On 1 July 2017, changes to the acquisition procedure of agricultural land will come into force

On 23 March 2017, in its final reading the Saeima adopted amendments to the Law on Land Privatisation in Rural Areas, hereinafter referred to as the Amendments, that will enter into force on 1 July 2017 and will change the requirements for acquisition of agricultural land.

The Amendments contain several significant changes to the acquisition procedure of agricultural land. It excludes several requirements that limited the opportunities for individuals and companies to acquire agricultural land. Instead of excluded requirements new ones have been adopted, including requirements regarding knowledge of the official language and other additional conditions for transactions with agricultural land.

  1. The requirements that have been excluded from the law

On the basis of objections from the European Commission that requirements of the Law on Land Privatisation in Rural Areas do not comply with the freedom of movement of capital and freedom of establishment stipulated by the Treaty establishing the European Union, the Amendments shall exclude the requirement that in order for an individual or legal person to acquire agricultural land this person should have received single area payments during the last three years. The requirement that the revenue of a natural or legal person from the agricultural production within the last three successive years should form at least one third of their total revenue from economic activity will also be excluded. The Amendments shall also exclude the requirement that an individual or at least one owner or permanent employee of the legal person must have obtained education in agriculture or equivalent field by spending in training no less than 160 hours.

  1. The new requirements for acquisition of agricultural land

Simultaneously with the exclusion of the above requirements new requirements are implemented for individuals and companies to be able to acquire agricultural land. Namely, from now on agricultural land can be acquired only by such citizens of the European Union, member states of the European Economic Area, as well as Swiss Confederation who have received a document proving the knowledge of Latvian language at least according to level B2. Identical conditions apply also to the shareholder or shareholders of legal persons who jointly represent more than a half of the company’s voting capital and who have the right to represent the company.

As an interesting fact it must be emphasized that from now on commission of each local government that monitors legitimacy of transactions with agricultural land performed in the respective municipality will be able to invite an individual or a shareholder of a legal person to present in official language their plans for further use of agricultural land. These individuals will have to be able not only to present further use of the land, but also reply in official language to the questions asked by the commission.

It is important to emphasise that in order to maintain the ownership rights to the land property, even after acquisition of ownership rights to the land property the legal person will have to ensure that it complies with all the requirements set by the law for acquisition of agricultural land. It means that it will no longer be possible to change the shareholders of the capital company only for the moment when the acquisition of agricultural land is carried out. According to the adopted Amendments, within ten working days the authorised representative of the company shall inform in writing the council of the respective municipality regarding the changes to the shareholder registry of the capital company. If after the changes to the shareholders registry the capital company no longer complies with the requirements of the law, within a month it must receive a new consent from the council of the respective municipality in order for it to retain the land property. If the council of the municipality does not grant the mentioned consent, the capital company will be obliged to sell the land property within the period of two years.

  1. Other news regarding sale, acquisition and lease of agricultural land

From now on, if the owner of the land sells the agricultural land owned by him, the pre – emption rights shall apply not only to joint owners of the land, if applicable, but also to a lessee who has registered the lease agreement of the land at the local government at least a year prior to the conclusion of the purchase agreement. The pre – emption rights of agricultural land will be held also by the manager of Latvian Land Fund. This solution was implemented in order to facilitate acquisition of agricultural land by local farmers.

In order to prevent a situation when large areas of agricultural lands are owned by one or several closely related persons, the Amendments provide a restriction that related persons may acquire no more than 4,000 hectares of agricultural land, but an individual may acquire no more than 2,000 hectares.

Law office  “Rasa & Ešenvalds” is convinced that the Amendments have been adopted not only in order to ensure that privatisation procedure of agricultural land complies with the requirements of the European Union, but also to continue to protect Latvian farmers because acquisition of agricultural land for individuals speaking the official language is easier, but more difficult, yet not impossible by foreigners due to language requirements.

Law office “Rasa & Ešenvalds” has a significant experience in transactions with agricultural lands. The Office provides legal consultations regarding acquisition of agricultural land and the procedures, when organizing the purchase of agricultural land and preparing the necessary documentation.

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