In line with the requirements under Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union (“FDI Regulation”) and by virtue of amendments to the Investment Promotion Act (“IPA”), a national legal framework for the screening of foreign direct investments (“FDIs”) into Bulgaria related to security or public order has been introduced.

The requirements for FDI screening shall be applicable in addition to any other existing requirements for obtaining permits and/or registration granted by competent regulatory bodies in the respective sectors, for instance, competition clearance given by the Commission for Protection of Competition.

The amendments to the IPA were published in the State Gazette, issue No. 20 dated 8 March 2024 and entered into force as of 12 March 2024.

Below is a summary of the more important provisions on the newly introduced screening mechanism.

General requirements for prior screening of foreign direct investments into Bulgaria

As per the national FDI screening mechanism, a prior screening (clearance) is required for any FDI that cumulatively: 

a)  Оriginates from a non-EU citizen, a non-EU entity or a non-EU controlled entity as well as an EU entity making an investment in its name but on behalf of or under the control of a non-EU citizen/entity, and

b)  Targets any of the industries specifically listed in the FDI Regulation, namely: 

  • Critical infrastructure (physical or virtual), such as energy, transport, water, health, communications, media, data processing or storage, aerospace, defence, electoral or financial infrastructure, and others; 
  • Critical technologies and dual use items, such as artificial intelligence, robotics, cybersecurity, aerospace, defence, energy storage, quantum and nuclear technologies, and others; 
  • Supply of critical inputs, including energy or raw materials, as well as food security;
  • Access to sensitive information, including personal data, or the ability to control such information; or
  • The freedom and pluralism of the media, and  

c)  Meets alternatively any of the below requirements:

  • By virtue of the FDI, at least 10% of the capital of an entity operating in Bulgaria is being acquired, or exceeds EUR 2 million in value (or its equivalent in Bulgarian leva); or
  • By virtue of the FDI, at least 10% of the capital of an entity operating in Bulgaria and carrying out high-tech activities is being acquired; or 
  • Is a new investment (i.e. greenfield, related to activity as a new enterprise, material change to the production process in existing enterprise, etc.) exceeding EUR 2 million (or its equivalent in Bulgarian leva). 

Exceptions to the general requirements. Ex officio screening

Certain FDIs shall be subject to screening in all cases (i.e. regardless of the presence of the general requirements described above), namely:

  • FDIs related to the production of energy products from petroleum and products of petroleum origin at sites part of critical infrastructure under the Act on Administrative Regulation of Economic Activities Associated with Oil and Petroleum Products; 
  • FDIs by foreign investors from Russia or the Republic of Belarus;
  • Irrespective of the investment threshold limitation, FDIs made by an investor that has direct or indirect public participation in its capital from a country outside the EU, including significant financing by a public authority. When the foreign investor is a company whose shares are traded on a regulated market, this exception shall apply in case the direct or indirect involvement of a country outside the EU in the company’s capital is more than 5%. However, certain non-EU jurisdictions, which will be additionally approved by the Bulgarian Parliament, as well as USA, the UK, Canada, Australia, New Zealand, Japan, the Republic of Korea, United Arab Emirates and Saudi Arabia are considered low-risk and shall be excluded from the scope of this exception. 

On certain occasions, an FDI can be subject to ex officio screening (i.e. initiated ex officio, not upon the investor’s application), including, by way of exception: 

  • Upon suggestion of a member of the Interdepartmental Council for Screening of Foreign Direct Investments (“the Council”) in the sector of competence in which the potential investment falls, reconciled with representatives of the State Agency for National Security and the State Intelligence Agency – in case of a greenfield FDI or an FDI not exceeding the threshold of EUR 2 million (or its equivalent in Bulgarian leva);
  • Upon a reasoned request by the State Agency for National Security and the State Intelligence Agency – regardless of whether the general criteria above have been triggered or not, when there is information that the FDI can impact security and public order; 
  • Ex officio by the Council – upon becoming aware of a new circumstance that is a prerequisite for initiating the procedure for screening of a foreign direct investment (within three months of becoming aware of this circumstance); 
  • Ex officio by the Council – upon an opinion of the European Commission or a notification containing sufficient information from an EU Member State that an FDI in respect of which no application for clearance has been made could be subject to screening, provided that the FDI was initiated within two years prior to the receipt of the opinion/notification. 

Competent authority. Timeframe and procedure

The FDI screening is vested with the newly established Interdepartmental Council for Screening of Foreign Direct Investments (i.e. the Council) comprised of ministers from most branches of the government as well as representatives of various regulatory commissions.

Decisions by the Council shall be issued within 45 days of the investor’s submission of an application or eliminating any inconsistencies thereof respectively. This term may be extended once for up to 30 days. The absence of a Council’s decision within any of these terms will be considered tacit clearance (i.e. green light for the FDI). 

The Council issues a decision by virtue of which the FDI might be authorized or the application for such rejected. Moreover, the Council may condition authorization for an FDI upon the investor’s fulfilment of mitigation measures, such as limitation of the right to acquire up to 20% of the capital of a company or up to 10% of the capital of a company in the field of high-tech productions, prescriptions for the protection of personal data, and others. 


For failure to comply with obligations under the screening regime, the foreign investor may incur a fine amounting to 5% of the value of the investment but not less than BGN 50,000 (approximately EUR 25,000). 

Regardless of the fine, the Council may also impose mitigation measures to ensure security or public order, including change of control, change and/or suspension of activity, termination of the FDI and other appropriate measures. 

What’s next? Transitional period

Within a 6-month term of the IPA amendments’ coming into force, subordinate legislation (rules on application of the IPA as well as on organization and function of the Council) shall be adopted/amended. 

As per the IPA, where an FDI has been initiated after the IPA amendments came into force but prior to the adoption of the envisaged subordinate legislation, no submission of application by the investor is required. The IPA, however, does not provide for details or definition when the FDI is considered initiated, or whether ex officio FDI screening control might be exerted by the Council with regard to such initiated transactions. Those matters would be eventually further regulated in the relevant subordinate legislation. 

How can we help?

The KPMG team remains at your disposal should you have any questions or need assistance regarding the interpretation and application of the newly established FDI screening regime.