EU Steps Up Pressure On Hungary Over Its Land Act Restrictions

  • 2 June 2016
  • Kutatócsoport2

The European Commission (EC) takes infringement procedure to second level against Hungary for restrictions on farmland. (Brussels, 26 May 2016)

Background

The Commission has launched the infringement procedure against Hungary concerning restrictions on the acquisition of arable land in the country’s land act in March 2015. EC has launched similar procedures in connection with the land acts of Bulgaria, Lithuania and Slovakia. According to the Commission, the land laws of these Member States contain several provisions which, under EU law, may be considered to restrict the free movement of capital and freedom of establishment. Any restriction of these basic Treaty freedoms must be justified and comply with the principles of non-discrimination and proportionality. Furthermore, the Commission would like to stress that, while Member States are permitted to 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.

According to the Commission, 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 sent so-called 'letters of formal notice' to the above mentioned Member States, a step that is the first stage of the infringement procedure.

Taking the second step

After having received the replies from them, EC is still concerned about the national provisions which are currently in force. The Commission maintained that: „Hungary has a very restrictive system which imposes a complete ban on the acquisition of land by legal entities and an obligation on the buyer to farm the land himself. In addition, as in Latvia and Lithuania, buyers must qualify as farmers.”

Therefore, EC has formally requested Hungary to amend legislation on the restrictive provisions in question in a ’reasoned opinion’, marking the second step in an infringement procedure. If Hungary fails to bring their national legislation into line with EU law within two months, the EC may refer Hungary to the EU’s Court of Justice. The Commission also sent reasoned opinions on similar restrictions on the sale of farmland to Bulgaria, Latvia, Lithuania and Slovakia.

Hungarian Reaction

In his regular weekly press briefing Minister for the Prime Minister's Office, Lázár János said Hungary is not going to back down on the issue. He stated that the Hungarian and the Brussels positions were far apart because the Hungarian legislature – in contrast to the European Commission’s view – decided that foreigners and business associations are not allowed to buy land in Hungary. He added that: „it is going to be a war with Brussels". 

 

Author:

Petra Agnes Kanyuk

Law Student, University of Debrecen, Faculty of Law

 

Reference:

Commission requests Bulgaria, Hungary, Latvia, Lithuania and Slovakia to comply with EU rules on the acquisition of agricultural land. Brussels, 26 May 2016.

http://europa.eu/rapid/press-release_IP-16-1827_en.htm (2016-06-01)

May infringements' package: key decisions. Brussels, 26 May 2016.

http://europa.eu/rapid/press-release_MEMO-16-1823_en.htm (2016-06-01)

Commission opens infringement procedures against Bulgaria, Hungary, Lithuania and Slovakia on investor restrictions for agricultural land. Brussels, 26 March 2015.

http://europa.eu/rapid/press-release_IP-15-4673_en.htm (2016-06-01)

EC initiates infringement procedure against Hungary.

http://bbj.hu/economy/ec-initiates-infringement-procedure-against-hungary_94939 (2016-06-01)

EC steps up infringement procedure against Hungary over farmland sale restrictions.

http://dailynewshungary.com/ec-steps-up-infringement-procedure-against-hungary-over-farmland-sale-restrictions/ (2016-06-01)

European Commission launches new infringement procedures against hungary. http://hungarytoday.hu/news/european-commission-launches-new-infringement-procedures-hungary-77889 (2016-06-01)

Lázár sees ‘war’ with EC over foreigners’ right to buy farms.

http://bbj.hu/politics/lazar-sees-war-with-ec-over-foreigners-right-to-buy-farms_116697 (2016-06-01)

 

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