REALWorld Law

Corporate vehicles

Restrictions on foreign investment

Are foreigners allowed to invest by directly purchasing a commercial real estate asset?

Angola

Angola

Although there are restrictions to the acquisition of real estate by foreigners, the Private Investment Law (Lei do Investimento Privado, Lei nº 10/18 de 26 de Junho) allows foreigners to invest in Angola via purchasing real estate assets when such acquisition is part of a private investment project.

Australia

Australia

Yes, however the Foreign Acquisition and Takeovers Act 1975 (Cth) (FATA) sets out the requirements associated with foreign investment in Australia. The FATA regime is administered by the Federal Treasurer and the Foreign Investment Review Board (FIRB).

The Commonwealth's stated approach to foreign investment is to encourage it consistent with Australia's national interest. Proposals concerning acquisition of an interest in Australian land requires notification to, and approval by, FIRB if the value of the interest being acquired exceeds prescribed thresholds.

Any acquisition of commercial real estate by an agreement country investor (currently being a non-government entity from the USA, New Zealand, Chile, Japan, the Republic of Korea and China) will be subject to a threshold of AUD1,094 million. Acquisitions of such land by a foreign person which is not an agreement country investor or a foreign government will be subject to a AUD252 million threshold unless the land is characterized as ‘sensitive’ in which case an AUD55 million threshold will apply. These lower thresholds also apply to Australian special purpose vehicles established by agreement country investors for the purposes of making the investment.

An interest in Australian land includes acquisitions of an interest in a share in an Australian land corporation and a unit in an Australian land trust.

The above mentioned thresholds are indexed annually on 1 January.

In the case of vacant land and residential land (as well as acquisitions by foreign government entities), the threshold is zero and accordingly all acquisitions of such land or by such entities require approval by FIRB.

A foreign person includes:

  • A person not ordinarily resident in Australia
  • A corporation in which a person not ordinarily resident in Australia (non-resident) or a foreign corporation holds a substantial interest (20 percent or more)
  • A corporation in which two or more non-residents or a foreign corporation hold an aggregate substantial interest (40 percent or more)
  • The trustee of a trust estate in which a non-resident or a foreign corporation holds a substantial interest (20 percent or more)
  • The trustee of a trust estate in which two or more non-residents or a foreign corporation holds an aggregate substantial interest (40 percent or more). A substantial interest in a trust estate arises when the trustee of the trust is empowered to distribute to a foreign person, either alone or together with associates, more than 20 percent of the income of the trust estate

Australian land is broadly defined and includes all agricultural land, commercial land, residential land and a mining tenement or production tenement situated in Australia.

Belgium

Belgium

Yes. There are no restrictions in Belgium on foreign investors making direct investments in property, irrespective of its intended use.

Bosnia-Herzegovina

Bosnia-Herzegovina

Foreign investors may invest in real estate in Bosnia and Herzegovina (BiH) by acquiring all or part of an existing local legal entity, or by establishing a new company in BiH. The rights of foreign individuals acquiring real estate in Bosnia and Herzegovina are regulated in different ways depending on the specific circumstances.

After acquiring an existing legal entity, a foreign investor becomes the owner of the real estate held by that company. A foreigner can own real estate in Bosnia and Herzegovina based on reciprocity with the foreigner's own country which is always presumed. The Ministry of Justice of Federation of Bosnia and Herzegovina issues a list of countries with whom Bosnia and Herzegovina does not have reciprocity related to the acquisition of real estate each year by 31 January at the latest. By establishing a new company, even where this is owned exclusively by a foreign individual or entity, foreign investors can acquire property in Bosnia and Herzegovina directly, without any restrictions since they will effectively acquire the same legal rights and obligations as any local BiH legal entity.

Occasionally there may be limits on foreign investors' rights to acquire real estate in certain parts of the territory of the FBiH, or they may require special written consent from the Ministry of Justice.

