The first stage of the agricultural land market is to take effect on July 1, 2021

Martyniv Law has prepared a brief overview of key aspects of agriculture land market

  • As of 01.07.2021, only Ukrainian citizens will be able to acquire up to 100 ha of agricultural land into ownership. The hectares acquired before 01.07.2021 will not be included in the calculation of the 100 ha limit.
  • SPA of agricultural land shall be notarized. Until 01.01.2030, the price shall not be less than the regulatory monetary valuation of a target land plot, settlements – only non-cash. Buyers shall confirm a source of funds.
  • Individuals are obliged to pay the land tax for the owned land. Some citizens have land tax benefits, but these benefits do not cover all the hectares in ownership. There is an exemption from the land tax if the land is transferred into a lease to the taxpayer of the single tax fourth group.
  • The law does not explicitly regulate the acquisition of agricultural land by individual entrepreneurs and family farms, established by an individual entrepreneur.
  • Solely banks may be mortgagees of agricultural land and rights to such land (lease, emphyteusis), and any rights that may arise in the future. As of 01.07.2021, banks are entitled to grant loans secured by agricultural land. The foreign ownership structure of banks is not a barrier to land acquisition as a result of the enforcement of collateral. Within 2-years, such land shall be sold by a bank at an auction. Banks are not subject to the restriction on the area of land in ownership.
  • Lease and emphyteusis rights of state and municipal agricultural land, as well as land servitudes, cannot be pledged. Lease and emphyteusis rights of private agricultural land can be pledged if such right to pledge is provided under a lease/emphyteusis agreement, and there are no other restrictions in a respective agreement. Additional options for banks: a pledge of biological assets, crops, and securing of obligations through trust property.
  • From 01.01.2024, companies with a Ukrainian ownership structure can actively participate in the agricultural land market. From this date, a limit of 10,000 ha “in one pair of hands” applies to all. The limit of 10,000 ha is applicable to direct ownership of land and indirect – through a participatory interest (control) in companies.
  • Foreign individuals, stateless persons, and companies with a foreign ownership structure cannot acquire agricultural land into ownership. Foreigners are also forbidden to “enter” Ukrainian companies that own agricultural land unless otherwise decided at a referendum. The date of the referendum is not defined. The referendum may take place before 01.07.2021 or later. Foreign individuals, legal entities with foreign ownership structures are not included in the list of persons entitled to acquire agricultural land into ownership. As follows from the adopted law, a positive decision at the referendum will allow foreigners to “enter” Ukrainian companies that already own agricultural land. However, the right of such companies to acquire additional agricultural land will be blocked after such “entry”, even if the limit of 10,000 ha is not yet exceeded. .
  • If foreigners are not allowed to participate in the land market, they will be able to “indirectly” acquire land through securities other than shares.