Romania introduces restrictions on sale and purchase of agricultural land

On 14 August, Romanian lawmakers passed an amendment to Law 17/2014 on the sale and purchase of agricultural land, imposing significant restrictions on the sale and purchase of extra muros agricultural land for foreign nationals.

A key amendment to the legislation is the extension of the categories of beneficiaries of legal pre-emption rights provided for the sale of agriculture land. The beneficiaries have been extended from four categories (co-owners, tenants, neighbouring owners, as well as the Romanian state through the State Property Agency) to thirteen categories with the following seven differentiating ranks:


New conditions have been introduced that must be met by potential buyers, other than those who are beneficiaries of a pre-emption right. If none of the beneficiaries of the pre-emption right intend to buy land, the sale of the agricultural land can be made to natural persons or legal entities subject to fulfilling certain cumulative conditions. The conditions appear to give preference to buyers having a domicile or residence in Romania for a period of at least five years, and buyers with past experience in farming in Romania prior to the date of the publication of the sale offer.  Similar conditions have been introduced for a controlling shareholder who must have his domicile located in Romania for a period of at least five years prior to the date of the sale offer's publication.

In terms of successive sales, the amended law restricts the sale of agriculture land for a period of eight years after the purchase with a penalty of an 80% tax on the difference between the sale price and the purchase price. This current provision is applicable also in case of direct or indirect transfer of the controlling stock in companies that hold agricultural lands representing more than 25% of their assets. To avoid double taxation, the profit tax has been applied to a diminished base. Breach of these obligations will result in the absolute nullification of the deed by which the controlling stock was transferred.

In its current form, the amendment does not expressly repeal nor amend the procedure to withdraw land from agricultural use. It offers a mandatory procedure to be followed for any investments implying the alternative use of agricultural land other than for agriculture. All future legislative changes should be closely monitored in regard to any amendments to the secondary legislation potentially making declassification of agricultural land more restrictive or onerous.

Prior to promulgation by the Romanian President, the bill has raised several controversies for the business environment, including businesses in the oil and gas and renewables sectors, which claim that the legislation may negatively impact on-going projects and Romania's investment climate by introducing additional burdens for carrying out activities on previously designated agricultural lands.