Will the foreigners be in the market of agricultural land in Ukraine ?

Whether foreigners will be in the agricultural land market in Ukraine – one of the most essential, debated and resonant questions that is a matter of public concernment: on one side - International Monetary Fund that betweenwhiles forward to further tranche reminds of promises to launch agricultural land market in Ukraine, on second side – owners of small land plots who still rely on gaining at least some funds from selling, on third side – large agriholdings being afraid to even imagine what the land innovations can bring to them.

As known, currently there are some restrictions on alienation of agricultural land plots had imposed by Law of Ukraine "On agreements on alienation of a land plot (plots)" and then prolongated by Land Code of Ukraine.

Particularly, it is prohibited purchase and sale or other alienation of land plots and change of the designated use of land plots being owned by citizens and legal entities for conducting commodity agricultural production, land plots allocated in kind for conducting personal agricultural production and also land allotment. The exceptions to the general rule are inheritance, exchange of one land plot for another one, seizure (buyout) of land plots for public needs and change of the designated use of land plots being provided to the investors – parties of production sharing agreements for carrying out activities pursuant to such agreements.

The prohibition also includes entering the right on land plots into companies' authorized share capital and also acquisition of agricultural land plots by foreigners, stateless person, foreign legal entities and foreign states.

One of the most resonant questions to be resolved by Ukrainian parliamentarians in the course of land reform is enabling for foreign citizens and legal entities to acquire agricultural land plots. Consequently, the purpose of this article is research of agricultural land market development in some states of Eastern Europe in the context of providing to the foreigners and non-residents the right to acquire agricultural land plots.

Poland

Till 2004 the acquisition of agricultural land plots by foreigners and non-residents was prohibited in Poland. In course of accession of Poland to the European Union in 2004, by Act concerning the conditions of accession of the Republic of Poland to the European Union, the transition period had been established for twelve years during which the provisions of the Polish legislation restricted the acquisition of land plots by foreigners and legal entities - non-residents might have been in force. Generally, within the transition period the indicated persons had the right to acquire agricultural land plots only after obtaining the special permits from Ministry of Interior and Administration in the absence of objections from Minister of National Defence and Minister of Agriculture and Rural Development. Moreover, foreigner or legal entity - non-resident was obligated to confirm that acquisition of the agricultural land plot had no risk to defence, national security or public order and was not in conflict with social policy and public healthcare and also confirm the connection with the Republic of Poland (temporary residence permit, government membership, conducting business or agriculture activity etc.). Obtaining of abovementioned permit did not require if citizen of member states of European Union was self-employed farmer and also legally resided on the territory of Poland and leased the land plots within three years continuously. The transition period expired in 2016 and since that time citizens and companies – residents of the member states of Agreement on the European Economic Area and Switzerland are not obligated anymore to obtain permit from Ministry of Interior and Administration however acquisition of agricultural land plots is still controlled by the state. Despite the fact that residents of states that are not members of European Union, as general, are obligated to obtain permit from Ministry of Interior and Administration of Poland, interest in agricultural land plots acquisition in Poland does not become lower. Subject to official statistics of Ministry of Interior and Administration of Poland[1], in 2017 the 224 permits were issued on acquisition of 270 land plots including of agricultural designation. Highly interesting is the fact that among 224 permits that were issued, Ukrainians obtained 134.

Czech Republic

Czech Republic got through a similar experience of lifting restrictions on acquisition agricultural land plots. Similar to Poland, till 2004 in Czech Republic the land plots acquisition by foreigners and non-residents was prohibited. Nevertheless, as result of accession of Czech Republic to the European Union in 2004, the transition period had been established within seven years during which the provisions of the Czech legislation restricted the acquisition of land plots by foreigners and legal entities - non-residents might have been in force. However, even within the transition period the acquisition of land plots was permitted if non-resident had temporary residence permit of member-state of the European Union, was registered as self-employed farmer and resided on the territory of Czech Rebublic within three last years continuously. Nowadays, the transition period expired and restrictions being in effect at that time lifted.  

Bulgaria

Till 2005 the acquisition of agricultural land by foreigners and foreign legal entities was prohibited in Bulgaria. Exceptions were cases of acquisition agricultural land through inheritance but even in such cases the non-residents were obligated to transfer such property within three years from the moment of such inheritance opening. After accession of Bulgaria to European Union, the transition period was established for seven years upon expiration of which the citizens and legal entities – residents of member states of European Union and European Economic Area should have been granted the right to acquire of agricultural land. However, even within the indicated transition period there should have not been any restrictions on acquisition agricultural land plots by self-employed farmers – citizens of member states of European Union legally resided on the territory of Bulgaria except restrictions imposed on Bulgarian citizens too. Currently, acquisition of agricultural land plot by citizens and legal entities – residents of member states of European Union and European Economic Area is permitted. Citizens and legal entities – residents of other states are permitted to acquire agricultural land plots only on the basis of international treaty with Republic of Bulgaria that shall be ratified by parliament - National Assembly of Bulgaria. Nevertheless, the acquisition of ownership rights on agricultural plots are prohibited by: 1) companies which shareholders are companies from low-tax jurisdictions (off-shore companies); 2) companies, which shareholders or partners are natural persons – citizens or companies – residents of states that are not members of European Union and European Economic Area and with which there are no international treaties permitting the acquisition of agricultural land plots; 3) joint-stock companies with bearer shares.

Overall, as is obvious, the prohibition on acquisition of agricultural land in some form or other existed in abovementioned states of Eastern Europe till their accession to the European Union. Existence of such prohibition in Ukraine - absolutely normal historical stage of development of our state. Nevertheless, choosing the European vector of development, lifting the moratorium on acquisition of agricultural land plots (including for foreigners) and as a result – development of agricultural land market - it's just a matter of time. Legislation of the European Union obliges their members to allow for agricultural land plot acquisition by foreigners and also impose the clear, transparent and non-discriminatory rules for implementing such an opportunity.

Source: Yuridicheskaya Praktika, http://pravo.ua/article.php?id=100117304

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