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Amendments regarding some measures to regulate the sale-purchase of the agricultural lands located outside the built-up area

In this issue:

Law no. 175/2020 which will enter into force on October 13 brings with it changes in the sale-purchase of agricultural land located outside the built-up area, among others the obligation to pay an 80% tax calculated at the value representing the difference between the sale price and the purchase price in certain situations.

 

The law brings amendments to Law no. 17/2014 on some measures to regulate the sale-purchase of agricultural land located outside the city and Law no. 268/2001 regarding the privatization of the commercial companies that hold in administration lands of public and private property of the state with agricultural destination and the establishment of the State Domains Agency.

Exercising the right of pre-emption

The law details the order to be applied for the pre-emption right, at the same price and under the same conditions, for the alienation by sale of the agricultural lands located outside the built-up area, in compliance with the substantive and formal conditions provided by Law no. 287/2009 on the Civil Code.

80% Taxation of agricultural lands located outside the built-up area sold before the 8th anniversary of the purchase

Out-of-town agricultural land can be alienated, by sale, before the 8th anniversary of the purchase, with the obligation to pay 80% tax on the amount representing the difference between the sale price and the purchase price, based on the grid of notaries in that period.

In case of direct or indirect alienation, before the 8th anniversary of the purchase, of the control package of the companies that own agricultural lands located outside the built-up area and which represent more than 25% of their assets, the seller will have the obligation to pay a tax of 80% of the difference in value of the land in question calculated on the basis of the notaries' grid between the time of acquisition of the land and the time of alienation of the control package. In this case, the profit tax on the difference in value of the shares or shares sold will be applied on a reduced basis in proportion to the percentage of the share of the agricultural land concerned in the fixed assets, any double taxation being prohibited.

This tax does not apply to the reorganization or reallocation of assets within the same group of companies.

Land use – exclusively for agricultural activities

The owners of agricultural lands located outside the built-up area have the obligation to use them exclusively in order to carry out agricultural activities from the date of purchase, and if there are agricultural investments on agricultural land for tree, vine, hops and exclusively private irrigation. will keep the agricultural destination of this investment.

Penalties

The alienation by sale of agricultural lands located outside the built-up area without respecting the right of pre-emption, or without obtaining the approvals provided by law is prohibited and is sanctioned with absolute nullity.

Applicability

The provisions on the procedures relating to offers for sale, the exercise of the right of pre-emption, the control of the application of the right of pre-emption and the procedure for issuing notices necessary for the alienation of land are applicable to applications made after the entry into force of this law. on this date.

Also, within 15 days from the date of entry into force of this law, the methodological norms for the application of Title I of Law no. 17/2014.

For more details you can consult the Official Gazette, Part I no. 741 of 14 August.

The EY team is at your disposal for details and clarification of the issues mentioned above.

 
Prepared by:
Răzvan Ungureanu ― Tax Senior Manager, Direct Tax
Ecaterina Boca ― Senior Consultant, Knowledge Management Department
 
For additional information, please contact:
Alex Milcev, Partner ― Tax & Law Leader Romania
Miruna Enache, Partner ― Transaction Tax Leader
 
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