Facing huge sanctions, Bulgaria to drop restrictions on EU citizens buying farmland

Bulgaria’s government has drafted legislative amendments to exempt European Union citizens from restrictions on buying agricultural land, as the country could face huge financial sanctions from the EU if it does not.

However, the government will be looking into other ways of restricting the purchase of farmland by foreigners.

An amendment to the Ownership and Use of Agricultural Land Act approved by Bulgaria’s Parliament in 2014 introduced a requirement that EU citizens must have been resident in Bulgaria for five years before being allowed to buy agricultural land.

The restriction was legislated at the point that the seven-year moratorium on EU citizens buying land in Bulgaria, that began when the country joined the EU in 2007, expired.

The amendment was approved by the Bulgarian Socialist Party and ultra-nationalists Ataka, in a largely populist move based on emotions about foreigners buying up Bulgaria, and about the supposed effect of demand for farmland pushing up prices beyond the reach of Bulgarians.

The two parties also wanted to see the full moratorium on the sale of agricultural land to foreigners remain in place until 2020.

Then-president Rossen Plevneliev vetoed the law, but the National Assembly exercised its constitutional power to override his veto.

A well-known absurdity is that such a restriction could only apply to individuals, because for many years it has been practice for a foreigner wanting to buy land in Bulgaria to set up a Bulgarian company through which to do so.

The draft bill removing the restriction on EU citizens buying land, by scrapping the five-year residence requirement, is open for comment until August 13.

In 2016, the European Commission gave Bulgaria an ultimatum to remove the restriction on EU citizens, or face a penal procedure.

Penalties would be stiff. Should the European court rule against Bulgaria, the country may be ordered to pay a one-off sanction of 839 000 euro, and then have to pay a 660 euro fine for every day that the violation of its EU treaty continues.

The sanction would not be paid directly from the country’s budget but would offset from EU funds for Bulgarian agriculture.

Other EU countries facing such sanctions are Hungary, Latvia, Lithuania and Slovakia, all of which have placed restrictions on land purchases by companies and citizens from other EU countries. The European Commission noted that all these countries are violating a fundamental principle of the EU, the free movement of capital.

Bulgarian Agriculture Minister Roumen Porozahnov, speaking in a television interview on July 14, confirmed that the requirement for foreign citizens to prove five years of residence before being allowed to buy farmland would be scrapped, but said that the government would seek other ways to curb agricultural land purchases by foreigners.

Porozhanov noted that Bulgaria had until the end of September 2017 to remove the five-year residence rule, or face being handed to the European court.

A working group would be set up in the Cabinet office to examine other possible restrictions, he said.

Porozhanov preferred not to comment on whether the existing restriction had been circumvented. At the same time, he said that liberalisation of the system could bring more investment.

(Photo: Dido Ivanov)




The Sofia Globe staff

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