European Commission opens infringement procedure against Bulgaria over restrictions against selling land to foreigners

The European Commission said on March 26 that it had opened an infringement procedure against Bulgaria on what the commission termed investor restrictions for agricultural land.

The announcement said that infringement procedures also had been opened against Hungary, Lithuania and Slovakia on the same grounds.

Bulgaria has legislated restrictions on the sale of agricultural land to non-EU foreign individuals and companies, although the country recently backtracked on a provision for huge fines for public companies with non-EU shareholders, and offshores, found owning agricultural land after May 1 2015.

The issue of banning foreigners from owning agricultural land in Bulgaria had been pushed mainly in recently years by nationalist and populist political forces, but made it on to the statute books with the backing of members of more mainstream parties.

The EC said that it had decided to formally request Bulgaria and the other three countries to “submit their observations” on their laws regulating the acquisition of agricultural land.

“These laws contain several provisions which, under EU law, may be considered to restrict the free movement of capital and freedom of establishment,” the EC said.

“Any restriction of these basic Treaty freedoms must be duly justified and comply with the principles of non-discrimination and proportionality. While member states are permitted to set their own rules to promote rural development, to keep land in agricultural use and avoid speculative pressure on land prices, this must be done within the limits of EU law,” the EC said.

In the Commission’s view – in its statement covering all four countries – the provisions in question also contain certain restrictions that may leave room for discriminatory treatment of investors from other member states.

These include a residence requirement in the given country; restrictions on persons without a local residence or previous local business activities; various restrictions on persons lacking professional knowledge, on ceding the use of land or on legal persons, as well as legal uncertainty related to the prior approval of sales contracts.

The Commission’s requests take the form of a letter of formal notice, the first stage of infringement procedures under Article 258 of the Treaty on the Functioning of the European Union. Bulgaria and the other three countries have two months to respond.