The Decree on the Scope of Sensitive Technology (in Dutch: Besluit toepassingsbereik sensitieve technologie, hereinafter: the Decree) specifies which technologies fall under this classification ‘sensitive’. In December 2024, the government announced a proposed expansion of the scope, further tightening the Decree. In this context, a consultation procedure was initiated, which has been completed.
This contribution discusses the scope of the Vifo Act, the definitions and delineations of sensitive and highly sensitive technologies, and the practical implications of the proposed expansions. It also addresses the relevant European and national policy developments that prompted these changes.
Scope of the Vifo Act
The security screening under the Vifo Act applies to investments, mergers and acquisitions involving critical providers or undertakings with sensitive technology. Critical providers are private entities that perform essential processes and are not already subject to another statutory screening framework, such as banks or port operators.
The legislation also applies to companies that possess sensitive technology known to pose a risk to national security if it falls into the wrong hands. Such technologies are characterised by their potential strategic importance or their relevant applications within security-critical domains.
Investments that lead to a change in the control structure of such entities must be reported to the Investment Screening Bureau (in Dutch: Bureau Toetsing Investeringen, hereafter: BTI). The BTI assesses whether the transaction poses a risk to national security. If such a risk is identified, conditions may be attached to the transaction, or, in extreme cases, the transaction may be prohibited.
Definition of sensitive technology – alignment with the Dual-Use Regulation
Article 8 of the Vifo Act defines sensitive technology as technologies that require an export licence under the European Dual-Use Regulation (Regulation (EU) 2021/821), as well as military goods as defined in the 2012 Strategic Goods Implementation Regulation. The Dual-Use Regulation contains an extensive list of technologies that can be used for both civilian and military purposes.
The Decree excludes certain items from the classification “sensitive”, while explicitly designating others. Sensitive technology includes, among other things, technologies essential to defence, intelligence and security services, or those critical to the availability of strategic products and processes in the Netherlands and its allies.
Annex 1 of the Decree lists the exceptions to the classification “sensitive technology”, referring to specific Export Control Number (hereafter: ECN) in the Dual-Use Regulation. Annex 2, on the other hand, lists technologies that are considered sensitive regardless of whether they appear in the Dual-Use Regulation, including quantum technology, photonics technology and semiconductor technology. Annex 3 provides a detailed list of technologies considered highly sensitive.
The Dual-Use Regulation is structured by categories (0 to 9) and sections (A to E), with each ECN providing a specific technical description. Interpretation of these provisions requires specialised knowledge due to the complex structure of references, technical notes and guidance.
Proposed expansion of the Decree
The proposed amendment to the Decree entails an expansion of Annex 2 with new sub-technologies. In addition, several technologies already classified as sensitive—such as in the fields of information security and satellite communication—are now reclassified as highly sensitive.
The proposed expansion includes, among others:
- Technology for advanced materials with applications in energy storage and 2D materials;
- High-entropy alloys (alloys consisting of at least five chemical elements);
- Specific AI applications for identification, deepfakes, geospatial analysis, military use, and autonomous navigation;
- Biotechnology, including synthetic cell technology, stem cell technology, gene editing and genomics;
- Nanotechnology, including micro-/nano reactor technology;
- Sensor and navigation technology (e.g. SLAM, sensor fusion, signature management);
- Medical nuclear technology.
Rationale and context for the expansion
The expansion is partly driven by developments at the European level, including the publication of the European Economic Security Strategy (EES Strategy) and the proposal to revise the screening of foreign direct investments. At the national level, an interim evaluation of the Vifo Act was promised following a parliamentary motion.
Technological innovations such as artificial intelligence and biotechnology have a major impact on the security environment and require a dynamic regulatory framework. Since such technologies do not always (or not timely) appear on export control lists, it is necessary to bring them explicitly within the scope of the Vifo Act.
Practical implications
Undertakings involved in highly sensitive technologies are subject to stricter reporting obligations. Due to the expansion of the Decree, a broader group of undertakings will soon fall under the BTI’s screening regime. This applies in particular to sectors such as the medical and biotechnological industry, chemicals, IT security, but also to less obvious sectors such as gaming, consumer electronics and telecom.
If the BTI concludes on the basis of a notification that risks are present, a more in-depth assessment may be carried out. This may result in risk mitigation measures or a prohibition of the proposed transaction.
Outlook
The consultation phase has concluded and the responses submitted are currently under review. While generally positive, the responses also highlight points of attention, such as the expected increase in notifications and the need for a level playing field within the European Union.
The planned entry into force of the amendment is expected in the second half of 2025.