Legal information and transfer taxes

Bulgaria is a politically stable country, and the introduction of a currency board in 1997 stabilised the country's economy. However, as is the case elsewhere in Central and Eastern Europe, legislation, including that governing real estate, is volatile and subject to frequent change.

A foreign investor can invest in properties in Bulgaria either directly or through a local entity. The non-Bulgarian clients as individuals are allowed to acquire title to apartments or any other properties not including land as well as to acquire only buildings and limited rights (e.g., leasehold and construction rights) to land. The non-Bulgarian clients are allowed to title land or any property with land such as houses, villas, and etc. only as juridical. In some limited cases concerning the security of Bulgaria, acquisition of immovable property by non-residents requires prior permission of the Ministry of Finance.

Foreign investors are guaranteed full repatriation of profits resulting from an investment in Bulgaria. The transfer abroad can be made only after the bank effecting the transfer is presented a certificate proving payment of all Bulgarian taxes due.

Bulgaria has one of the most liberal foreign investment laws in the region. Foreign investment typically assumes one of the following forms: establishing a joint venture with existing companies, state-owned or private; acquiring a company through privatization; setting up a new (green field) venture; or making a portfolio investment. Portfolio investment has been minimal given the relative lack of development and inefficiencies of the capital markets.

The most common type of organization for foreign investors is a limited liability company. The procedure of registering takes 2-4 weeks. The costs are 1000 lv. or appr. 500 EUR including all the fees and taxes. To start the procedure the main capital of the company which is 5000 lv. or appr. 2500 EUR should be transferred into the bank account of the company. This amount can be drawn back within few days.

Other forms are companies limited by shares (joint stock companies), joint enterprises, business associations, general partnerships, limited partnerships, and sole proprietorships.

The law does not limit the extent or amount of foreign participation in companies. Foreign companies have the right to open deposit accounts in hard currency and Bulgarian leva.

Transfer taxes

The transfer is subject to notary and municipal fees. The notary fees are paid on the higher of the market price or the book value of the property at varying rates, specified in a special chart and is less then 0.5 % from the price. In addition, 2% of the market value of the property is paid to the municipality where the real property is located.

Value Added Tax

Transactions with land and lease of property for residential purposes are exempt from Value Added Tax (VAT). All other real estate transactions are subject to VAT at the uniform rate of 20% if the seller is a company registered for VAT purposes. The buyer/lessee is entitled to a VAT refund, provided that it is registered for VAT purposes.

Property taxes

The property taxes for your own property in Bulgaria are very low. For example the annual property taxes and the annual garbage taxes for a property in a big Bulgarian city or in a resort area are 50-70 EUR.

Annual costs

Annual costs for running a house or an apartment in Bulgaria are considerably lower than in UK appr. 900-1200 EUR. Costs vary according to the size and location of the property and how much is it in use. This includes:

• Estimated charges for electricity, water and telephone;
• Maintenance fees if the property is located in a complex area.
• House/apartment and content insurance