Canada

Canada

Federal

At the federal level, the only restrictions on foreign ownership are in the Investment Canada Act (“the Act”), and only apply to a foreign investor acquiring control of a Canadian business. Any transaction that triggers the relevant dollar threshold is subject to a pre-closing review where the Minister of Industry must be satisfied the transaction is “likely to be of net benefit to Canada.” The threshold amount depends on the nature of the entity purchasing the Canadian business. Some of the categories for review are described below.

Private Sector World Trade Organization (“WTO”) Investors

In 2021, the review threshold for a WTO investor that directly acquires control of a Canadian business is CA$1.043 billion in enterprise value. The threshold level will be adjusted annually for growth in GDP.

State-Owned Enterprise WTO Investments

In 2018, the review threshold for foreign state-owned enterprises that are WTO members is CA$415 million in asset value.

Non-WTO Investments and Investments in Cultural Business

The thresholds for investments by an investor who is not a “WTO investor” as defined in subsection 14(6) of the Act are CA$5 million in asset value for direct investments and CA$50 million in asset value for indirect transactions. These thresholds also apply to investments made by all non-Canadian investors to acquire control of a Canadian business that is a “cultural business” as described in the Act (generally any business that produces, distributes, or sells magazines, newspapers, video or music recordings, etc).

National Security

Finally, any investment of any size by a non-Canadian can be reviewed if the Minister believes it could injure national security.

Provincial

British Columbia: 20 Additional Property Transfer Tax on Residential Properties in the Greater Vancouver Region, Capital Regional District, Fraser Valley, Central Okanagan and Nanaimo.

There is an additional property transfer tax of 20% that foreign nationals, foreign corporations, and foreign taxable trustees pay in addition to the general property transfer tax on transfers of residential property in the Greater Vancouver Regional District, Capital Regional District, Fraser Valley, Central Okanagan and Nanaimo. By regulation, the tax can be applied to other areas in the province. There are no other foreign ownership restrictions in the province.

Ontario: A Non-Resident Speculation Tax in Metro Toronto

Following on the footsteps of Vancouver, Ontario imposed a tax of 15% of the fair market value of residential properties being transferred to non-residents. This tax came into effect on 5 May 2017.  Unlike British Columbia, this tax only applies to properties containing up to six units in a single title.

Alberta: No Foreign Buyer Can Own More Than 20 Acres of ‘Controlled Land’

Individuals who are not Canadian citizens or permanent residents, as well as foreign controlled corporations, cannot acquire interests in controlled land consisting of more than two parcels containing not more than 20 acres. “Controlled land” is land outside a city, town, or village. This restriction also applies to leases.

Saskatchewan: Non-Residents and Non-Canadian Owned Entities Cannot Own More Than 10 Acres of ‘Farm Land’

Non-residents of Canada and non-Canadian owned entities cannot own more than 10 acres of farm land. There are limited exceptions to this rule. This restriction covers all types of land interests, including leases. Under the regulations, “farm land” means real property that is situated outside a city, town, or village. It does not include land used for extracting, processing, storing, or transporting minerals or land used primarily for sand and gravel extraction.

Manitoba: Non-Canadians and Non-Canadian Owned Organizations Cannot Own More Than 40 Acres of ‘Farm Land’

Non-Canadian citizens, organizations at least partly owned by non-Canadians, and publicly traded companies and other organizations whose ownership is open to non-Canadians cannot own more than 40 acres of farm land unless an exemption is granted by the Manitoba Farm Industry Board. This restriction applies to most types of interests, including leases. “Farm land” means real property outside a city, town, village or hamlet that is reasonably capable of being used for farming. Like Saskatchewan, the Manitoba legislation exempts land used for the purpose of extracting, processing, storing, or transporting minerals.

Québec: Non-Quebec Residents Cannot Own More Than 4 Hectares (10 acres) of Land

Non-residents of Québec and non-Québec resident entities are not allowed to acquire more than 4 hectares of land below the 50th parallel or in a zone designated as an agricultural zone except with the authorization of the Commission de protection du territoire agricole du Québec. “Farm land” is defined as any land used for agricultural purposes having an area of at least four hectares. This restriction applies to leases as well.

