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Sale of agricultural land - three yeras after the amendments

Background
As of 1 May 2016, the same principles for acquisition of real estate in Poland apply to citizens and companies from member states of the European Economic Area and Switzerland as for Polish entities. These regulations also concern the acquisition of agricultural land. At the same time, on 30 April 2016, an amendment to the Polish law concerning the design of the agricultural system (hereinafter referred to as “law”) took effect. In practice, the law restricts agricultural land market. According to the law, agricultural land (hereinafter referred to as “land”) with an area of at least 1 hectare (until 25 June 2019 - 0.3 hectares) can fundamentally only be acquired by individual farmers. In other cases it is necessary to obtain approval from the General Director of the State Centre for Support of Agriculture (poln. Krajowy Ośrodek Wsparcia Rolnictwa, “KOWR”).

Restrictions
In the application for granting consent, it must be demonstrated, inter alia, that the sale of the land to an individual farmer or other persons named in the law (inter alia, relatives, municipality) is impossible. The application must also indicate the area of land already owned by the future buyer. If the KOWR comes to the conclusion that the acquisition leads to an excessive ownership concentration, it can refuse to grant consent. In the case of refusal, the seller can demand that the KOWR buy the land. The price is to be determined by the KOWR and should correspond to the market value of the land. If the seller is not in agreement with the proposed price, he may waive the sale of the land or request that the court determine a corresponding price. The law also provides further restrictions. One of the most important is the right of first refusal of the KOWR to the shares of the companies who are the owners of agricultural land with an area of at least 5 hectares. However, the right of first refusal is excluded if the acquisition concerns the shares in a so-called parent company. If the subsidiary is the owner of land, the shares can be acquired in their parent company without legal restrictions.

A little statistic1
In the years 2017-2018, 37,528 applications were made for granting approval. The KOWR issued approval in 31,024 cases (over 92%, concerning 81,700 hectares) and refused them in 538 cases (approx. 1.73%). The KOWR asserted the right of first refusal to the company shares in 2017 in 138 cases out of a total of 1,432 cases (approx. 9.5%). In 2018, the KOWR had already asserted its right of first refusal in 926 out of a total of 2,836 cases (approx. 32.5%, related to transactions in the amount of 30 million PLN, whereby the total value of the transactions in 2018 was 1.4 billion PLN).

1 Report on the activity of the State Centre for Support of Agriculture for 2017; information from the State Centre for Support of Agriculture dated 11 February 2019 and 1 March 2019

Author: Konrad Schampera