence; the law expressly includes tax advice, bookkeeping and management consulting (§ 18 Abs. 1 Nr. 1 Buchst. d AWG). That is why we do not act for individuals or companies from countries subject to comprehensive EU sanctions regimes. For investors from almost every other country, we are here for you, with partner firms in more than 20 countries. How this cooperation works is explained in the article Tax Advice Across Borders.
How we support you
“Investment screening belongs at the start of a transaction, not at the end. If you plan for it early, you can align the timetable, data room and purchase agreement with it.”
Fatma Tabak, tax advisor · TABAK Steuerberatung
TABAK Consulting coordinates the transaction: the acquisition structure, the timetable, and the new company’s bookkeeping and IT. The filing with the BMWE is handled by specialised lawyers we work with. Tax advice is provided by our partner tax firm TABAK Steuerberatung.
We advise you in English — directly, without intermediaries.
Frequently Asked Questions
Does every foreign investor have to notify their acquisition?
No. A notification requirement only exists in sensitive sectors, such as critical infrastructure or certain technologies, and above certain thresholds. In all other sectors, the BMWE can review an acquisition by an investor from outside the EU from 25 percent of the voting rights, without you having to notify it.
Does screening also apply if I set up a new company?
Investment screening is triggered by the acquisition of an existing German company or a stake in one. According to the published analyses, new businesses remain exempt under the IPG draft as well.
What is a certificate of non-objection?
A confirmation from the BMWE that it has no concerns about the acquisition. It is issued on application and is deemed granted if the ministry does not open a review within two months.
Is investment screening the same as the AWV report to the Bundesbank?
No. The reports to the Bundesbank are for statistical purposes and involve no approval. Investment screening is a BMWE review procedure that can restrict or prohibit an acquisition.
When does the new Investment Screening Act take effect?
Not yet. It only exists as a ministerial draft (as of 13 October 2026). The EU Screening Regulation it is meant to implement applies from 17 January 2028.
Sources
- BMWE – Investment screening
- § 55a AWV – case groups and notification requirement
- § 56 AWV – shares of voting rights
- § 14a AWG – deadlines
- § 15 AWG – legal invalidity and prohibition on completion
- § 18 AWG – criminal provisions
- Regulation (EU) 2026/1386 – screening of foreign investments
- Gleiss Lutz – The IPG draft (16.10.2026)
- Linklaters – First look at the draft IPG (02.10.2026)
- EU Sanctions Map
More than 20 years advising entrepreneurs, investors and family businesses. Reserved tax services are provided by our partner tax firm, TABAK Steuerberatung.
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We plan the acquisition structure, the timetable and the new company so that screening does not become a bottleneck – together with specialised lawyers and our partner tax firm TABAK Steuerberatung.