Prince-Edward Island: Non-Residents Cannot Own More Than 5 Acres and Cannot Have a Shore Front of More Than 165 Feet

Non-residents of PEI as well as corporations cannot own land in excess of 5 acres and cannot have a shore front of more than 165 feet. This restriction applies to all land and most types of interests, including leases. The restriction applies to all corporations as opposed to only foreign-owned ones.

China

China

Foreigners are prohibited from directly purchasing real estate that is not for self-use.

Foreign investors may acquire real estate in the PRC if it is for their own use and the investor has had a presence in the PRC (or in the case of an individual, has worked or studied in the PRC) for at least one year.

For real estate acquisitions that are not for self-use, foreign investors must establish a Foreign Invested Enterprise (FIE), specifically set up for the proposed investment project. 

Croatia

Croatia

Investors wishing to invest in real estate in Croatia can structure their acquisition through a direct acquisition of the real estate or an indirect acquisition via a Croatian corporation.

Since 1 February 2009, EU residents have been allowed to acquire real estate in Croatia, other than agricultural land and designated environmentally sensitive areas, without having to obtain prior approval from the Ministry of Justice. The direct acquisition of real estate assets by non-EU residents is subject to reciprocity (ie it is permitted provided Croatian citizens are allowed to acquire real estate in the investor's home country) and requires written consent from the Ministry of Justice. Agricultural land and forests cannot normally be acquired by foreigners, unless an international agreement provides otherwise.

Czech Republic

Czech Republic

There are several possible routes for real estate investment in the Czech Republic, including direct acquisition of real estate (an asset deal), an indirect acquisition via a corporation (share deal), an acquisition via a partnership, and a purchase of an enterprise or its branch office. No specific conditions for organisations or companies apply to investment in real estate.

The previous temporary restrictions which were a derogation from the applicable European Union rules regarding the free movement of capital have already expired and do not apply.

It should also be noted that a Czech corporate entity based in the Czech Republic which is established and controlled by a non-Czech entity is not subject to restrictions when acquiring real estate in the Czech Republic. The acquisition of real estate, including agricultural land, through the establishment of such a company is common practice among non-EU investors.

In 2022, the member states of the European Union (including Czech Republic) has established certain restrictions with respect to business, transactions, free movement, investments etc. in relation to the Russian Federation and several individuals due to invasion of Russia to Ukraine.

Denmark

Denmark

Foreigners need permission from the Minister of Justice to purchase real estate assets used for commercial purposes in Denmark, unless investing through a corporation which has its registered office in Denmark. The need for a permit can easily be avoided by establishing a Danish subsidiary company.

The need for a permit does not apply to corporations registered in EU member states, as long as the purpose of purchasing the real estate is business related.

France

France

In France, direct investment in real estate can be carried out without ownership of a company registered in France.

Germany

Germany

In general, there are no limits on the acquisition of property by foreign investors over and above those imposed on resident German investors. Where investors are from countries outside the European Union, the German government would be entitled to promote statutory law requiring foreign corporate investors to obtain a public permit to acquire real estate in cases where German companies are subject to similar restrictions in the investor’s country of origin. Currently, however, such law does not exist and we are not aware of any intent to enact it. However, if a legal entity with its statutory seat outside of Germany intends to acquire real estate in Germany, such legal entity needs to register in the German transparency register (Transparenzregister), disclosing its ultimate beneficial ower (UBO) within the meaning of German law. No German real estate transaction can even be signed prior to such registration. The UBO-requirements are very detailed and subject to individual review. Generally, a natural person holding 25% of the shares or voting rights in a legal entity or the majority of shares/voting rights of a group is considered a UBO. In case there is no UBO within the meaning of German law, management of the legal entity is considered as fictitious UBO and needs to be registered in the transparency register.

Hong Kong, SAR

Hong Kong, SAR

Yes.

Hungary

Hungary

Yes. There are, however, certain restrictions on the acquisition of arable land by foreign citizens and a prohibition on its acquisition by legal entities, whether foreign or domestic.

