What you have to know when buying a property in Bulgaria

Once you have completed your search and you have selected few properties the next step is to contact the owner of the property. Our law firm may assist you to contact the owner of the property and make initial assessment.

Our real-estate lawyers will assist with the following:

• Verify that the seller is the actual owner of the property
• Verify that there are no legal impediments to the transfer of the property
• Draw up of the Notary Deed (same as Title Deed in the UK), also called Title Deed
• Draw up the Preliminary Sale contract
• Register the Notary Deed with the Property Registry at the Registry Agency, which ensures the rights of the buyer in case of possible claims of third parties. Since then the buyer has every right to dispose with mortgages, rentals, sale etc.
• File a tax declaration, levying an annual tax at the Local Taxes and Fees Department at the municipality where the property is located
• To obtain permanent residence and Bulgarian citizenship by investment in real-estate
• To provide the most competitive conveyancing fees in Bulgaria

We may assist you to buy a property in Bulgaria remotely by granting a power of attorney to our law firm. You may find more details how to legalize documents for official use in Bulgaria. 

For more details about buying a real-estate in Bulgaria, please feel free to contact us. 

Procedure for buying a property in Bulgaria

Bulgarian law allows non-EU citizens to buy property in Bulgaria with some limitations. All non-EU natural or legal persons can buy apartments in Bulgaria on their own names, provided that the apartments don’t come with ideal parts of the land on which the apartments were built. Most of the apartments for sale in Bulgaria are sold without parts of the land.

When buying a house with a garden or a plot of land one must know that generally land cannot be sold to non-EU citizens and can only be bought by registering a Bulgarian company. Our lawyers can assist you to register a Bulgarian limited company for only 199 € including all legal & state fees and registered office address. Using our company formation services, we do not charge maintenance or annual fees for the registered office address.

On the other hand, EU physical and legal persons are allowed to buy houses with gardens and regulated plots of land in Bulgaria on their own names as physical persons. The Treaty of Accession of Bulgaria to the EU allowed Bulgaria to keep the prohibition for EU physical and legal persons to buy land in Bulgaria for up to 5 years for land after its accession to the EU. The 5-year term has now finished and since 1.01.2012 all EU persons are allowed to buy land in Bulgaria. This applies to houses with gardens, all plots that are within the zoning of the settlements, apartments coming with ideal parts of the land, offices and other commercial properties. The same applies for citizens of countries from the European Economic Area (EEA).

If you would like to learn more regarding the limitation to buy a real-estate in Bulgaria, please feel free to contact us.

Tips when buying a property in Bulgaria

• Properties in Bulgaria are valued by square meter instead of rooms as in the United Kingdom. A three-bedroom apartment may turn out to be a tiny expensive panel box.
• Real-estate agents mention the total size of the property in square meters without mentioning the size of the common parts (the common parts are non-usable BUT you will pay them as regular square meters).
• Some property offers may look very attractive, however, when buying a property in Bulgaria you should always remind yourself that you get what you pay for. There is always a good reason why the property is undervalued.
• Agents’ commission vary between 2,5 % – 3,5 % of the value of the property.
• The price of the advertised properties is usually higher than the real value leaving some room for negotiations. Common practice is the price of the property to be lowered by 5-10% in the course of dealing.

Taxes and Fees in Case of Purchase and Sale Transactions

According to the Art. 186 of the Obligations and Contracts Act the costs incurred during the sale of the property must be shared equally between the parties.

The following fees must be paid upon the performance of the formalities of the deal at the notary’s office:

1. Notary fee, calculated as per the Notary Fees Tariff on the certified material interest (in case of difference between the tax evaluation and the sale price – on the higher amount) + 20% VAT.
2. Fee for the registration of the title deed with the Property Register at the Registry Agency, amounting to 0.1% of the certified material interest.
3. Tax in the case of onerous acquisition of property, amounting to 0.1 to 3 %. The tax rate for each municipality is determined by the municipal council. The tax is calculated on the basis representing the higher of the two values – the tax evaluation of the property, determined in compliance with the rates stipulated under Annex 2 to the Local Taxes and Fees Act or the agreed price. For this purpose, before the performance of the deal at the notary’s office, the owner of the property must obtain a Certificate of Tax Evaluation issued by the municipality where it is located. The total of these amounts is paid to the notary and the latter performs the registration of the title deed and pays the fees due.

Depending on the situation, additional charges may be required to be paid as remuneration of the real estate agent /agency/ – determined by negotiation, usually at the rate of 2.5 to 3%.

Buying a property in Bulgaria you may become a tax resident of Bulgaria. 

