Details emerge on Croatia's draft Foreign Direct Investment Screening Act

Public consultation for the draft FDI Act will run until 3 October 2025. After that, the law may be amended in response to feedback before final adoption. Since the law is being adopted through an expedited procedure, it is expected to come into force by the end of October.

Scope of coverage

The FDI Act applies to any foreign investment resulting in the acquisition of 10 % or more of share capital or voting rights in Croatian entities (deemed "obliged entities") operating in critical sectors such as energy, transport, health, digital infrastructure, defence, media, financial services and research. The regime also covers all types of concessions, including public-private partnerships. Exemptions are provided for investments in agricultural land, forests and forest land owned by the Republic of Croatia, which are subject to separate legal protections.

Key definitions

• Foreign investor:
  • any natural person who is not a citizen of Croatia or another EU Member State (including dual nationals who also hold third‑country citizenship) and stateless persons;
  • any legal person organised under the laws of a third country (including trusts and similar foreign legal forms);
  • any investment migration intermediary (as regulated by Regulation (EU) 2024/1624 on the prevention of the use of the financial system for the purpose of money laundering or terrorist financing);
  • any legal person established in Croatia or another EU Member State that is directly or indirectly controlled by a foreign investor or by a public authority of a third country; and
  • any subsidiary or branch in Croatia or another EU Member State that is directly or indirectly controlled by a foreign investor or by a public authority of a third country (including downstream subsidiaries/branches and companies effectively controlled or influenced by them).
    
    
• Obliged entity: Any company registered or to be established (i.e. a greenfield investment) in Croatia in connection with the foreign investment and whose activities may affect national or EU security or public order.
• Qualifying holding: Direct or indirect acquisition of at least 10 % of shares, voting rights or property rights, or effective control over an obliged entity. "Control" under the Act is broadly defined and includes both direct and indirect means of exercising decisive influence over an obliged entity, not limited to shareholding but also encompassing rights, agreements and other forms of influence over management and key decisions.

Screening procedure

The foreign investor and/or the obliged entity (i.e. the Croatian company or entity in which the investment is made) must notify the Ministry of Finance before completing a foreign investment that meets the qualifying holding or control thresholds. Notification is also required for all types of concessions, public-private partnerships and certain other arrangements where a foreign investor is involved. 

Key timetable and steps

• Before registration/completion:
  • The applicant (foreign investor or obliged entity) must apply for approval of the foreign investment to the Ministry of Finance before:
    • registering the entity in the court register;
    • adopting a decision on granting a concession;
    • concluding a concession or public-private partnership contract;
    • any entry in the Central Depository and Clearing Company (CDCC) depository.
  • The application can be submitted by registered mail or electronically.
    
    
• Upon receipt of the application:
  • The Ministry of Finance will conduct an administrative check of the application to verify completeness and eligibility.
    • Deadline: Up to 30 days from submission (can be extended to 60 days in certain cases).
      
      
• If the application is incomplete:
  • The Ministry of Finance will issue a request to supplement the application.
    • Deadline for applicant to respond: 8–15 days (specified in the request).
    • If not completed in time, the application will be rejected.
      
      
• If the application is complete:
  • The Ministry of Finance will forward the application to the Commission and National Contact Point.
    • Deadline: Within three days of determining completeness.
      
      
• National contact point:
  • The national contact point will notify the European Commission and other EU Member States of the application.
    • Deadline: Within three days of receiving the application.
      
      
• FDI Committee's opinion:
  • The FDI Committee must prepare and adopt an opinion on the investment's impact on security and public order.
    • Deadline: Within 90 days of receiving a proper application (can be extended by 30 days if additional information or checks are needed).
      
      
• Decision by the Ministry of Finance:
  • The Ministry of Finance will issue a decision on the application (approval or rejection).
    • Deadline: Within 120 days of receiving a valid application (or 150 days if the Commission's deadline was extended). 

Control mechanisms

Control bodies, including commercial courts, the Central Depository and Clearing Company, concession grantors and the competition authority, are tasked with preventing the completion of foreign investments without prior approval. The Ministry of Finance may also initiate ex officio reviews in cases of undeclared investments, suspected circumvention or risks to security and public order.

Various authorities, each competent in their respective sector, will be responsible for identifying obliged entities, maintaining and regularly updating a register of such entities, and submitting it regularly to the Ministry of Finance. Competent authorities will also be required to inform the obliged entities about their obligations under the Act. The register will not be publicly available.

Enforcement and sanctions

If a violation is found, the Ministry of Finance may revoke FDI approval and order the divestment of shares or rights within a maximum of nine months, during which the investor is restricted from exercising related rights. Judicial protection is available through administrative proceedings before the High Administrative Court of Croatia.

Transitional provisions

Procedures initiated prior to the entry into force of the FDI Act will be completed under the previous regime. Obliged entities must be identified within six months of the relevant regulation's adoption. The Act will also apply to investments made before its entry into force and such retroactive screening must be carried out by the authority within three years from the date the Act enters into force.

Under the current draft, transactions signed but not yet closed when the Act enters into force will be subject to the new screening and approval requirements, which must be fulfilled prior to closing.

Conclusion

The Act on Foreign Investment Screening introduces a comprehensive screening mechanism for foreign investments in Croatia, aligning national law with EU and OECD standards. However, it may also create significant uncertainty for companies in Croatia regarding investments made before the Act enters into force, as it does not specify clear limits on how far back such investments may be reviewed or how the Act's provisions will be applied to those companies.

Schoenherr is closely monitoring developments in this area and will promptly share any significant updates as they arise.  

authors: Ana Mihaljević*, Volker Weiss