In addition, non-EEA citizens or legal entities may acquire real estate only with the consent of the relevant administrative office.

On the basis of the laws introduced due to the COVID-19 pandemic, in certain cases the acquisition of real estate assets critical to carry out the activities of certain strategic sectors with an ownership structure involving directly or indirectly certain foreign elements may require a notification to and acknowledgement by the competent Hungarian ministry.

Ireland

Ireland

Yes.

Italy

Italy

There are no restrictions on foreigners investing in real estate in Italy. However, where an investment is by way of the purchase of shares in a corporate vehicle then there are certain restrictions that may be imposed by the Foreign Ministry (Ministero degli Affari Esteri). In any case the principle of reciprocity shall be met. There is no reciprocity when a foreign country places restrictions on an Italian investor who wants to establish a company in that country, since in such cases Italy applies the same limitations to the foreign citizen of that country, or to the foreign company of that country that wishes to invest in Italy. The check about the existence of treatment reciprocity shall not be carried out towards citizens of those countries with which Italy has concluded Bilateral Investment Treaties (BITs), for the matters covered by such treaties.

The issuance of a tax code may be necessary for physical persons with foreign citizenship and intending to set up a legal entity. The tax code will also be necessary if the person becomes a director of an Italian legal entity.

Japan

Japan

Yes.

Netherlands

Netherlands

In general, there are no restrictions applying to foreigners in particular.

Nigeria

Nigeria

Generally, under Nigerian law, foreigners are not allowed to directly own landed property. However, a foreign investor may acquire real property in Nigeria through any company or entity registered in Nigeria. The company may acquire land in Nigeria like a Nigerian citizen, whether wholly owned by foreigners or not.

Furthermore, a foreign investor may also acquire real property in Nigeria by ensuring that it has obtained the prior approval of the State Governor and following the required procedure for application for approval to acquire any interest or right in land by a foreigner. Section 6 of the Acquisition of Alien Law empowers State Governors to lay down individual procedures for acquisition of land by aliens in their States.

Norway

Norway

In general, there are no specific restrictions applying to foreigners.

Poland

Poland

The Act on the Acquisition of Real Estate by Foreigners stipulates that the purchase of real estate including rights of perpetual usufruct by an entity considered to be foreign is conditional upon prior permission in the form of a decision issued by the Minister of Administration and Internal Affairs. Any breach of this obligation will render a transaction null and void.

However, since Poland's accession to the European Union, foreigners from the European Economic Area have not been required to obtain such a permission, except in relation to the purchase of agricultural or forest land, where a permission was required until 1 May 2016.

Where their home country allows reciprocal rights, foreign investors can establish branches in Poland to conduct business. Foreign investors from EU, EEA and EFTA member states can undertake commercial activity subject to the same regulations as Polish businesses.

Portugal

Portugal

Yes, foreigners are allowed to invest in Portugal by directly purchasing any real estate asset.

Romania

Romania

At present, foreign entities and individuals are allowed to own land in Romania, provided that certain conditions are fulfilled. A preferential regime applies to EU or EEA (European Economic Area) nationals and EU or EEA based companies which are resident in Romania following Romania’s accession to the EU on 1 January 2007. Thus, resident EU or EEA nationals and companies are allowed to purchase land subject to the same conditions as Romanian nationals and companies. However, non-resident EU or EEA nationals and EU or EEA based companies are allowed to acquire land only for the purpose of establishing a secondary residence or headquarters here and only with effect from 1 January 2012.

EU or EEA nationals and EU or EEA based companies are allowed to acquire agricultural land or forest in Romania as from 1 January 2014.

Non-EU nationals and companies may acquire land in Romania, provided that there is an international treaty between Romania and the relevant state, and that reciprocal arrangements are in place. So far, no such treaties have been concluded by Romania with non-EU/EEA countries.

These restrictions do not apply to the ownership of buildings as opposed to land. Foreigners may also hold certain rights over land (such as the right of 'superficies' - the right to own a building and to use the underlying land).

