The Council of Ministers of the Republic of Bulgaria adopted amendments to the Rules on the Implementation of the Investment Promotion Act (“IPA”), which supplement the framework of the national screening mechanism for foreign direct investments related to security or public order in Bulgaria (“FDIs”), introduced in March 2024. An overview of the screening mechanism for FDIs was provided in our previous publication.
The amendments to the Rules were published in the State Gazette, issue No. 59 dated 22 July 2025 and entered into force as of the same date, 22 July 2025.
Entry into force of the screening mechanism
Pursuant to the IPA, no application was required to be submitted by a foreign investor for investments initiated during the period after the entry into force of the IPA amendments (in March 2024) but prior to the adoption of the relevant secondary legislation (the so-called transitional period) necessary for the implementation of the screening mechanism.
Since the Rules on the Organisation and Operation of the Interdepartmental Council for Screening of Foreign Direct Investments (“the Council”) were promulgated and entered into force on 31 January 2025, and with the latest amendments to the Rules on the Implementation of the IPA of 22 July 2025, the transitional period – during which investors were not required to submit applications – has come to an end. The national legal framework for the screening of FDIs should now be considered fully effective.
Although the formal composition of the Council is still pending publication, foreign investors are now expected to submit their applications to the Bulgarian Investment Agency.
Key highlights of the newly adopted secondary legislation
The Rules on the Implementation of the IPA set out the conditions and procedure for carrying out the screening of FDIs. Specifically, they regulate the submission and review process for applications for FDI clearance/authorisation, including the required documents and information, the powers of the competent authorities involved, applicable deadlines, and other technical aspects of the procedures.
The Rules introduce an application for FDI clearance/authorisation which takes the form of a standardised template containing the relevant information requirements regarding the investment, the target undertaking, and the investor.
In this context, the standardised template of the application includes an important clarification regarding which investments are not considered FDIs within the meaning of the IPA and therefore fall outside the scope of the screening mechanism, namely the following transactions and operations:
- intra-group restructurings where the foreign investor and the EU target are owned or controlled by the same foreign company, and
- restructurings where a transfer of shares takes place between companies of the same economic group without leading:
- to a change of ultimate control over the investor or the target undertaking,
- to the acquisition of a participation by a new foreign investor, or
- to the expansion of an existing investment, including the expansion of the capacity of an existing enterprise, the diversification of the production of an enterprise into products that were not previously produced, or to the creation of a new location to carry out the activity or increase in the capital of the investment site under the condition that the shares are acquired by the foreign investor.
The Rules also specify the powers of the Council as the lead competent authority in the screening procedure. It is envisaged that the Council may grant clearance/authorisation for the investment to proceed either with or without an enhanced review. The enhanced review of the investment and the investor is carried out within the 45-day decision-making period and is conducted independently of any other authorisations required under separate legal procedures.
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 FDI screening regime.
For information
Juliana Mateeva
Partner, Legal Advisory Services
Tel.: +359 2 9697 600
Yuliana Mihaylova
Manager, Legal Advisory Services
Tel.: +359 2 9697 600
