We are pleased to share our latest commentary on the practical implications of the newly introduced FDI screening framework in Greece, with a particular focus on transactions involving assets in borderline areas.
The analysis highlights the emerging challenges arising from the parallel application of Law 5202/2025 and Law 1892/1990, and their combined impact on foreign investment, legal certainty, and transaction efficiency.
In June 2025, we released a newsletter about the recent enactment of Law 5202/2025 on the screening of foreign direct investments (FDI), which undoubtedly constitutes a significant step towards aligning the Greek legal framework with European trends and safeguarding national and financial security.
In that newsletter, we expressed our concerns regarding the practical coexistence of this new regime with the pre-existing framework of Law 1892/1990, which governs approvals for transactions involving assets located in borderline areas. We noted that the parallel application of the two regimes creates a complex regulatory landscape in such areas, particularly in the sensitive sector of tourism, and highlighted the need for institutional coordination and a clear allocation of responsibilities among the competent authorities to avoid overlaps and ensure legal certainty for investors.
These concerns now appear to be materializing in practice. Foreign investors interested in acquiring shares in companies holding real estate assets in borderline areas are effectively subject to two parallel procedures, each based on different screening criteria. On the one hand, Law 5202/2025 introduces an investment screening mechanism grounded in considerations of public order and security. On the other hand, Law 1892/1990 requires prior authorization for transactions involving assets in designated areas, constituting a prerequisite for the validity of the underlying legal transaction. However, in practice, both processes impose extensive and largely overlapping filing requirements, focusing on the identity of the investor and the structure of the transaction.
While this distinction is conceptually clear, it does not mitigate the practical outcome: the cumulative application of the two regimes results in a system of “dual control”, without any evident institutional alignment or procedural coordination. The requirement to submit parallel applications to different authorities, operating under distinct criteria and often divergent timelines, adds complexity, increases administrative burden, and creates uncertainty, potentially leading to delays and higher transaction costs.
For legal advisors, this framework necessitates enhanced due diligence and more sophisticated regulatory risk management. For foreign investors, it translates into extended timelines, increased costs, and potential disruption of the commercial balance of investments, especially where timing is critical, as in the tourism sector.
The issue is not the existence of regulatory oversight, which is both legitimate and, in certain sectors, necessary. Rather, the question is whether its current fragmented structure effectively serves its intended purpose. In the absence of a unified, or at least coordinated, mechanism, there is a tangible risk that the pursuit of security may operate as a de facto disincentive to investment.
In an increasingly competitive international environment, where speed and legal certainty are key factors in investment decision-making, a “two-speed” control system may ultimately undermine the attractiveness of the Greek market, particularly for non-EU investors.
Against this background, in our opinion there is a clear need to reassess the current framework and move towards a more coherent and functionally integrated control mechanism.
AUTHORS
Amalia Balla
Partner, Head of Real Estate
aballa@papapolitis.com
Kassiani Flaouna
Associate
kflaouna@papapolitis.com