Bulgaria to Abandon Local Settlement Requirement for Acquisition of Agricultural Land

The requirement of Bulgarian domestic law for a 5-year “settlement period” as condition to acquiring agricultural land will cease to apply for EU-based investors after found by CJEU to be in breach of EU law fundament.

With a Judgment from 18 January 2024 in case C‑562/22 the Court of Justice of the European Union (CJEU) gives a fundamental interpretation of the Treaty on the Functioning of the European Union (TFEU), leading to bigger foreign investment initiative when it comes to buying Bulgarian agricultural lands.

Reasons behind the Judgment:

The CJEU adopts its Judgment based on the regulation given by Bulgarian Law on the Ownership and Use of Agricultural Land (Article 3c) in its current wording, according to which only persons (natural and/or legal) who have been established in the territory of the Republic of Bulgaria for more than 5 years may acquire a right of ownership over agricultural land.

The CJEU finds that those provisions of Bulgarian law falls within the scope of the free movement of capital in the meaning of Article 63 TFEU and present unjustified limitation to that freedom, therefore are precluding.

The CJEU noted that in order to justify restrictions on the free movement of capital, such restrictions must be appropriate and necessary to achieve the set out objectives, whereas the provision of Article 3c of the Bulgarian Law on the Ownership and Use of Agricultural Land does not guarantee them.

Legal and practical implications of the Judgment:

The Judgment of the CJEU is binding to all courts and institutions in the Republic of Bulgaria.

What can be expected is that the Bulgarian courts will align their rulings with the one of the CJEU, however the Notaries as an institution who certifies such transactions, may oppose. Bulgarian law anticipates methods of protection against such oppositions.

As long as the provisions of Article 3c of the Law Bulgarian Law on the Ownership and Use of Agricultural Land are not changed so that they do not fall within the scope of the interpretation given by the CJEU, they should not be applied.

Therefore, the CJEU Judgment provides for new opportunities for foreign investors to acquire agricultural land in the Republic of Bulgaria, which can later on be subject to re-designation procedure.

By Konečná & Zacha, Bulgaria, a Transatlantic Law International Affiliated Firm.

For further information or for any assistance please contact bulgaria@transatlanticlaw.com

Disclaimer: Transatlantic Law International Limited is a UK registered limited liability company providing international business and legal solutions through its own resources and the expertise of over 105 affiliated independent law firms in over 95 countries worldwide. This article is for background information only and provided in the context of the applicable law when published and does not constitute legal advice and cannot be relied on as such for any matter. Legal advice may be provided subject to the retention of Transatlantic Law International Limited’s services and its governing terms and conditions of service. Transatlantic Law International Limited, based at 84 Brook Street, London W1K 5EH, United Kingdom, is registered with Companies House, Reg Nr. 361484, with its registered address at 83 Cambridge Street, London SW1V 4PS, United Kingdom.