Tag Archives: moratorium

Extension Of Moratorium On Acquisition Of Farmland By Foreigners As Impossible As Inefficient

22 October 2013 | 02:03 | FOCUS News Agency Home / European Union Sofia.  Protesters in front of the Agriculture Ministry insisted for an extension of the ban on the acquisition of farmland by foreigners. This is also the “solution” to the problem that Bulgarian politicians came up with, even though it is as impossible as inefficient, the Sega daily comments. Other Eastern European countries agreed such moratoriums at their EU accession. The motive was that the price of agricultural land was very low there and foreigners could easily “snatch it from under the nose” of the needy local citizens. However, prices in Bulgaria are still low. The average price per decare is €440 in Bulgaria compared to €1,430 in Italy and €2,930 in the Netherlands. Weeks prior to the end of the moratorium the Agriculture Ministry sent a letter to the European Commission (EC) asking for an extension. The EC promised to answer within a month. Its response is, however, clear in advance – according to Bulgaria’s EU membership treaty it must lift the ban in 2014. The EC will also probably remind Bulgaria of the report it sent in 2010 containing recommendations for safeguard measures it could undertake. They are no different from what other EU member states did. For example, Spain has limited foreign stakes in the land belonging to one village to 15%. Greece introduced restrictions for the acquisition of farmland in border regions, Sega daily comments further. The Sega daily also reported that the EU has turned down a request by Romania to extend the ban on the sale of farmland to foreigners, quoting ITAR-TASS. The moratorium on the sale of farmland to foreign physical persons is virtually formal, as they can always register as juridical persons, the Duma daily comments. According to most experts the expiration of the ban will not produce a considerable effect as since Bulgaria’s EU accession foreigners received the right to buy land under the condition of setting up a joint-stock company with capital of BGN 2. Foreign investments in agricultural land in Bulgaria amount to below 0.2% for the past seven years since its EU entry, according to data from the latest report of the World Bank, as cited by the Institute for Market Economics. Experts note the reason behind the scepticism of foreign investors is the confusion with land management in Bulgaria. Continue reading

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Ukraine: Article "Update On Foreign Investment In Ukrainian Agricultural Land"

Last Updated: 23 May 2013Article by Galina Khmarksaya Frishberg & Partners The moratorium on alienation of Ukrainian farm land has long prevented meaningful foreign investment into the Ukrainian agricultural sector. To somehow obtain access to agricultural land, instead of outright ownership foreign investors had to register Ukrainian companies that entered into lease agreements with landowners, most with a “right to buy” option if and when the moratorium will be lifted. However, if the current amendments to the legislation will be approved, the lifting of moratorium will not allow any legal entities to purchase their leased land despite any provisions to the contrary in their lease agreements. To add insult to injury, the suggested taxes and other mandatory payments to the state, will decrease any profits generated from the leased land. By way of background, at the end of 2012, the Verkhovna Rada (the Parliament) adopted Law №11315, further extending the moratorium on selling agricultural land until January 1 st , 2016, right after the next Presidential elections. Under the draft law, privatization of farm land will benefit the Ukrainian government first and foremost, followed by select Ukrainian citizens. For instance, potential buyers of farm land can only be (a) the Ukrainian government; ( regional state authorities; © the State Land Bank; or (d) Ukrainian citizens. Moreover, only the first three categories have the priority right to purchase any agricultural land that is offered for sale. All individuals who wish to own more than 100 hectars will need to obtain permission from GosZemAgenstvo (the State Land Agency). This is a highly controversial requirement because it allows government bureaucrats to decide which Ukrainian individuals can own large parcels of farm land. Significantly, even after cancellation of the moratorium, all legal entities (including those with foreign investment) would only be able to lease farm land, rather than buying it outright. The minimum term has been proposed to increase from 5 to 7 years, while the maximum term would remain at 50 years. Moreover, the minimum amount of lease payments would increase dramatically: if the draft law passes, the minimum lease amount will be 3% of the land’s value. Additional land tax of 1% of the value of 1 hectar will also be levied. If the farm land is not used according to its zoned purpose, the above taxes will increase by 1.5 times, which will be further increased on a yearly basis by 20%. Taking the above into account, unfortunately, the Ukrainian agricultural sector would remain stagnant (yet stable) for foreign investors for the unforeseeable future. Besides prolongation of the moratorium on sale of agricultural land, foreign investors would still be prohibited from owning agricultural lands even after cancellation of the moratorium. Thus, lease arrangements will remain the only way for foreign investors to gain access to agricultural lands (including land for personal farming or gardening). By way of exception to the general rule, a foreign legal or natural entity may inherit agricultural land. However, even in such case, the land will be subject to alienation within one year from the time of inheritance; otherwise, the ownership rights thereto would be revoked. In conclusion, there still have been no significant movements in Ukraine towards the liberation of the agricultural land market for foreign investors. If the draft law is of any indication, foreign investors will still not be allowed to purchase Ukrainian farm land despite any “buy-out” options that may exist in their current lease agreements. Instead, all legal entities (including foreign-owned companies) will be required to seek alternative ways attain agricultural land on a temporary basis by entering into short, medium and long-term lease agreements. The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Continue reading

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