- Introduction
With the enactment of Law 5202/2025 (Government Gazette A’ 84/23.05.2025), entered into force on 23 May 2025, Greece introduced a regulatory framework for the screening of Foreign Direct Investments (FDI), likely to affect security or public order, in alignment with Regulation (EU) 2019/452—five years after its adoption.
The primary objective of this legislative initiative is to establish a national mechanism for the assessment of FDIs in Greece, aiming, on the one hand, to safeguard national security and public order through the protection of assets of strategic importance and, on the other hand, to enhance the country’s attractiveness as an investment destination.
According to art. 4 par. 1 of Regulation (EU) 2019/452, each member state was given the discretion to determine the categories of foreign investments that are likely to affect security or public order.
Within this context, the Greek State, by means of Law 5202/2025, opted to regulate thereunder -among others- investments for tourist accommodations in borderland areas, introducing significant amendments on the existing licensing process. These changes are of particular importance to international investors interested in the tourism sector.
Below, we set out a preliminary analysis of this new regime, especially in comparison to Law 1892/1990, which regulates the acquisition of immovable property in borderland areas.
- Definition of Foreign Investment Under Law 5202/2025
Law 5202/2025 applies only to “foreign investors”. Such term is defined in law through reference to Regulation (EU) 2019/452. However, there is an evident lack of clarity regarding the substantive criteria that would determine whether an investor falls under this category (e.g. whether the real or statutory residence of the investor will be taken into account), which might give rise to legal uncertainty.
Also, said law requires a minimum of 10% participation of the foreign investor in the target company. This criterion applies both to investors from third countries, but also to investments made through EU-based subsidiaries, ultimately controlled by non-EU persons. Nevertheless, the methodology for calculating the percentage of participation remains undefined.
In addition to the numerical threshold, law also provides that de facto control exercised through extra-corporate arrangements (e.g., shareholder agreements) is also taken into account in the assessment of the participation of a foreign investor, without specifying though qualitative or quantitative thresholds for determining such control.
III. Comparative Overview with Law 1892/1990
The new framework appears to limit its scope only to investments made through share deals, i.e. through acquisition of shares or equity interests. On the other hand, Law 1892/1990 applies to both asset and share deals.
Furthermore, Law 5202/2025 seems to apply exclusively to investments in tourism. Therefore, investments in other types of real estate (e.g., commercial, logistics, residential) in borderland areas do not appear to fall under the scope of the new law but remain subject to the provisions of Law 1892/1990. At this point, a further interpretive gap in Law 5202/2025 should be highlighted: it is unclear whether such law applies not only to investments in existing tourist accommodations but also to real estate assets which, through future development or conversion, turn into tourism assets.
Regarding the licensing process, under Law 1892/1990, transactions involving real estate in borderland areas are authorized by a decision of a special committee comprising the General Secretary of the competent Decentralized Administration and representatives of the Ministries of National Defense, Development, and Citizen Protection. For transactions involving non-EU legal entities and the Hellenic Republic Asset Development Fund (HRADF), authorization is granted by a decision of the Minister of National Defense, upon application by the interested investor.
On the other hand, Law 5202/2025 introduces, for the first time, a national screening mechanism for foreign investments in borderland areas, with the involvement of specially authorized bodies competent to assess the investment, under the consideration of national security and public order. The investor’s application is submitted to the Interministerial Committee for the Screening of Foreign Direct Investments (I.C.S.F.D.I.), which includes, at a minimum, the Ministries of Foreign Affairs and Development. Where an in-depth investigation is deemed necessary, the file may be forwarded for opinion to the Commission and other Member States. A screening decision on the investment is issued by the Minister of Foreign Affairs within an indicative timeframe of 30 days following the ICSFDI’s recommendation. Should a period of 60 days elapse without a screening decision, the investment shall be deemed approved by default.
- Conclusions
The coexistence of Laws 5202/2025 and 1892/1990 creates a complex regulatory framework for the screening of foreign direct investments, particularly in the sensitive context of tourism in borderland regions. The new law seeks to align Greek domestic legislation with Regulation (EU) 2019/452 by introducing an enhanced screening mechanism that approaches national security and public order through an investment perspective. However, to ensure effective implementation and institutional balance, it is essential to provide clear interpretive guidance on key concepts, such as the definition of “tourist accommodation”, the calculation of foreign investor participation, and the determination of de facto control.
Moreover, institutional coordination and a clear allocation of responsibilities among the competent authorities are required to prevent overlaps with the regime of Law 1892/1990 and to ensure legal certainty for investors. Only through mutual reinforcement and careful harmonization of the two frameworks can the dual objective be achieved: the protection of critical national interests and the preservation of the country’s attractiveness as an investment destination.
AUTHORS
Amalia Balla
Partner, Head of Real Estate
aballa@papapolitis.com
Kassiani Flaouna
Associate
kflaouna@papapolitis.com