Bulgaria has liberal foreign investment laws in the region regarding Bulgarian real estate and foreign investors. Property in Bulgaria is growing fast with the increase in property prices, placing the country among property price growth leaders on a global scale. The country has been politically stable with a developing economy.
The preferential conditions for foreign investors have generated exceptional business opportunities and investment growth potential. The real estate prices are lower in Bulgaria as compared to other destinations in Europe and that makes the country attractive and profitable.
Bulgarian Law
According to the Bulgarian constitution and legislation, only Bulgarian citizens and legal residents can own land in Bulgaria. However, foreign investors can invest in real estate in Bulgaria either directly or through a local company. They can acquire buildings but not land and can purchase land by setting up a company, which would then own the land for the investor. Limited Liability Company is the type of organization for foreign investors and the extent of foreign participation in companies is not limited by law.
Forming a Limited Liability Company
A foreigner or Bulgarian resident can form the company. The setting up of a company can be done by a Bulgarian lawyer in about two week’s time. To register a Limited Liability Company, a deposit of at least 70% of the company capital amount is required as a legal requirement. The money however remains available for use once the company is registered. The law allows using the company for the purpose of renovation and improvement of property according to the investor’s wish. Foreign organizations can open bank accounts and the company stake is not limited.
Real Estate Tax
The transfer of property levies corporate tax. No other tax is levied on it and the transfer is subject to notary and municipal fees. The notary fee is paid at varying rates depending on the market price of the property. 2 % of the market value of the property is also paid to the municipality upon completion.
Local Taxes and Rates
The people owning a building or a plot are obliged to pay a property tax. If the building is built on a municipal plot, the value of the plot will also be included in the tax. However, arable land is exempted from local taxes. Waste-collection fees should also be paid along with the property tax which is determined after registration of the ownership with the municipality. The registration should be done within 60 days of completion, failing which, small fines can be levied.
Value Added Tax
Transactions regarding land and lease of property for residential purposes are exempted from Value Added tax. Other real estate transactions are subject to the tax at the rate of 20%. The buyer can be entitled to a VAT refund if it is registered for the purpose.
