Cyprus remains one of the few countries that have yet to implement a foreign investment screening mechanism, according to a statement by the European Commission on Tuesday, October 14.
The Commission’s annual report notes that 24 EU member states have already integrated such control systems into their national legislation, but Cyprus remains an exception to this broader European trend.
Although a relevant draft law was submitted to Parliament in March 2024, the island nation has not yet managed to launch the initiative.
Rising Notifications of Foreign Direct Investments in the EU
In recent years, the number of notifications of foreign direct investments (FDI) under the EU cooperation mechanism has increased by 15% compared to 2021.
In 2024, member states received 477 notifications, 92% of which were approved within two weeks. The remaining 8% underwent in-depth review due to risks of technology leakage or threats to critical infrastructure.
The highest scrutiny was applied to industrial manufacturing, while technology and supply chain security became priority areas for preventive measures.
Cyprus’ Stalled Legislation
The proposed Cypriot system for screening foreign investments remains at the final drafting stage. The Ministry of Finance submitted the bill to Parliament in March 2024, after which it was returned to the Legal Service for review in early 2025.
Discussion of the “Law on the Establishment of a Foreign Direct Investment Screening System” concluded on October 7, 2025, during a meeting of the Parliamentary Committee on Economic and Budgetary Affairs.
Because the legislative process is still incomplete, Cyprus was not included in the European Commission’s annual reports on national screening mechanisms.
EU Preparing Mandatory Screening Framework
The European Commission presented a draft regulation in January 2024, proposing a revision of EU rules on foreign investment screening. Once adopted, all EU member states will be required to establish and maintain active national control systems, with minimum harmonization standards across the bloc.
The aim of the initiative is to strengthen Europe’s security and mitigate strategic risks, particularly in the fields of energy, defense, and digital technologies.
At present, EU rules allow member states to introduce screening mechanisms but do not make them mandatory. The current framework provides for information exchange between member states and the Commission when an investment may pose a threat to critical technologies, infrastructure, or sensitive data.
The introduction of mandatory standards is expected to enhance oversight and reduce potential risks to both the economy and national security.