Laws in Bulgaria, Hungary, Lithuania and Slovakia may be restricting the free movement of capital and freedom of establishment


The European Commission has requested Bulgaria, Hungary, Lithuania and Slovakia to submit their observations on their laws regulating the acquisition of agricultural land. These laws contain several provisions that, under EU law, may be considered to restrict the free movement of capital and freedom of establishment. Any restriction of these basic freedoms must be justified and comply with the principles of non-discrimination and proportionality. Although member states can set their own rules to promote rural development, to keep land in agricultural use and avoid speculative pressure on land prices, this must be done within the limits of EU law.

In the Commission’s view, the provisions in question also contain certain restrictions that may leave room for discriminatory treatment of investors from other member states. These include: a residence requirement in the given country; restrictions on persons without a local residence or previous local business activities; various restrictions on persons lacking professional knowledge, on ceding the use of land or on legal persons, as well as legal uncertainty related to the prior approval of sales contracts.

The Commission’s requests take the form of a letter of formal notice, the first stage of infringement procedures under Article 258 of the Treaty on the Functioning of the European Union. The countries concerned have two months to respond.