Ownership of Bulgarian properties by foreign investors
I. OWNERSHIP OF LAND & BUILDINGS
1. Foreign citizens may have the possession over buildings, the right to build a house on a piece of land (superficie) and other land associated rights such as the right of use (usus), and the servitudes(passage), but may not acquire land.
2. Foreign legal entities and physical persons can however acquire land via a Bulgarian registered company / OOD or EOOD being the equivalent of Limited Company or Limited Company with only one Director/; via a joint venture with already established local companies; via acquiring a company through privatization or by making a portfolio investment.
3. The recent Bulgarian ownership legislation will be harmonized with the EU in the near future.
II. WHAT MIGHT BE THE COSTS, INVOLVED IN ACQUIRING A PROPERTY
The costs associated with the transaction are as in elsewhere in Europe subject to notary and municipal fees.
1. The notary fees are approximately 0.4% of the higher of the market price or the book value of the property at varying rates within the maximum being BGN 3,000 (approx. £1,030).
2. The municipal fees are 2% of the market value of the property and are paid to the municipality in which the real property is situated.
3. Local taxes and rates – 0.1% of the book value of the property. Arable land is exempt from local taxes. In addition to the real property tax, owners also pay waste – collection fees, which are of minor importance.
4. Value added tax (VAT) – transactions with land and lease of property for residential purposes are exempt from these tax. All other real estate transactions are subject to VAT at the uniform rate of 20%. The buyer / lessee are entitled to a VAT refund, provided that it is registered for VAT purposes.
6. Should you require purchase of land you have to set up a Bulgarian limited company /EOOD or OOD/. It takes 3-7 days ('express' option, otherwise 2 - 6 weeks) to form a company. Registering a Bulgarian Limited Company costs less than £600*. Svetoslav Arsov, an independent lawyer can provide you full legal assistance to incorporate Bulgarian limited company.
* These fees are subject to change in case of any increases in the state fees.
7. It is advisable that you appoint an experienced accountant to look after your company’s affairs/ to register you firm for BULSTAT, NOI /national insurance contributions/, tax purposes, etc./. Our qualified accountants can save you these worries for as little as EUR 300 per annum /approximately £200/.
After setting your limited company you have to sign a Preliminary Contract and pay a deposit/down payment (in most cases 10% of agreed price) . Within 3-4 weeks the whole transaction is completed. After payment of the remaining 90% of the agreed selling price, the new owner receives the Title Deeds of the property / Notary Act/.
Should you need any further assistance please contact
Independent information on the process of incorporation of a private limited company is available from the Bulgarian Embassy – www.bulgarianembassy.org.uk in London, UK about:
* Buying a Property in Bulgaria
* Starting a Business in Bulgaria
* Residence in Bulgaria
* Bulgarian Citizenship
* Visa Information for Bulgaria