New EU Foreign Investment Screening Regime: Portugal

Regulation (EU) 2026/1386 moves the Union from monitoring foreign investment to regulating it as a strategic policy matter. With full application on 17 January 2028, Portugal faces one of the most extensive reforms of any Member State.

On 26 June 2026, Regulation (EU) 2026/1386 on the screening of foreign investments in the Union (the “Regulation”) was published in the Official Journal. It repeals Regulation (EU) 2019/452 and replaces a framework built on cooperation between Member States with an integrated system founded on common rules. The Union remains open to foreign capital, but that openness will now coexist with markedly more robust screening.

Crucially, the Regulation does not impose full harmonisation. Screening remains a national competence: each Member State applies its own regime, and national security stays within Member State control. What the Regulation establishes is a mandatory minimum standard that every Member State must meet, while remaining free to adopt more expansive rules. A degree of divergence between national regimes will therefore persist.

The EU framework: what changes

At the heart of the new regime is a mandatory prior authorisation requirement. Every Member State must screen investments in a common set of sensitive sectors, and such transactions cannot be completed before clearance. The common list covers dual-use items and military goods; semiconductor, quantum and certain advanced artificial-intelligence technologies; strategic raw materials; critical entities in energy, transport and digital infrastructure; key financial-market entities such as central counterparties, securities depositories, regulated markets and payment systems; and electoral systems, including voter-registration databases and voting infrastructure.

Procedures are partly aligned. All screening mechanisms must include an initial review of no more than 45 calendar days, counted from the date the filing is complete, followed where necessary by an in-depth investigation; pre-notification and in-depth review periods are not fully harmonised. Authorities must also hold ex officio call-in powers: non-notifiable investments may be reviewed for at least 15 months, and up to five years, after completion, while investments that should have been filed but were not, or were filed late, remain reviewable for at least 24 months after completion.

The Regulation also looks through to the ultimate controller. It reaches not only investments made directly from third countries but also those routed through an EU-established entity controlled by a foreign investor, so an EU acquisition vehicle will not, of itself, avoid notification. Certain operations fall outside the net: resolution measures for financial institutions are excluded, as are internal corporate restructurings, unless a new third-country entity is inserted into the ownership chain. Greenfield investments are covered by the Regulation but are not subject to mandatory prior authorisation, and Member States may choose whether to screen them.

Finally, the cooperation mechanism is reinforced with fixed deadlines, enhanced information-sharing, a larger role for the European Commission and a secure EU database of past filings and outcomes. Consistency of disclosure across filings in different Member States will matter more than ever. The result is a genuine change in architecture: in place of predominantly national regimes supported by European cooperation, a genuinely European framework built on common rules.

Timing and transition

The Regulation entered into force on 16 July 2026, twenty days after publication, and applies in full from 17 January 2028. Member States must notify their implementing measures to the Commission by that same date, and several provisions concerning the EU-level systems and database already apply. The new rules are not retroactive: investments undergoing screening on, or completed by, 17 January 2028 remain governed by the current framework.

Portugal: the evolution of the regime

Portugal has had a national mechanism since 2014. The regime for the safeguarding of strategic assets, established by Decree-Law No. 138/2014, of 15 September, traces back to the privatisation cycle: Law No. 50/2011 amended the Privatisations Framework Law and instructed the Government to create an extraordinary safeguard regime, and Law No. 9/2014 granted the legislative authorisation. The backdrop was the Golden Shares case law, in which the Court of Justice struck down Portugal’s special rights in EDP (C-543/08) and Galp (C-212/09) and sharply limited the State’s traditional tools. Designed within those constraints, the regime is deliberately narrow. Opposition is possible only in exceptional circumstances, upon a real and sufficiently serious threat assessed against a closed list of criteria, and the regime has remained largely dormant: no opposition decision is publicly known.

Measured against the Regulation, the distance Portugal must travel is considerable. The current regime applies only to acquisitions of control by non-EU/EEA persons, control being understood as decisive influence in the competition-law sense by reference to the Portuguese Competition Act, and only over strategic assets in defence and national security, energy, transport and communications.

