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As of March 11, 2024, the Amendments and Supplements Act to the Investment Promotion Act (hereinafter referred to as the “Act”) entered into force in accordance with Regulation (EU) 2019/452, introducing for the first time a mechanism for screening direct foreign investments. This mechanism represents an authorization regime through which certain foreign investors are required to pass when intending to make a new investment or expand an existing one in the country. The aim of the screening mechanism is to ensure that foreign investments contribute to the economic and social progress of the country without compromising its sovereignty and security. Given the increasing globalization and competition in the global market, the introduction of this mechanism is crucial for protecting national interests and the security of the country.

What is a direct foreign investment?

A direct foreign investment is an investment of any kind by a foreign investor aimed at establishing or maintaining lasting and direct ties between the foreign investor and the entrepreneur or enterprise to whom or which the capital is made available, to carry out an economic activity in a Member State, including investments which enable effective participation in the management or control of the company carrying out the economic activity.

Which foreign investments are subject to prior approval by the Interdepartmental Council for Screening?

Article 27 of the Act provides that direct foreign investment may be made by the foreign investor only after obtaining approval from the newly established Interdepartmental Council for Screening of Foreign Direct Investments if the subject matter falls within the areas listed in Article 4(1) of Regulation (EU) 2019/452 and subject to one of the following conditions:

  • Acquisition of ownership of at least 10% of the capital of an enterprise operating in the country, or the value of the investment exceeds the threshold of EUR 2,000,000 or the equivalent in Bulgarian lev;
  • Acquisition of ownership of at least 10% of the capital of an enterprise operating in the country and engaged in high-tech activities;
  • Implementation of a new investment exceeding the threshold of EUR 2,000,000 or the equivalent in Bulgarian lev.
  • The Act also provides for foreign investments that do not meet the above general conditions but are nevertheless subject to prior approval.

Scope of regulated investments

The scope of investments is exhaustively set forth in Article 4 of Regulation (EU) 2019/452. It mandates screening of so-called “critical technologies,” such as artificial intelligence, robotics, cybersecurity, etc. The Act contains a specific provision for high-tech companies in sectors related to security and public order, where the only difference from other investments lies in the screening thresholds. However, high-tech investments from low-risk countries are also exempt from screening, so our technology industry will not face an increased administrative burden in attracting capital.

Procedure for applying for issuance of a permit

The procedure for issuing a permit begins with the submission of an application by the foreign investor for the issuance of a permit through the Bulgarian Investment Agency to the Interdepartmental Council for Screening. The application is submitted in Bulgarian with a translation into English.

The proceedings may also commence ex officio upon receipt of an opinion from the European Commission or a signal. In such cases, screening may also be conducted on investments that have already been made and initiated up to two years before the receipt of the opinion or signal.

The period for consideration of the investment by the Interdepartmental Council is 45 days, and with its decision, it may be extended once by up to 30 days. The proceedings conclude with the issuance of a decision by the Interdepartmental Council for Screening, approving, restricting, or rejecting a particular investment if it is deemed a threat to national security or other essential interests of the country.

Decisions must be reasoned and proportionate, not blanket and excessive. Although these may seem declarative texts at first glance, they provide more assurance that in a judicial process, it will be in favor of the investor if a state authority has lawfully restricted a given investment.

The screening council will publish data on the screening applications received and the decisions it has made. This will allow monitoring of the screening process and whether it is overly restrictive.

Article 27(10) provides for an option of tacit consent within the meaning of Article 28 of the Act Restricting Administrative Regulation and Administrative Control over Economic Activity. This means that in the absence of a decision within the specified period by any of the specified means, the investment is considered approved.

The decision constitutes an individual administrative act, subject to judicial review.

In the transitional and final provisions of the Act, it is provided that no application for prior approval is submitted concerning direct foreign investments initiated after its entry into force and until the bringing into compliance with it of the subordinate legislation. In this way, the initial implementation of the new regime is postponed by up to 6 months, as the deadline for the adoption of regulations on the organization and activities of the Interdepartmental Council for Screening and the amended regulation for the implementation of the law is 6 months.

Screening Mechanism

The screening mechanism for direct foreign investments in Bulgaria involves various administrative and legal procedures carried out by the competent authorities of the country. These procedures vary depending on the specific circumstances of the investment and the potential risks it may pose.

The changes in the law regarding foreign investments and the implementation of the national mechanism for screening direct foreign investments in Bulgaria will have various impacts on foreign investors and the national economy. Here are some of the possible effects:

Increased transparency and predictability: Foreign investors will need to adapt to new rules and procedures related to investment screening. This may lead to a greater demand for transparency and predictability in planning and implementing investment projects.

Increased administrative costs: The introduced procedures for screening direct foreign investments may lead to additional administrative costs for investors, as they will need to provide additional documentation and participate in various approval processes.

Possible restrictions on certain sectors: The introduction of a screening mechanism will lead to stricter restrictions on some strategically important sectors, such as energy, telecommunications, transportation, and others. This is expected to affect the plans of foreign investors in these areas.

Greater clarity and transparency: The new legislative changes are likely to establish clearer and more transparent procedures for screening foreign investments. This may provide greater security and clarity for foreign investors regarding the requirements and procedures that will follow.

Encouragement of sustainable investments: Stricter screening procedures may encourage the attraction of sustainable and responsible investments that contribute to the long-term economic development of the country.

Increased investment security: Through improved screening procedures and clearer criteria for investment approval, foreign investors may feel more secure and confident in their investment decisions in Bulgaria.

Like any legislative change, this amendment to the law of foreign investments may have both positive and negative consequences depending on the specific circumstances and context of investment projects.


For violations, the new Act provides for significant sanctions – a fine or pecuniary sanction amounting to 5% of the value of the investment, but not less than BGN 50,000. Types of violations include:

  • Providing inaccurate, incomplete, or misleading information in an application for approval of a direct foreign investment;
  • Undertaking a direct foreign investment without an issued permit under the conditions of this Act;
  • Carrying out direct foreign investment in violation of the conditions of a conditional permit issued;
  • Non-compliance with an imposed restrictive measure.

In conclusion, the National mechanism for screening direct foreign investments in Bulgaria represents an important step towards protecting the country’s strategic interests in the context of globalization and intensive foreign investments. This mechanism not only ensures the security of the country but also supports sustainable economic development by attracting quality and socially responsible investments.

Published on: 27/03/2024

Atty. Dimitar Petrov

Partner Dimitar Petrov has been a practicing lawyer since 2016 and has many years of experience as a legal consultant in several large commercial companies. Lawyer Petrov specializes in civil and administrative litigation. His areas of expertise include contract law, property law, family law, tort law and copyright protection. He has extensive expertise and a large number of successful court proceedings against utility monopolists. His interdisciplinary approach enables him to successfully defend both of these in a single dispute. He is a PhD candidate at the Department of General Theory of Law at Sofia University. Kliment Ohridski", as well as a lecturer in General Theory of Law at Sofia University "St. Kliment Ohridski". Kliment Ohridski". Working languages: Bulgarian, English, French and Russian.

Violeta Velkova

Violeta Velkova has been an associate at Georgiev & Petrov Law Firm since the end of 2022. She has a strong interest in private international law and intellectual property.