Bulgaria to Abandon Local Settlement Requirement for Acquisition of Agricultural Land

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.