Poland: Will EAA And Swiss Investors Be Able To Freely Acquire Agricultural And Forest Real Properties As Of May 2016?

On 2 May 2016, restrictions on acquiring agricultural and forest real properties located in Poland by foreigners from the European Economic Area (EEA) and Switzerland will cease to be binding. Does this mean that trade in agricultural real properties will be entirely free and not subject to any restrictions as of that time

Current legal status

Pursuant to the currently applicable Real Property Acquisition by Foreigners Act dated 24 March 1920 (consolidated text: Journal of Laws of 2014, item 1380), foreign nationals and entrepreneurs acquiring a real property located in Poland are required to obtain a permit issued by the Minister of Internal Affairs. Acquisition of a real property without the required permit is invalid by operation of law.

The above rule, i.e. the obligation to obtain a permit, applies not only to direct acquisition of a real property, i.e. acquisition of ownership or perpetual usufruct of a real property. It also applies to indirect acquisition, i.e. acquisition or taking up of shares in a commercial company by a foreigner if, as a result, the company that is the owner or perpetual usufructuary of the real property becomes a controlled company or such company is a controlled company and shares are acquired or purchased by a foreigner that is not its shareholder.

Exception for entrepreneurs of the EEA and Switzerland

Upon Poland's accession to the European Union, i.e. on 1 May 2004, the Act was amended inter alia by excluding the obligation to obtain a permit to acquire a real property by foreigners who are nationals or entrepreneurs of the EEA or Switzerland. However, this exception did not apply to agricultural and forest real properties: the need to obtain the said permit to directly acquire such properties was to continue to exist for a transition period of 12 years following Poland's accession to the European Union.

Market practice

Foreign entrepreneurs interested in acquiring agricultural and forest real properties located in Poland occasionally and in specific cases acquire such real properties directly. Much more frequently, they acquire shares in companies that are owners or perpetual usufructuaries of real properties. In doing so, they avoid the need to obtain the permit of the Minister of Internal Affairs for the planned transaction. Such action, however, requires an adequate transaction scheme to be designed and implemented since, as a result, the acquisition comprises not only a specific real property, but also all rights and obligations of a shareholder in a company along with all the company's liabilities and debts.

The 12 years' transition period agreed between Poland and the European Union will end on 1 May 2016. It is commonly believed that after that date, foreigners from the EEA or Switzerland will be able to acquire agricultural and forest real properties located in Poland without any restrictions. But will that really be the case?

Changes considered

Those expecting the implementation of absolute freedom in acquiring agricultural and forest real properties stand to be disappointed. As the end of the transition period is approaching, proposals for implementing commonly applicable restrictions on trade in agricultural and forest real properties are increasingly becoming the subject of intense debates.

Naturally, restrictions on trade in agricultural and forest real properties are nothing new and apply in a number of "old" EU member states, e.g. in France. Several "new" EU member states also implemented similar limitations upon the expiry of agreed transition periods. For example, this was done in Bulgaria, Hungary, Latvia, Lithuania, Romania and Slovakia. The scope of limitations varies from state to state, but in principle they include the need for the real property acquirer to demonstrate its adequate qualifications and experience in agricultural activities in a given EU member state, limitations on the size of the real property to be acquired, or implementation of the priority right upon real property acquisition for specific entities.

Relying on the experience of other states, the discussion in Poland is addressing, for example, whether to introduce a maximum area of agricultural real properties possessed, mandatory intermediation of a state agency upon the sale of such real properties, offering such properties first of all to individual farmers, and limiting parties to the sale agreement in setting sale prices. As in the other "new" EU member states, these restrictions will apply to the same extent to Polish nationals and entrepreneurs as they will to nationals and entrepreneurs coming from other EEA member states and Switzerland.

Thus, perhaps it is worth acquiring a real property before the transition period ends?

Bills limiting trade in agricultural and forest real properties have already been submitted to the Polish Parliament. In a standard situation, this would mean that any potential changes would only be adopted after a long time. However, the year 2015 is an election year in Poland: planned presidential and parliamentary elections may sharply accelerate legislative works and are likely to lead to limitations being implemented prior to 2 May 2016. The effect of such works will represent a compromise among a large number of political circles and it is very difficult to anticipate what restrictions will finally be passed. In this context, given limitations that at present are not sufficiently specified and which in the worst-case scenario can even entirely prevent acquisition of agricultural and forest real properties by certain entities, it seems worthwhile to consider using legally admissible schemes established on the market during the last 12 years in order to finalise planned transactions before 2 May 2016. This may prove to be an attractive option specifically for investors interested in long-term investments.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions