From 1 May 2015, foreign companies face sanctions for companies owning agricultural land in breach of the restrictions introduced in May 2014.
The 2014 changes to the Ownership and Use of Agricultural Land Act prohibited the acquisition of ownership of agricultural land by:
- commercial companies directly or indirectly owned by companies registered in jurisdictions with preferential tax regimes (as listed in Para 1, s.64 of the Supplemental Provisions of the Corporate Income Taxation Act);
- commercial companies wholly or partly owned by shareholders or members from non-EU/EEA states; or
- joint-stock companies with bearer shares.
The restrictions do not affect ownership of forestry land, which is regulated by a different law.
Parliament has now approved a further amendment – published in the State Gazette on 20 February 2015 and coming into force from 1 May 2015 – to impose a financial sanction on companies owning agricultural land in breach of these restrictions.
The sanction is an initial BGN 100 for each decare (1,000m2) of land, followed by a tripling of the penalty (the wording of the law suggests that this is supposed to be a further BGN 300 per decare rather than a tripling of the sanction already imposed) if the owner does not dispose of the land within three months from the sanction date.
The amendment then states that the triple penalty rule will also apply to ‘each subsequent breach’. This either means that the company would have to pay the same tripled sanction again every quarter until the breach is corrected, or that the sanction would continue to be tripled and added to previous penalties every quarter until the breach is corrected.
It is also unclear which authority will be responsible for enforcing the restrictions and imposing the sanctions.