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Brussels, 20 November 2009

Free movement of capital: Commission requests Austria to modify provisions on the acquisition of agricultural real estate in the Land Transfer Law of Vorarlberg

The European Commission has sent Austria a formal request with regard to the Vorarlberg Land Transfer Law, under which a non-farmer cannot acquire agricultural land if a farmer intends to acquire that land instead. Moreover, future agricultural use by a farmer within an agricultural undertaking has to be ensured. The infringement procedure was initiated by a letter of formal notice in December 2008 following a complaint. Having analysed the Austrian government's reply, the Commission considers that the restrictions still represent some unjustified obstacles to EC Treaty rules on free movement of capital. The Commission's request takes the form of a 'reasoned opinion', the second stage of infringement procedures under Article 226 of the EC Treaty. If there is no satisfactory reply within two months, the Commission may decide to refer the case to the European Court of Justice.

According to § 5 Vorarlberg Land Transfer Law (VGVG, LGBl. 42/2004), if a non-farmer wants to acquire agricultural land, any farmer may notify his interest to buy the land at the usual local price, resulting in a denial of authorisation to the non-farmer according to § 6(2)g VGVG. Moreover, according to § 6(2)d VGVG, future agricultural use by a farmer within an agricultural undertaking has to be ensured. These provisions constitute restrictions of the free movement of capital which, in the Commission's view, are not fully justified in order to obtain the VGVG's objectives.

While Austria accommodated several concerns expressed in the letter of formal notice, § 5 VGVG in connection with § 6(2)g VGVG in some aspects still appears to be disproportionate. The procedure mentioned applies without exceptions for long-term tenants. Also, in case a farmer notifies his interest, but subsequently the purchase does not take place, the prospective acquirer might be exposed again to the 'interested farmers' procedure. Moreover the 'interested farmer' procedure applies in case the present owner transfers his plot to a company he owns or to a foundation he controls. § 6(2)d VGVG appears to be disproportionate as it is required in every case that not only future agricultural use, but also cultivation by a farmer (§ 2 VGVG) within an agricultural undertaking must be assured.

The latest information on infringement proceedings concerning all Member States can be found at:

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