Luxembourg's investment screening regime has changed materially. A revised legislative framework, effective from early 2025, introduces mandatory pre-notification requirements for a broad range of foreign investments in sectors the government classifies as strategically sensitive. For international companies with existing or planned positions in Luxembourg. whether through direct acquisition, investment fund structures. Alternatively. Holding entities such as a SOPARFI (société de participations financières. a Luxembourg holding company). the window for compliance preparation is narrow. Failure to notify before completing a transaction can result in suspension of the deal, unwinding orders, and administrative penalties.
Luxembourg's new foreign investment screening rules require non-EU investors. and, in certain cases. EU-domiciled vehicles with non-EU ultimate beneficial ownership. to notify the competent national authority before closing transactions that cross defined ownership thresholds in sensitive sectors. The notification obligation is triggered at the point of signing, not at closing. Companies that fail to file a complete notification before the statutory deadline face the risk of transaction suspension and potential unwinding by order of the Tribunal d'arrondissement (Luxembourg district court).
This alert explains what changed, which business categories are affected, the applicable thresholds, the compliance deadline, and the immediate steps international companies should take now.
What changed and when it took effect
Luxembourg transposed the EU Foreign Direct Investment Screening Regulation into national law through dedicated investment screening legislation. The revised rules, which entered into force in early 2025, go beyond minimum EU requirements in two important respects.
First, the scope of covered sectors is wider than the EU baseline. Luxembourg has designated critical infrastructure, financial services, investment fund management, data processing, and dual-use technology as sensitive sectors subject to mandatory review. This means that transactions involving licensed entities – including operators supervised by the Commission de Surveillance du Secteur Financier (CSSF – Luxembourg's financial sector supervisory authority) – now fall within the screening perimeter automatically.
Second, the notification is pre-closing and mandatory, not voluntary. Under the prior regime, voluntary notification was encouraged but rarely enforced. Under the new rules, the competent ministry must receive a complete notification file before the transaction closes. The review period runs from the date the notification is deemed complete. If the authority does not act within the prescribed review window, the transaction is deemed cleared by default – but only if the notification was filed correctly and on time.
The Cour de cassation (Luxembourg's highest court of ordinary jurisdiction) has confirmed that procedural defects in notification filings do not suspend the review clock. This means incomplete submissions restart the countdown and can cause material delays at the worst possible moment in a deal timeline.
Who is affected: thresholds and business categories
The notification obligation applies to any transaction by which a foreign investor acquires, directly or indirectly, control or a significant ownership interest in a Luxembourg entity operating in a covered sector. The key threshold criteria are:
- Acquisition of control – regardless of percentage ownership – over a covered entity
- Acquisition of voting rights or economic interests reaching or exceeding defined ownership bands in a covered entity
- Any restructuring that results in a non-EU entity obtaining ultimate beneficial ownership of a previously EU-controlled covered entity
- Indirect acquisitions through investment fund structures, including those structured as a SICAR (société d'investissement en capital à risque – a Luxembourg risk capital investment company), where the underlying asset is a covered-sector entity
The rules apply to investors from outside the EU. They also apply to EU-domiciled vehicles – including Luxembourg SOPARFI holding companies – where the ultimate beneficial owner is a non-EU national or entity. Practitioners note that this "look-through" approach catches a large share of private equity and venture capital structures routed through Luxembourg for tax or regulatory efficiency reasons.
Financial sector entities supervised by the CSSF are automatically within scope. This includes licensed investment fund managers, credit institutions, payment institutions, and entities involved in securities offering or IPO-related activities where a prospectus has been filed or is in preparation. Disclosure obligations arising under capital markets legislation do not replace or delay the screening notification – both sets of requirements run in parallel.
For international companies structuring transactions through Luxembourg for listing requirements or as part of a broader capital markets strategy, the interaction between CSSF-regulated disclosure obligations and the new screening rules deserves early attention. A transaction that is compliant from a prospectus and securities offering perspective may still require a separate screening notification. Our capital markets practice in Luxembourg advises on both sets of requirements in an integrated manner.
To discuss whether your transaction or investment structure triggers a notification obligation, contact us at info@ferrazwhitmore.com.
Immediate action items for international companies
Companies with pending or recently closed transactions in Luxembourg should act on the following points without delay.
Map your Luxembourg exposure. Identify all entities in your group that are incorporated or licensed in Luxembourg and operate in a covered sector. This includes SOPARFI holding companies with downstream interests in sensitive-sector operations, SICAR vehicles with Luxembourg-based portfolio companies, and CSSF-supervised entities at any level of the group.
Apply the look-through test. If any Luxembourg entity in your structure has non-EU ultimate beneficial ownership, treat the notification requirement as presumptively applicable. Do not rely on the EU domicile of an intermediate holding company as a safe harbour – the new rules pierce intermediate layers.
Audit transaction timelines. If a transaction was signed after the effective date of the new rules but before a notification was filed, seek legal advice immediately. The risk of a deemed-void closing is real. Lawyers in Luxembourg with experience before the Tribunal d'arrondissement report that the competent authority has begun issuing compliance enquiries to parties who closed without notification.
Prepare a complete notification file before signing. The notification file must include corporate ownership charts, financial information, sector classification analysis, and a description of the transaction rationale. Incomplete filings restart the review clock. Allow at least four to six weeks for file preparation in complex group structures.
Coordinate with your banking and finance advisers. Transactions involving credit facilities, bond issuances, or regulated financing structures may require parallel approval from the CSSF. The screening notification does not substitute for those approvals. Our banking and finance practice in Luxembourg can coordinate both workstreams. For a parallel comparison with investment screening developments in other EU jurisdictions, see our alert on investment screening changes in Portugal.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our capital markets and investment funds practice covers Luxembourg's full regulatory environment – from CSSF-supervised entities and investment fund structuring to foreign investment screening compliance and securities offering work. We advise international entrepreneurs, institutional investors, and in-house legal teams on cross-border transactions that require both civil law precision and common law-informed deal discipline. The firm's Luxembourg practice includes practitioners with experience before the CSSF and in coordinating multi-jurisdictional notification processes under EU investment screening rules. As an international law firm with deep Luxembourg expertise, Ferraz & Whitmore helps clients build compliant structures from the outset. To discuss your Luxembourg investment screening exposure, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.