Slovak Republic

Slovak Republic

The opportunities for foreigners to acquire real estate in the Slovak Republic used to be severely limited. Since the Slovak Republic joined the European Union (1 May 2004), these restrictions have been significantly liberalized. Foreigners can now acquire ownership of real estate located in Slovakia including agricultural land and forest.

The Foreign Exchange Act defines a 'foreigner' (cudzozemec) as a non-resident individual or legal entity.

However, there are some exceptions relating to the ownership of real estate whereby acquisition by foreigners is restricted by virtue of specific legislation. For example, legislation provides that the ownership of the agricultural land may not be acquired by a country, a citizen of a country, a natural person with residence or a legal entity with its registered seat in a country, whose legislation does not allow citizens of the Slovak Republic, natural persons with residence in the Slovak Republic or legal entities with their registered seats in the Slovak Republic to acquire ownership of agricultural land. This does not apply to inheritance and to the states of the European Union, the European Economic Area, Switzerland or the states for which it follows from the international agreement by which the Slovak Republic is bound.

Spain

Spain

Yes, foreigners are allowed to invest in Spain by directly purchasing a real estate asset for commercial purposes. However, a foreign investment in real estate which is valued at more than €3,005,060.52, or which is made with funds which come from a tax haven, must be reported to the Investment Registry of the Spanish Ministry for the Economy and Competitiveness (Registro de Inversiones del Ministerio de Economía y Competitividad).

Official forms DP2, D2A or D2B must be completed by the foreign investor when investing in real estate assets, further to legal resolution issued by the Dirección General de Comercio Internacional e Inversiones on 27 July 2016.

Additionally, foreigners will be required to have a Spanish Tax Identification Number (NIF), when the investor is a legal person; or Foreigner Tax Identification Number (NIE), when it is a natural person.

Military authorization will be required, by virtue of the Decree 689/1978 of 10 February, for foreign investment by directly purchasing a commercial real estate asset in the following territories:

  • Spanish islands
  • Spanish peninsular territory: Cartagena, Galicia, Strait of Gibraltar, bay of Cádiz, the border area with Portugal, France and in the Spanish territories in the north of Africa

For these territories, certain quotas for total foreign investment have been established.

Sweden

Sweden

Yes.

Thailand

Thailand

Foreign ownership of land in Thailand is generally prohibited. Buildings and other structures located on the land could be owned by a foreigner with separate title registration. Moreover, a foreigner is allowed to directly own condominium units with an aggregate unit space of up to 49% of the total floor area of all units in a condominium building.

In addition, foreign-owned companies may be allowed to own land for their business if operated in an industrial estate zone and/or granted investment promotion by the Board of Investment.

United Arab Emirates - Abu Dhabi

United Arab Emirates - Abu Dhabi

Yes, but only where the real estate asset is located in one of the investment areas of Abu Dhabi. In these areas non-UAE nationals can hold the following land interests:

  • units and floors in buildings (but not the land itself);
  • usufruct rights (rights of exploitation) lasting up to 99 years;
  • musataha rights (development rights) lasting up to 50 years (renewable by mutual consent for a further term of 50 years); or
  • long-term leases with a term of up to 25 years.
  • In addition to the above, foreigners who are nationals from Gulf Co-operation Council (GCC) countries, or companies wholly owned by them, may also hold freehold interests in the land itself (conferring absolute ownership) within the designated investment areas.
  • The GCC countries are the United Arab Emirates, Qatar, Kuwait, Oman, the Kingdom of Saudi Arabia and Bahrain.

The Abu Dhabi Executive Council is permitted to designate certain individuals, companies and parties as having the same status as UAE nationals regarding land ownership in the Emirate. This has been done to date for two real estate development companies listed in Abu Dhabi Aldar Properties PJSC and Sorouh Properties PJSC, the two of which have since merged to form one company (being Aldar Properties PJSC). This designation enables these companies to own land interests throughout Abu Dhabi despite them having an element of foreign ownership.

In the Abu Dhabi Global Market financial free zone, only GCC citizens and companies wholly owned by them may hold a freehold interest in land. There are no such restrictions on buying other freehold interests in real estate, such as units and floors.

