In today's article, we invite you to read our series on agricultural land again. This time, we will discuss the fees investors face after obtaining a decision permitting the exclusion of land from agricultural production. If you would like to read about the exclusion procedure itself first, we invite you to read this morning's article. #62.
A person who has obtained a final decision authorizing the exclusion of land from production is obligated to pay the so-called "due" and "annual fees ." This obligation arises from the date of actual exclusion of the land from production, i.e., the commencement of non-agricultural land use. According to established administrative court case law, the exclusion of agricultural land from production is a factual act. However, it should be remembered that the commencement of non-agricultural or forestry land use does not involve discontinuing agricultural activities on the property, but rather undertaking activities on the property that amount to initiating non-agricultural land use. The mere fact of issuing a decision establishing development conditions or even a building permit for the land does not constitute exclusion from agricultural production. However, the commencement of a construction project, such as erecting a kiosk on the land for business purposes, or developing the land for subsequent construction unrelated to agricultural production, will constitute such an act.
Now let's move on to what exactly the annual fee and charges are.
The fee is a one-time fee payable for permanently excluding agricultural land from production . The authority calculates its amount in the decision authorizing the exclusion of the land from production. When the land is actually excluded from production, we submit a relevant declaration to the authority, and the authority issues another decision informing us that the fee and annual fees are already applicable, the exact amounts, and the deadlines for payment. The fee must be paid within 60 days of the date the decision becomes final.
The amount due is calculated according to the table specified in the Act on the Protection of Agricultural and Forest Land. The amount due is determined per hectare of land excluded from production, based on the type and class of use.
It's also worth noting that, pursuant to Article 12, Section 6 of the Act on the Protection of Agricultural and Forest Land, the fee is reduced by the value of the land, determined according to market prices applied in a given location in land transactions, on the date the land is actually excluded from production . This means that if the price of investment land is very high and exceeds the amount of the fee, the investor does not pay the fee. However, if the land price is lower than the calculated fee, the investor only pays the difference between the calculated fee and the land price.
Furthermore, in accordance with Article 12a of the Act on the Protection of Agricultural and Forest Land, the obligation to pay the fee does not apply to the exclusion of land from agricultural or forest production for residential construction purposes :
1) up to 0.05 ha in the case of a single-family building;
2) up to 0.02 ha, per residential unit, in the case of a multi-family building.
It is also important that an owner who, within two years of the decision authorizing the exclusion becoming final, waives, in whole or in part, the right to exclude land from agricultural or forestry production, receives a refund of the amount paid, proportional to the area of land not excluded from production . The refund is due within three months of the date the waiver is notified to the authority.
After obtaining a decision permitting the exclusion of agricultural land from production and the actual exclusion of such land from production, in addition to the dues, we are obliged to pay annual fees.
The term annual fee shall be understood as an annual fee for the use of land excluded from production for non-agricultural or non-forest purposes . Each fee amounts to 10% of the amount due (without deducting the market value of the land) and is payable in the event of permanent exclusion – for 10 years , and in the case of temporary exclusion – for the period of such exclusion, but no longer than 20 years from the date of exclusion of the land from production.
In accordance with accepted practice, it is permissible to pay annual fees for a 10-year period "in advance." The annual fee for a given year is payable by June 30 of that year.
It is also worth pointing out that the obligation to pay annual fees, as in the case of dues, does not apply to the exclusion of land from agricultural or forestry production for residential construction purposes , in accordance with the limits indicated above.
It's worth remembering that if land excluded from production is sold, the obligation to pay annual fees passes to the buyer by operation of law. The seller is obligated to notify the buyer accordingly. Changing the person responsible for paying annual fees does not require a change in the administrative decision – the obligation to pay fees does not arise from the decision itself, but by operation of law.
We also invite you to read the article that will appear next week and will concern the rules and restrictions related to the acquisition of forest properties.
This alert is for informational purposes only and does not constitute legal advice.
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