17 years after Bulgaria’s membership in the European Union, the court in Luxembourg canceled the last restriction for EU citizens to acquire agricultural land in Bulgaria.
All obstacles to this should have fallen back in 2014, but instead, with changes to the Law on the Ownership and Use of Agricultural Lands (ZSPZZ) contrary to the Treaty on the Functioning of the EU (TFEU), the state has put up a new barrier, says Lex. This happened with the adoption of a text in the ZSPZZZ, which stipulates: “The right of ownership of agricultural land can be acquired by natural or legal persons who have resided or been established in the Republic of Bulgaria for more than 5 years”. This rule did not only apply to inheritance by law.
On Thursday, however, the Court of Justice of the EU ruled that European norms do not allow “legislation of a Member State under which the acquisition of the right of ownership of agricultural land located on its territory is conditioned by the requirement that the acquirer of land has resided more of five years in that Member State’.
The background
Five years after Bulgaria’s accession to the EU, citizens of the Union and of the countries in the European Economic Area (EEA) received the right to acquire non-agricultural land in the country. Since 2012, they and the companies they have registered in Bulgaria, as well as foreign companies from EU and EEA countries, can own non-agricultural land.
For agricultural land, the restrictions were supposed to be removed from January 1, 2014. Instead of that happening, a new requirement was introduced with a text from the ЗСПЗЗ for all those who want to acquire it – to have resided in Bulgaria for at least 5 years. The rule that introduces this provision is common to all citizens – Bulgarian and foreign, and it follows that natural persons who have not resided or been established in Bulgaria for at least the last 5 years do not have the right to acquire agricultural land with any to be a kind of deal. As for legal entities, the requirement to register at least 5 years before the acquisition of the land can be overcome if the partners (or the founders of AD) meet the residency or establishment requirements.
The text in the ZSPZZ is a proposal of MPs from the BSP, and there are no reasons for the introduction of the restriction in their bill. In 2014, President Rosen Plevneliev vetoed the change, noting that, in practice, the provision provides for an impermissible restriction on Bulgarian citizens by introducing a residency requirement. For EU citizens, he emphasizes that Bulgaria cannot, after the date of its accession to the Union, introduce additional restrictive conditions for the acquisition of land, because it unilaterally limits the right of establishment.
After the final adoption of the provision in the law, the European Commission started a criminal procedure.
Today’s decision of the CJEU, according to which the norm will no longer be applied, was reached because of a preliminary inquiry by the District Court in Burgas. It is a case of an Austrian against the son of his Bulgarian friend and three fields in Burgasco.
The decision of the CJEU
Before coming to the conclusion that the provision of the CPA is incompatible with EU law, the Luxembourg court examines the purposes for which the provision was adopted. They were presented to him as follows by RS-Burgas: “…introducing restrictions on investments in Bulgarian agricultural lands, this national provision aims to ensure that these agricultural lands will continue to be used in accordance with their purpose. This jurisdiction specifies that speculative transactions in agricultural land, as well as the sale of such to foreign investors whose purpose is to use the land for other purposes, would lead to a significant reduction in arable land, as well as the associated disappearance of both the small, as well as the large Bulgarian agricultural producers”.
The CJEU states that although such objectives are in themselves of general interest and may justify restrictions on the free movement of capital, these restrictions must nevertheless be appropriate and actually lead to their achievement. In the decision, it was found that the provision in question of the ZSPZZZ only provides for an obligation to reside, and not an obligation to exploit the property personally. “Consequently, it turns out that such a measure in itself is not of a nature to guarantee the achievement of the stated goal that the agricultural lands located on Bulgarian territory continue to be used in accordance with their purpose”, concludes the CJEU.
Having established that the measure does not in practice achieve the intended goals, the CJEU undertakes to verify its proportionality. “For the purpose of this assessment, account must be taken of the fact that the stated obligation restricts not only the free movement of capital, but also the right of a person to freely choose his residence, which is guaranteed to him by the European Convention for the Protection of Human Rights and basic freedom,” the court stated. And it concludes that the residency requirement is particularly restrictive.
The decision also comments on the possible other measures with which Bulgaria could limit the acquisition of agricultural land for speculative purposes and ensure that it will be used for its intended purpose. Examples of such have been given by the European Commission – “measures which introduce, for example, higher taxes on transactions for the resale of agricultural land soon after they are acquired, or the requirement for a significant minimum term of agricultural land rental contracts” .
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2024-01-19 22:40:43
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