Scenario: Acquisition of a Tyrolean Farm by a Liechtenstein Foundation

The following scenario is entirely hypothetical and is intended to illustrate typical legal questions.

Initial Situation

A Liechtenstein family foundation based in Vaduz — let us call it the Bergheim Foundation — wishes to acquire a farm in Tyrol. The farm comprises 45 hectares of pasture land, a residential house and several farm buildings. The family's wish is to keep the farm within the family and to manage it sustainably, without living there permanently. The seller is an elderly farmer who is giving up the operation for health reasons. The purchase price is 1.8 million euros.

Legal Questions

The case is multi-layered:

1. Can a Liechtenstein foundation, as a non-EU entity, acquire agricultural land in Tyrol?
2. What requirements does the TGVG impose regarding farming of the land?
3. Does the 30 per cent price rule apply, and how is it to be applied?
4. How can the farm be properly managed without the foundation's responsible persons being permanently present?

Analysis

Free movement of capital for non-EU entities: Liechtenstein is not a member of the EU but is an EEA member. For EEA members, the EU free movement of capital under Art. 63 TFEU applies to capital movements. The ECJ clarified in the Ospelt decision (C-452/01) that even a Liechtenstein foundation, covered by the EEA Agreement, benefits from these fundamental freedoms. The logic of that decision applies to the Bergheim Foundation: a blanket refusal of land transfer approval based solely on the Liechtenstein seat of the foundation would be contrary to EU law.

Self-farming requirement: The TGVG requires, for agricultural land, that the acquirer farms the land themselves or ensures proper farming of it. The requirement of self-farming is not sustainable under EU law, to the extent that it disproportionately restricts the free movement of capital, in light of the Ospelt judgment. What matters is that proper agricultural use (ordentliche Bewirtschaftung) is ensured — this can also be achieved through an appointed farm manager.

The 30 per cent price rule: The TGVG contains a provision designed to prevent agricultural land from being sold at inflated prices, thereby putting it out of reach for farming families. Where the purchase price exceeds 30 % of the expert-assessed market value (Verkehrswert), the authority must refuse approval at first instance. In the specific case, careful examination of the ratio of purchase price to yield value is required. At a purchase price of 1.8 million euros for 45 hectares of Tyrolean pasture land, a review is appropriate.

Proper management through a farm manager: The Bergheim Foundation can have the farm managed by an employed or contracted farm manager. This person must possess the requisite expertise and must ensure sustainable agricultural use. The Foundation must demonstrate that such management is concretely secured — a mere statement of intent will not satisfy the Grundverkehrsbehörde.

Proposed Approach

Our recommendation for the Bergheim Foundation:

First, we obtain an independent valuation report on the yield value of the property to objectively establish the ratio to the purchase price and to demonstrate compliance with the TGVG price rule.

Second, we develop a detailed farm management plan that names a qualified farm manager and describes concrete measures for the maintenance and use of the agricultural land.

Third, we prepare the application for land transfer approval with complete documentation and actively accompany the proceeding. Should the authority refuse approval, we are prepared to challenge the decision before the competent administrative courts and — where necessary — before the ECJ.

Fourth, we structure the purchase contract with the necessary suspensive condition of approval being granted, and clear provisions governing the situation where approval is refused.

This case illustrates that the acquisition of agricultural land by foreign entities is legally possible — but requires particularly careful preparation and the consistent assertion of the fundamental freedoms guaranteed by EU law.