United Arab Emirates - Dubai

United Arab Emirates - Dubai

Yes, but the law provides that natural or legal persons from non-GCC countries may only acquire the following interests, in specific areas designated for foreign ownership from time to time by the Ruler of Dubai:

  • an interest unlimited in time, and
  • a usufruct interest (the right to exploit land belonging to another) or a long leasehold interest for up to 99 years

The Gulf Cooperation Council (GCC) countries are the United Arab Emirates, Qatar, Kuwait, Oman, the Kingdom of Saudi Arabia and Bahrain.

GCC nationals are entitled to own land anywhere in Dubai.

UK - England and Wales UK - England and Wales

UK - England and Wales

The UK’s decision to leave the European Union is likely to cause some uncertainty. Fiscal consequences may include changes in Stamp Duty Land Tax (England), Land and Building Transaction Tax (Scotland) and Land Transaction Tax (Wales). There may well be some other changes. If you have a contact in DLA Piper, please do check the latest position with him or her.

Yes.

UK - Scotland

UK - Scotland

The UK’s decision to leave the European Union is likely to cause some uncertainty. Fiscal consequences may include changes in Stamp Duty Land Tax (England), Land and Building Transaction Tax (Scotland) and Land Transaction Tax (Wales). There may well be some other changes. If you have a contact in DLA Piper, please do check the latest position with him or her.

Yes.

Ukraine

Ukraine

Ukrainian law allows foreign investors to purchase real estate as a direct investment. At the same time, a range of restrictions and special rules apply and investors should be aware of these.

Foreign investors are not entitled to purchase and own agricultural land.

Foreign investors may acquire non-agricultural land but only in the following circumstances:

  • inside the boundaries of a 'settlement':
    • where the plot of land underlies a building or structure owned by the buyer; and/or
    • where the buyer plans to develop a building or structure.
  • outside the boundaries of a 'settlement':
    • where the plot of land underlies a building or structure owned by the buyer.

The restrictions mentioned above also apply to joint ventures, ie companies established under Ukrainian law with the participation of foreign investors and Ukrainian legal entities and/or individuals.

The purchase of non-agricultural municipal land by foreign investors and joint ventures requires approval from the Ukrainian government, and the purchase of non-agricultural state land requires approval from the Ukrainian parliament. In addition, a sale of state or municipal land to a foreign company requires the registration of a permanent establishment in Ukraine which has the right to conduct business activity. Other restrictions apply to certain types of land.

It should be noted that on 31 March 2020 the Law of Ukraine "On amending some legislative acts of Ukraine regarding conditions of the agricultural land circulation" was passed. The respective law allows foreigners to purchase and own agricultural land only subject to the consent provided by Ukrainian people in a national referendum.

Moreover, there is no definitive position as to whether Ukrainian companies that are 100% foreign owned may acquire plots of land in Ukraine. On the one hand, there are clarifications of the State Agency for Land Resources and court decisions stating that the acquisition of plots of land by Ukrainian companies that are 100% foreign owned is not provided for by Ukrainian law. On the other hand, there are court decisions stating that such companies should be allowed to acquire non-agricultural land in Ukraine.

United States

United States

Generally, a foreign investor may purchase a direct interest in commercial real estate, although it is advisable that, for liability protection purposes, an interest in commercial real estate be held through a legal entity. Moreover, lenders may require that a foreign investor hold its interest through a legal entity. In certain circumstances a federal statutory requirement to file a national security clearance process overseen by the US federal government body known as the Committee on Foreign Investment in the United States (CFIUS) may be required.

Zimbabwe

Zimbabwe

There are no restrictions on foreign investors directly purchasing real estate. In terms of section 71 (2) of Constitution of Zimbabwe Amendment (No. 20) Act of 2013, “…every person has a right, in any part of Zimbabwe, to acquire, hold, occupy, use, transfer, hypothecate, lease or dispose of all forms of property, either individually or in association with others.” Foreigners may invest by directly purchasing a commercial estate asset or may do so through corporate vehicles.