After a long wait since early 2024, Bulgaria’s national mechanism for screening of foreign direct investments officially came into effect on 22 July 2025, in accordance with Regulation (EU) 2019/452. This is now a fact following the promulgation of amendments to the Rules on Implementation of the Investment Promotion Act.
The new mechanism applies to any investor from countries outside the EU (with some exceptions) and must be considered before making new investments in certain sectors in Bulgaria. The approval regime and also applies to companies of such investors who already have a business in the country and intend to expand their operations one way or another.
The Interagency Screening Council to the Council of Ministers (CM) is the competent authority which will review the applications for foreign direct investment and approve/reject their implementation. The Council’s members are determined by a decision of the CM.
Below, we provide a brief overview of some of the legal requirements and the procedure for obtaining an approval for a foreign direct investment.
Pursuant to the law, a foreign investor is a natural or legal person who has made or intends to make a direct foreign investment in Bulgaria and who is related to a country outside the EU. This include, for example, natural persons who are citizens of countries outside the EU; legal entities with registered offices in countries outside the EU; legal entities controlled by persons outside the EU, etc.
The definition is broad and covers:
Firstly, the foreign direct investment must relate to fields of activity listed in Regulation (EU) 2019/452, such as critical infrastructure, i.e. infrastructure that is essential for maintaining vital public functions, health, safety, and economic or social well-being (including energy, transport, water, healthcare, communications, media, data processing or storage, aviation, defence, etc.); critical technologies and products; supply of critical resources; access to sensitive information; media freedom and pluralism.
In addition, if the investment is in any of the listed areas, it must meet at least one of the following conditions in order to be subject to prior screening, namely:
The Act also provides for specific exceptions for investments that do not meet the conditions set out above, but are subject to prior screening, e.g. investments in the production of petroleum energy products; investments with a foreign investor from Russia or the Republic of Belarus; investments that may impact the national security or public order, etc.
Foreign investors originating from countries included in a special list approved by the National Assembly, as well as those explicitly mentioned in the Act, such as the United States, the United Kingdom, Canada, Australia, etc., appear to fall outside the scope of the national screening mechanism. However, there remains some uncertainty, leaving room for alternative interpretations. The screening rules for EU Member States should apply to investments originating from these countries, as there are no further clarifications from the authorities at this time.
The recent amendments to the Rules on Implementation of the Investment Promotion Act introduce a statutory application form along with a request for approval. The application must be submitted by the investor through the InvestBulgaria Agency (IBA) to the Interagency Screening Council, which reviews the submitted application within 45 calendar days.
The application must be submitted with detailed information and documents regarding the structure, ownership, financing, and management of the investment. The IBA reviews this information and forwards it to the Interagency Screening Council. The latter may:
If needed, written negotiations can take place with the investor, and approval may be granted with certain conditions, including the imposition of restrictive measures. If no agreement is reached, the authorization shall be rejected.
Before issuing a permit, the Interagency Screening Council may request current information and documents for the purpose of its final assessment.
The introduction of the national screening mechanism for foreign direct investment represents an important regulatory amendment that will impact some of the investment processes in the country.
While the new mechanism is meant to protect national security and public order, the new regime imposes additional administrative requirements that may significantly extend the time needed to finalize investment projects (including those already underway and established in the country by third-country investors) and create legal uncertainty. Investors and companies falling within the scope of the mechanism, especially in sensitive sectors or with a more complex ownership structure, will need to plan in advance and comply with the new requirements.
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