FDI Update Germany 2025: Facts, Figures and Outlook

The German Federal Ministry for Economic Affairs and Climate Action (Bundesministerium für Wirtschaft und Klimaschutz, "BMWK") published its annual facts and figures on investment screening in 2024 a few days ago. Further adjustments of the FDI regime are expected at legislative level - EU and national. Below you will find a brief overview:

Statistics of the BMWK (2024)

In 2024, the BMWK processed 261 national screening procedures in accordance with the AWV; in 2023, that number was 257. As in previous years, these procedures were predominantly cross-sector review procedures (85%).

Investors continue to come primarily from the U.S. (112, +5% year-on-year), followed by the UK (29, -3% year-on-year) and China (27, +2% year-on-year). German target companies operating in the fields of information and communication technology (65) and healthcare and biotechnology (34) were particularly relevant for foreign investors.

The trend towards efficient and speedy reviews by the BMWK continued. In almost two thirds of all cases, the duration of the procedure was up to 40 days. A formal review procedure (Phase II review) was opened in only 18 of the 261 cases. The number of cases in which acquisition-restrictive measures – including prohibitions, ancillary provisions and public law contracts – were issued by the BMWK fell again compared to the previous year (to 3%). For example, the acquisition of MAN Energy Solutions' gas turbine business by the Chinese company CHGT was prohibited due to the proximity of its shareholder China State Shipbuilding Corporation to the Chinese military.

Status of legislation (EU and Germany)

Both the EU Commission and the German Government are working on a further reform of the FDI screening regime (see: Further tightening of FDI screening). In this context, further tightening is to be expected, particularly in the area of the currently existing case groups. After an initial draft regulation was presented at the EU level in January 2024, the Commission is currently (again) in the consultation process with the Member States. At the national level in Germany, there has not been a submission of draft legislation for the planned German Investment Screening Act (Investitionsprüfgesetz, “IPG”). This is where the end of the coalition government comes into play.

Outlook

Despite the ongoing challenges due to political and economic uncertainties – such as the tariffs announced by the Trump Administration – an overall increase in M&A transactions is expected for 2025. Tech companies in particular are focussing on acquisitions to strengthen their innovation power. Added to this are lower refinancing costs (interest rate cuts) and high cash holdings by investors as well as more favorable regulatory conditions. Market participants are hoping that a more business-friendly federal government will stimulate the economy after the general election. It remains to be seen whether Germany will become a more attractive location for foreign investors again.

The reform of the EU Screening Regulation and the possible introduction of an IPG will further increase the importance of investment screening in the EU and Germany in the future. Investors should keep an eye on these developments and take them into account as part of their due diligence. However, there will only be a few changes in the very short term. The new German Government must first be constituted, and it remains to be seen whether and to what extent plans for a standardized investment screening act will be pursued. The consultation process at the EU level (FDI Regulation) will also take some time and the regulation will not come into force for another 15 months once it has been adopted.

We are keeping a close eye on developments and will keep you up to date with the latest news.