New rules for the acquisition of agricultural land

√     New categories of pre-emptors
√     New taxes are applicable to agricultural land acquisition

Law No. 175/2020 for amending and supplementing Law No. 17/2014 regarding measures to regulate the sale-purchase of agricultural lands located outside the built-up area was published in the Official Monitor No. 741 dated 14 August 2020. This law shall enter into force on 13 October 2020.

1.     Significant expansion of the list of the beneficiaries of the preemption right and modification of the ranks priority

According to the new regulations the pre-emption right belongs to the following categories of pre-emptors, in this specific order:

i)     first class of pre-emptors: co-owners, first degree relatives, spouses, relatives up-to/including the third degree;

ii)    second-class pre-emptors: owners of agricultural investments for the cultivation of fruit trees, vines, hops, exclusively private irrigation and/or tenants. If on the lands subject to sale there are agricultural investments for fruit trees, vines, hops and for irrigation, the owners of these investments have priority in the purchase of these lands;

iii)   third class of pre-emptors: the owners and/or the agricultural lessees of the lands adjacent to the land subject to sale;

iv)   fourth class of pre-emptors: young farmers, i.e., persons up to the age of 40 who have the appropriate professional skills and qualifications and who are established for the first time on an agricultural holding as the head of that holding with the intention of carrying on or carrying out agricultural activities;

v)    fifth class of pre-emptors: the Academy of Agricultural and Forestry Sciences «Gheorghe Ionescu-Şişeşti» and the research-development units in the fields of agriculture, forestry and food industry, organized and regulated by Law No. 45/2009 on the organization and functioning of the Academy of Agricultural and Forestry Sciences “Gheorghe Ionescu-Şişeşti” and the research and development system in the fields of agriculture, forestry and food industry, with subsequent amendments and completions, as well as agricultural educational institutions, for the purpose of purchasing agricultural lands located outside the built-up area with the destination strictly necessary for agricultural research, located in the vicinity of the existing lots in their patrimony;

vi)    sixth class of pre-emptors: natural persons with domicile / residence located in the administrative-territorial units where the land is located or in the neighbouring administrative-territorial units;

vii)   seventh class of pre-emptors: the Romanian state, through the State Domains Agency.

viii)  Furthermore, the legal provisions stipulate for specific categories of pre-emptors particular additional requirements, that they must comply with. For example, the agricultural lessee wishing to acquire land must have a valid agricultural lease agreement concluded and registered according to the legal provisions at least one year before the date of the publishing of the sale offer at the town hall.

The non-compliance with the procedure and the requirements provided by law in connection with the pre-emption right is sanctioned with the absolute nullity of the sales agreement.

2.     Extension of the legal term during which the pre-emption right can be exercised

Another amendment concerns the term of exercising the pre-emption right, this being extended from 30 to 45 working days from the display of the offer by the competent mayor’s office.

3.    Novelties regarding sale performed in the absence of the exercise of pre-emption right – Introduction of intermediary requirements

If the holders of the pre-emption right do not express their intention to buy the land, the sale can be concluded with:

(i)     A natural person observing the following cumulative mandatory conditions:

a) having the domicile/residence on the national territory for a period of at least 5 years prior to the registration of the sale offer;

b) carrying out agricultural activities on the national territory for a period of at least 5 years prior to the registration of this offer;

c) being registered with the Romanian fiscal authorities for at least 5 years prior to the registration of the offer for sale of the agricultural lands located outside the built-up area.

(ii)    A legal person observing the following cumulative mandatory conditions:

a) having the registered headquarters and/or the secondary office located on the national territory for a period of at least 5 years prior to the registration of the sale offer;

b) carrying out agricultural activities on the national territory for a period of at least 5 years prior to the registration of the offer for sale of the agricultural lands located outside the built-up area;

c) holding documents attesting that, from the total income of the last 5 fiscal years, at least 75% derives from agricultural activities, as provided by Law no. 227/2015 on the Fiscal Code, with subsequent amendments and completions, classified according to the NACE code by Order of the Minister of Agriculture and Rural Development;

d) the associate / shareholder holding the control of the company has the domicile located on the national territory for a period of at least 5 years prior to the registration of the offer for sale of the agricultural lands located outside the built-up area;

e) if in the structure of legal entities, the associates / shareholders controlling the company there are other legal entities, then the associates / shareholders controlling the company must prove they have the domicile located on the national territory for a period of at least 5 years prior to the registration of the offer sale of agricultural land located outside the built-up area.

In case of non-exercise of the pre-emption right, if none of the potential buyers, within the legal 45 days term, meets the conditions to be able to buy the agricultural land located outside the built-up area, its sale can be made to any natural or legal person.

4.     Extensive taxation

Agricultural lands located outside the built-up area can be transferred by sale, before the 8th anniversary of the purchase, under the obligation to pay 80% tax on the amount representing the difference between the sale price and the purchase price, based on the notaries’ grid corresponding to that period.

In case of direct or indirect alienation, before the 8th anniversary of the purchase, of the control package of the companies that own agricultural lands located outside the built-up area and which represent more than 25% of their assets, the seller will have the obligation to pay a tax of 80% of the difference in value of the respective lands calculated on the basis of the notaries’ grid between the moment of acquiring the lands and the moment of alienation of the control package. In this case, the profit tax on the difference in value of the shares or shares sold will be applied on a reduced basis in proportion to the percentage of the share of the respective agricultural land in fixed assets, any double taxation being prohibited.

5.     Interdiction to change the destination of the land

The owners of agricultural lands located outside the built-up area have the obligation to use them exclusively in order to carry out agricultural activities from the date of purchase, and if there already are agricultural investments on agricultural land for fruit trees, vines, hops and exclusively private irrigation, they will keep the agricultural destination of this investment.

6.     Change in the amount of fines

The administrative fines under the new provisions are increased and are ranging from lei 100,000 (approx. EUR 21,000) to lei 200,000 (approx. EUR 42,000).

 

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