New Rules on Acquisition of Agricultural Land in Latvia

Triniti

Latvian Parliament has adopted amendments to the law which regulates acquiring of agricultural land in Latvia. The amendments have entered into force on 1 November 2014.

Under the new amendments an individual (natural person) is entitled to acquire agricultural land if he/she conforms to all the following criteria:

1)   Performs economic activity in Latvia and has registered it with the Latvian State Revenue Service; and

2)   Has received single area payments under the EU Regulation No.73/2009 for at least a year during the last 3-year period; or

  • Shall receive direct payments to farmers under the EU Regulation No. 1307/2013 as of 1 July 2015; or
  • At least 1/3 of his/her income from the economic activity for the last 3 years has been derived from the agricultural production (this criterion shall enter into force as of 1 July 2015); or
  • Has acquired education in agriculture; and

3)   Has confirmed in writing that he/she shall commence agricultural activities on the acquired land (either within a year, if the land has been applied for receiving single area payments for the previous or the current year; or within three years, if the application for single area payments have not been filed); and

4)   On the day of filing the application for acquisition of the agricultural land has no tax debt (either in Latvia or in the state where he/she has declared permanent residence).

A legal entity (company) can acquire agricultural land if it (the company) conforms to all the following criteria:

1)   It has received single area payments under the EU Regulation No.73/2009 for at least a year during the last 3-year period; or shall receive direct payments to farmers under the EU Regulation No. 1307/2013 as of 1 July 2015; or at least 1/3 of company’s income for the last 3 years has been derived from the agricultural production (this criterion, similarly to individuals, shall enter into force as of 1 July 2015); AND

2)   It has confirmed in writing that it shall commence agricultural activities on the acquired land (either within a year, if the land has been applied for receiving single area payments for the previous or the current year; or within three years, if the application for single area payments have not been filed); and

3)   At least: (a) one of its owners or a permanent employee has professional education in agriculture, or (b) 1/3 of income of at least one of the owners for the previous 3 years is derived from agricultural activities; AND

4)   It can confirm that all its beneficial owners are citizens of either Latvia, EU, EEA or Swiss Confederation; AND

5)   On the day of filing the application for acquisition of the agricultural land it has no tax debt (either in Latvia or in the country where it is registered).

According to the amendments an individual or legal entity will not be able to acquire more than 2,000 hectares of agricultural land (in total). It should also be noted that a local municipality can set maximum amount of agricultural land to be acquired by an individual or entity which is less than the maximum amount stipulated by the law.

In order to acquire agricultural land an application form together with documents evidencing: (1) the transaction (a deed or agreement); and (2) compliance with the above criteria; shall be filed with the local municipality. However, the Cabinet of Ministers regulations that should stipulate the procedure for filing the applications (and accompanying documents) as well as the formation of the relevant municipal commissions reviewing the applications have not been adopted yet (although the deadline for adopting these regulations was 30 October, the regulations are still in the stage of initial drafting/preliminary approval within the Cabinet).

It should also be noted that the above criteria for acquisition of agricultural land must be applied both when the agricultural land is purchased and when it is acquired as investment in kind (contribution to the company’s share capital). The transfer of agricultural land (and the new owner) can be registered with the Land Book only after written consent from the local municipality has been received.

The above restrictions on acquisition of the agricultural land are not applicable if an individual: (1) inherits a land plot (without restriction regarding area of the land); or (2) acquires a land plot that does not exceed 10 hectares; or a legal entity acquires land of less than 5 hectares.

As of 1 November 2014 all agreements on lease of agricultural land shall be concluded for a term of at least five years; either the land owner or the lessee shall inform the local municipality regarding the lease transaction and the local municipality shall keep a register of all agreements on the lease of agricultural land within its territory.

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