On 18 January 2024, the Court of Justice of the European Union (EU) ruled on the issue of whether the limitation envisaged in Bulgarian legislation for foreign citizens to acquire land in Bulgaria contradicts European legislation. The Court of the EU issued its decision on the occasion of a preliminary inquiry addressed to it by the District Court in the city of Burgas, before which a case was filed by a foreign citizen who wished to acquire agricultural land in Bulgaria, but was refused due to restrictions provided for in the law.
According to the Bulgarian Law on the Ownership and Use of Agricultural Lands: Natural or legal persons who have resided or have been established in the Republic of Bulgaria for more than 5 years can acquire the right of ownership of agricultural lands..
In order to resolve the inquiry addressed to it, the EU Court refers to Art. 63 of the Treaty on the Functioning of the European Union (TFEU), which prohibits any restrictions on the free movement of capital between Member States and between Member States and third countries.
The right to free movement of capital under Article 63 TFEU is one of the fundamental freedoms of the Union's internal market, which aims to promote the integration, competition and efficiency of the Union's economy. The right to free movement of capital covers various types of transactions, such as investments, loans, donations, inheritances and acquisition of property.
The Bulgarian legislation limiting the acquisition of agricultural land was adopted in Bulgaria pursuant to Article 24 of the Treaty of Accession of Bulgaria to the European Union, which allows Bulgaria to maintain the existing restrictions on the acquisition of agricultural land by citizens of other member states for a period of seven years after accession, i.e. until 1 January 2014. After the expiration of this period, Bulgaria adopted new legislation, which stipulates that the right to acquire agricultural land is granted only to individuals who have resided in Bulgaria for more than five years, or to legal entities that are established in Bulgaria and have more than 50% Bulgarian participation in the capital. This legislation is motivated by the public interest of protecting agricultural lands and promoting the development of rural areas, taking into account the specifics of Bulgarian agriculture.
The jurisprudence of the Court of Justice of the European Union (CJEU) on similar cases is rich and varied, as the Court has considered various types of restrictions on the acquisition of property in the Member States, such as requirements for residence, nationality, professional activity, permits, approvals, etc. The CJEU ultimately recognized that such restrictions constitute a breach of Article 63 TFEU, as they prevent or make it more difficult for nationals of other Member States or third countries to acquire property. The Court also recognizes that such restrictions can be justified by public interest, such as environmental protection, spatial planning, social policy, cultural heritage, etc., but only if they are necessary, proportionate and non-discriminatory. The CJEU ruled that the restrictions must take into account all the circumstances of the particular case, such as the nature, location and purpose of the property, as well as the personal situation of the acquirer, such as the professional qualifications, experience and connection to the agricultural activity.
In conclusion of the above, the Court of the EU decided that Bulgaria's national legislation, which limits the right to acquire agricultural land to persons who have resided in Bulgaria for more than five years, constitutes a violation of Article 63 TFEU, prohibiting any restrictions on the free movement of capitals. This legislation is disproportionate and discriminatory because it does not take into account all the circumstances of the particular case, such as the nature, location and purpose of the land, the professional qualifications, experience and connection of the acquirer with the agricultural activity, but is based only on the temporal and territorial criterion. Bulgarian legislation therefore affects nationals of other Member States or third countries who wish to acquire agricultural land in Bulgaria less favorably than nationals of Bulgaria or other Member States who have resided in Bulgaria for more than five years, and therefore constitutes discrimination on grounds of nationality or residence.