1. What is the current legal landscape for Foreign Direct Investment Law in your jurisdiction?

Up to the very end of 2025 Croatia was one of the last EU-member countries which did not introduce any FDI-screening regime. The main reason for this late introduction of the screening regime lies predominantly in the shallow economy which greatly needs substantial foreign investments to deepen the economy and in the obligation, as a member of EU, to implement EU Regulation 2019/452 on implementation of foreign direct investment screening framework. From 2014 (the first year after accession to the EU-membership) up to end of 2025 the total amount of FDIs was in the excess of EUR 30 billion (2021 being the record year with EUR 4,5 billion), where the average yearly amount is around EUR 3 billion. The structure of foreign investments was initially dominated by investment in banking and telecommunication sectors, whilst the investments in IT, pharmaceutical, services and financial sectors dominated in last few years. The largest investments came from Netherlands, Austria, Germany and Italy, that is, within the EU zone.

Since October 2025, Croatia has introduced FDI-screening regime by enacting the Act on Foreign Investment Screening (the “Act”). The main takeaways from the Act are the following:

• The Act applies to non-EU originated or controlled foreign investments in companies operating in critical sectors such as energy, health, defence, digital infrastructure, and similar, as well as to any kind of concessions and PPP arrangements.
• foreign investors must seek approval from the Ministry of Finance for investments involving the acquisition of 10% or more shares, voting rights, or control in a company. The verification process includes administrative checks, risk assessments, and collaboration with the European Commission and EU member states.
• The Ministry of Finance may unilaterally initiate control procedures for unreported foreign investments or those deemed risky. If violations are found, the Ministry can revoke approvals and order the sale of shares or assets within a specified timeframe (no longer than nine months).
• The Act applies retroactively; the screening regime applies on concerned foreign investments made three years before the Act entered into force, and the relevant investors are required to undergo the screening procedure as though their investments had been made after the Act came into effect.

The main stakeholders in the screening procedure are the Ministry of Finance and its special council (yet to be formed), another nine ministries, the Electronic Media Agency, the Croatian National Bank, the Financial Services Supervisory Agency and the commercial courts (which keeps companies records and register changes in ownership of companies). One of the main challenges in the screening procedure is coordination between all these stakeholders. This is, presumably, one of the main reasons as to why the screening procedure, as regulated by the Act, will be a time-consuming exercise which can take up to nine months.

However, in practice, the implementation of the Act at the beginning of 2026 is still lagging as various participants in the screening regime have reported a number of challenges and issues that must be resolved in order to establish a sensible and predictable regime. Some stakeholders have gone so far as to propose a temporary suspension of the Act until the end of 2026 to allow all outstanding issues to be settled in the interim.

2. What three essential pieces of advice would you give to clients involved in Foreign Direct Investment matters?

Currently, investments from non-EU countries remain in a state of uncertainty until these issues are resolved, whilst significant pressure from the business community is being exerted on all stakeholders to restore normal operations as expeditiously as possible. Accordingly, any investor contemplating an investment in Croatia should consult with local experts to determine whether its ownership structure involves any aspect of non-EU control that would trigger the screening regime. This is because the Act captures not only direct or indirect ownership or control at the first layer of the ownership structure, but also more remote aspects thereof. Moreover, the list of sectors subject to foreign investment scrutiny is not straightforward, as it cross-references other legislation (including the Act on Critical Infrastructure). Should such a preliminary assessment raise concerns regarding the potential activation of the screening regime, local legal experts may propose various solutions for optimising the investment structure to mitigate the uncertainty associated with the currently non-functional screening regime. This is particularly important given that the implementation of the FDI screening regime remains a moving target, with the situation evolving continuously as the relevant authorities establish precedents that serve as guidance for future cases. These precedents are not published but are disclosed only to those involved in the investment environment, such as lawyers, public notaries, and investment bankers. Consequently, ongoing communication with such advisers is essential to ensure the swift and seamless execution of transactions.

3. What are the greatest threats and opportunities in Foreign Direct Investment law in the next 12 months?

We anticipate that the situation described above will persist until the end of 2026, investors should remain mindful of these considerations for at least that period. On a positive note, it is still the fact that the most of foreign investments into Croatia originate from the EU-members and the said are implemented in an orderly manner, as it was since Croatia joined the EU.

4. How do you ensure high client satisfaction levels are maintained by your practice?

In our practice we are providing up-to-date information on the current situation regarding the FDI screening regime and requirements by way of a dedicated team of lawyers who are in constant contact with the Ministry of Finance, companies registry, public notaries and some other authorities. Through these contacts our team is gathering information on latest practices of screening bodies, exchange thoughts with the said players, and providing internal analysis of optimal structures and strategies to enable compliance with the screening regime in various situations and under various circumstances. However, as stated above, the crucial point is an early approach to our team to discuss the potential investment’s structures and optimal solutions.

5. What technological advancements are reshaping Foreign Direct Investment law and how can clients benefit from them?

One of the aspects of providing accurate and reliable solutions for FDI investment compliance is the use of IT solutions for gathering information from various ultimate beneficial ownership registers and company houses, which keep records available to screening authorities and wherefrom they can learn of potential non-EU aspects in ownership structures of potential investors. Further, the local authorities are establishing close cooperation with relevant counterparts in other EU-jurisdictions, which should also be taken into account in order to ensure consistency of investor’s information on its ownership structure with the information already available in other jurisdictions. Gathering such extensive information for our clients in preparatory phase of the investment from various sources across EU and other jurisdictions would not be possible without advanced use of IT technologies including artificial intelligence.