License for Military Goods: Export, Import & Transit in the Netherlands
Category: Corporate law, Defence industry
Since June 1, 2023, the Investment, Mergers and Acquisitions Security Screening Act (Vifo Act) has been in force in the Netherlands. This law introduces a screening regime for changes of control in critical companies and technologies. The goal? To protect national security by reducing risks when strategic businesses or technologies fall into the wrong hands.
National security is interpreted broadly: it concerns the continuity of vital processes, the protection of strategic knowledge, and the prevention of undesirable dependencies.
Why Was the Vifo Act Introduced?
The Vifo Act arose from geopolitical tensions and incidents where Dutch knowledge and infrastructure attracted interest from foreign parties. The government wants to prevent vital companies or strategic technologies from ending up unnoticed in the hands of actors posing security risks. This applies not only to states but also to private parties under state influence.
Who Does the Vifo Act Apply To?
The law targets three categories of companies:
- Vital Providers
Operators of energy infrastructure, ports, nuclear facilities, and financial system players. - Companies with Sensitive or Highly Sensitive Technology
Products with both civilian and military applications, such as dual-use goods, high-end semiconductor technology, and quantum technology. - Business Campus Operators
Locations where public-private partnerships and technological innovation converge, such as the High Tech Campus in Eindhoven. For this group, a notification obligation already applies from a 10% stake.
The scope is broad: not only traditional infrastructure companies but also innovative start-ups and scale-ups developing technology relevant to defense or digital infrastructure.
When Is Notification Required?
A notification is required when an investor crosses a control threshold through a transaction:
- Vital providers and sensitive technology companies: from 25% of voting rights.
- Highly sensitive technology: notification required from 10%, and again at 20% and 25%.
Influence through other rights—such as appointment or veto rights—can also trigger notification. The law looks beyond share percentages to actual control.
Expansion of the Vifo Act in 2025
Although the law has only been in effect since June 2023, an expansion has already been announced. At the end of 2024, a consultation began on six new technology areas:
- Biotechnology
- Artificial Intelligence (AI)
- Nanotechnology
- Advanced Materials
- Sensor Technology
- Medical Nuclear Technology
These sectors are considered crucial for the geopolitical position of the Netherlands and Europe. The expansion, expected by the end of 2025, will result in:
- 125 additional notifications per year
- 1,700 extra companies falling under the regime
For biotech firms, AI start-ups, and companies in advanced materials, this means transactions that are currently unrestricted will soon require prior approval under a Vifo screening.
Impact on Entrepreneurs and Investors
The expansion has major implications:
- Longer timelines and additional conditions will become the norm.
- Notification obligations will become a standard part of the transaction process.
- Preparation and legal advice are essential to avoid delays and penalties.
For companies seeking capital, it’s important to realize that foreign investors will only have certainty after screening is complete. For investors, additional compliance and longer processes are inevitable.
Conclusion
The Vifo Act significantly changes the rules of doing business in the Netherlands. Where mergers and acquisitions were once primarily assessed under competition and corporate law, national security is now an independent standard. Companies in vital or strategic sectors must seek timely advice.
Need advice? Blenheim’s lawyers have extensive experience with investment screenings and can assist you in preparing and structuring transactions under the Vifo Act. Contact us to discuss what this expansion means for your business.