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Brussels, 14 April 2011
Frequently asked questions: Extension of transitional periods for the acquisition of agricultural land
What does the extension refer to?
The 2003 Act of Accession provides that the Czech Republic, Estonia, Hungary, Latvia, Lithuania and Slovakia may maintain the existing restrictions in their legislation at the date of accession for a seven-year period (until 30 April 2011), and Poland – for a twelve-year period (until 30 April 2016). These restrictions are applicable to the acquisition of agricultural land by nationals and legal persons from other EU/EEA countries.
This transitional period constitutes a temporary exception to one of the fundamental EU freedoms - the free movement of capital as guaranteed by Articles 63 to 66 of the Treaty on the Functioning of the European Union. Upon the expiration of the three-year extension on 30 April 2014 no further extension is possible.
The 2003 Act of Accession also foresees, with the exception of Poland, that "if there is sufficient evidence that, upon expiry of the transitional period, there will be serious disturbances or a threat of serious disturbances on the agricultural land market of [the country in question], the Commission, at the request of [that country], shall decide upon the extension of the transitional period for up to a maximum of three years".
Which Member States have applied for extension of the transitional period?
Hungary, Latvia, Lithuania and Slovakia had requested the Commission to extend their transitional periods for another three-year period.
Following the Decision of 20 December 2010 granting an extension of the transitional period to Hungary (see IP/10/1750), the European Commission has adopted Decisions granting similar extensions to Latvia on 7 April 2011, Lithuania and Slovakia on 14 April 2011.
Which Member States could apply for extension?
The Czech Republic and Estonia who were also granted transitional periods upon accession to the EU in 2004 did not request extensions.
Since Poland has negotiated the longest transitional period (12 years), the Accession Treaty does not foresee the possibility for any extension of its transitional period.
Malta, Cyprus and Slovenia did not negotiate for a transitional period upon accession to the EU in 2004.
According to the Accession Treaty signed in 2005 with Bulgaria and Romania, these two Member States do not have the possibility to request any extension of the seven-year transitional period given for the acquisition of agricultural land (until 31 December 2013).
When do the Decisions enter into force?
The Commission Decision extending the transitional period concerning the acquisition of agricultural land in Hungary entered into force on the 20th day following its publication in the Official Journal of the European Union.
The Decisions concerning Latvia, Lithuania and Slovakia will enter into force on the day of their publication in the Official Journal of the European Union.
Why was the extension granted?
The reason for granting Hungary, Latvia, Lithuania and Slovakia a transitional period upon accession was originally based on the need to safeguard the socio-economic conditions for agricultural activities following the introduction of the Single Market as well as the transition to the Common Agricultural Policy.
Having assessed the arguments submitted by Hungary, Latvia, Lithuania and Slovakia, the Commission considers that it can be anticipated that lifting the current restrictions will exert pressure on the agricultural land markets of these countries and threaten to cause serious disturbances.
Does the fact that the extension has been granted mean that ongoing reforms would slow down?
No. The Commission calls on Hungary, Latvia, Lithuania and Slovakia to speed up their efforts to complete ongoing agricultural structural reforms. No further extension is possible, so by 30 April 2014, these countries should open their agricultural land markets to investments from all EU/EEA Member States.
However, the Commission reminds Hungary, Latvia, Lithuania and Slovakia of the benefits of an increased inflow of foreign capital into agricultural land markets and the positive effect that foreign investment would have on the provision of capital and know-how, on the functioning of land markets, and on agricultural productivity.1
Moreover, the Commission emphasises that a progressive loosening of the restrictions on foreign ownership during the transitional period would also contribute to better prepare agricultural land markets for full liberalisation.
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This has already been stressed in the Mid-term Review of the transitional measures presented by the Commission to the Council in 2008; COM(2008)461 final, 16 July 2008.