The Regulation reaches any foreign investment conferring effective participation in the management or control of the target, across the full common list of sensitive sectors. Portugal also imposes no filing obligation at all: acquirers may voluntarily request confirmation that the State will not oppose, deemed granted if no review is opened within 30 days, and the State otherwise holds only an ex-post opposition power. Under the Regulation, mandatory prior notification, a standstill obligation and prior clearance become the rule.

The timelines tell the same story. Today, a review must be opened within 30 days of completion or of the transaction becoming public, and the Council of Ministers must then decide within 60 days of receiving complete information, with silence counting as non-opposition. That short window must give way to an ex officio review reaching at least 15 months, and up to five years, after completion, backed by monitoring capable of detecting non-notified deals.

The risk criteria must broaden as well: DL 138/2014 relies on a narrow, asset-focused list shaped by the Golden Shares case law, whereas the Regulation prescribes a structured set of factors covering critical technologies and infrastructure, supply continuity, sensitive data, media pluralism, electoral processes, public health and food security, together with investor-related factors such as third-country government links, restrictive measures and opaque ownership.

Institutionally, the review is today initiated by the member of Government responsible for the sector, with the opposition decision resting with the Council of Ministers on that member’s proposal. The only sanction is the nullity of an opposed transaction, and there is no penalty regime, no structured cooperation with the Commission and other Member States, no annual report and no published guidance. The Regulation requires a dedicated screening authority with adequate powers and resources, effective, proportionate and dissuasive penalties, full participation in the EU cooperation mechanism, an annual public report and regularly updated guidance.

Two points of continuity are worth noting. Portugal’s regime already reaches indirect acquisitions of control by non-EU/EEA persons, the concern addressed by the Court of Justice in Xella Magyarország (C-106/22) and now generalised by the Regulation’s look-through rule, and it already provides for judicial review of opposition decisions before the administrative courts. On both fronts, national law is closer to the new baseline than on any other.

Next steps

From an institutional standpoint, this would be the most significant reform of Portugal’s foreign investment screening regime since its introduction. The legislator will need to replace the optional confirmation model with a mandatory notification and prior-approval regime, with clear thresholds, procedural rules and a standstill obligation; to extend the substantive scope to the full common list of sensitive sectors, with the option to go further; to introduce effective call-in powers and the monitoring capacity needed to identify non-notified transactions; and to broaden and systematise the risk-assessment framework in line with EU law.

On the institutional side, Portugal must establish a dedicated screening authority with full participation in the EU cooperation mechanism, publish and maintain guidance, report annually, and provide for effective, proportionate and dissuasive penalties.

For investors and their advisers, the practical horizon is clear. Transactions in sensitive sectors that today may proceed with limited Portuguese scrutiny will, from 17 January 2028, require prior clearance, and structuring an acquisition through an EU vehicle will no longer sidestep review. Deal timetables, conditions precedent and risk allocation should begin to reflect this well before the application date.

Assessment

On balance, the Regulation is a welcome development. In an environment defined by geoeconomic competition and the growing use of investment as an instrument of influence, the fragmentation of national screening regimes had become difficult to justify. Its effectiveness, however, will depend less on the quality of the text than on implementation. A regime that is robust yet predictable can strengthen the Union’s economic security while preserving investor confidence; one that is excessively burdensome risks delay, higher transaction costs and a less attractive internal market.

For Portugal, the challenge is twofold: to legislate in time, and to build an authority capable of applying the new regime with the rigour and predictability this Regulation expects.

How GFDL Advogados can assist foreign investors

GFDL Advogados advises companies, investors and funds on the legal aspects of investing in Portugal. We support foreign investors with investment screening analysis under the current safeguard regime and the incoming EU framework, transaction structuring and timetable planning, confirmation requests and, once the new regime applies, mandatory filings, engagement with the competent Portuguese authorities, deal documentation including conditions precedent and regulatory risk allocation, company incorporation or acquistion, corporate and commercial contracts, international tax structuring, employment and immigration, and ongoing regulatory compliance.

For investors with existing or planned positions in Portuguese sensitive sectors, early legal planning can be decisive. Transactions signing now but closing closer to 2028 will straddle two regimes, and a well-prepared entry helps investors move faster, reduce uncertainty and protect long-term value.

Planning an investment in Portugal? Contact us to discuss how we can support your transaction from initial screening analysis to clearance.

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