Seek independent legal advice

Numerous property owners are now experiencing problems with their property because they did not seek independent legal advice and instead used lawyers and translators which were recommended by the estate agent or developer and in some cases were acting for both parties. Appoint a lawyer who is experienced in property conveyance and fully independent of anyone else involved in the transaction, e.g. the estate agent, vendor or developer.

Annual tax on the property

The owner of the property has to pay annual property taxes. There are usually two property taxes to be paid: property tax and garbage collection, which are paid at the local municipality.

If you would like to learn more regarding buying a real-estate in Bulgaria, please feel free to contact us. 

Have you considered becoming a tax resident of Bulgaria? Under the Bulgarian legislation you can claim Bulgarian tax residence if 1. You reside in Bulgaria 183 days annually or 2. You prove that the center of your vital interests is in Bulgaria. Under point 1, you will be considered a tax resident of Bulgaria only in the year when you have resided in the country for 183 days. On the other hand, you are not required to satisfy the residence requirement if you justify that the center of your vital interests is in Bulgaria. To determine the center of vital interests, the tax office will consider the location of your employment/ self-employment, business, the country where you pay social contributions, residence permits, properties, family, and others.

Bulgarian residence and Bulgarian ID card for EU citizens. 

To ease your tax residence application under point 2 (vital interests), we may assist you to obtain a residence permit and Bulgarian ID card for EU citizens. We will assist you during the entire procedure from preparing the set of application documents to receiving a Bulgarian ID card. The service includes the opening of a personal bank account and preparation of 12 months’ rent contract. Our immigration lawyers can ensure that the Bulgarian residence permit and Bulgarian ID card will be issued within 3 working days. 

Become a Bulgarian tax resident

The procedure of issuing a residence permit in Bulgaria for individuals, who are citizens of the European Union (EU) is governed by the Law on Entering, Residing and Leaving the Republic of Bulgaria of EU citizens and members of their families . According to this law:

Art. 6. (1): A European Union citizen shall reside in the Republic of Bulgaria with identity card or passport within a term of up to three months.

In addition:

Art. 7. (1): A European Union citizen may reside in the Republic of Bulgaria long-term or permanently, for which a certificate shall be issued by the “Migration” directorate in the Ministry of Interior Affairs, the Sofia Directorate of the Interior Affairs (SDIA) or the regional directorates of the Ministry of Interior Affairs or by officials authorised by the directors.

(2) The long-term residence is for a period of up to five years.

Our Bulgarian immigration lawyers will assist you to obtain a permanent residence for EU citizens after holding the long-term residence permit for five years. 

Recent Development on getting Bulgarian tax residence

Due to some recent changes the most guaranteed way to prove vital interests is by way of buying a property in Bulgaria –  this can be a small flat or office irrespective of the value of the property. On the other hand, if you will be physically residing in Bulgaria and conducting your business from Bulgaria, there is no need to buy a property at all.

Buying a Property in Bulgaria

Our real-estate lawyers will assist you to buy a property in Bulgaria. You may even buy the property remotely granting a power of attorney to our law firm. We will assist in the process of verifying the actual owner of the property, verifying that there are no legal impediments for the property conveyance, drawing up of the title deed and preliminary sale contract and all other related formalities. 

Alternatively, a foreign national may become a tax resident of Bulgaria by the way of obtaining Bulgarian citizenship by investment .

The National Revenue Agency certifies that a person is a resident of Bulgaria for tax purposes within the meaning of the Double Tax Convention and is subject to tax on his worldwide income in the Republic of Bulgaria.

Become A Tax Resident Of Bulgaria

To check the requirements to obtain a Bulgarian ID card and Bulgaria Fiscal Residence, please do not hesitate to contact us.

Bulgaria Tax Residency

Becoming a Bulgaria Tax Resident, you can benefit from the lowest tax rates in the entire European Union. Bulgaria applies a worldwide income tax system and residents are taxable on their worldwide income. The corporate tax in Bulgaria is only 10% flat rate compared to 33.9%+ in Belgium, 33.3%+ in France and 25%+ in Austria. Bulgaria also levies the lowest flat personal income tax rate of 10%.

If you are a non-EU national who would like to immigrate to Bulgaria, you may consider the registration of a trade representative office in Bulgaria and obtain a Type D visa and Bulgarian residence permit.

Bulgaria Fiscal Residence Application Form

*EU nationals can reside in Bulgaria with a national ID card or passport for up to three months without registering in Bulgaria. If you would like to reside temporarily or permanently you have to register at the local Migration Police branch.

**The government authority responsible for the collection and administration of state taxes and obligatory social security contributions in Bulgaria is the National Revenue Agency.

Our dedicated team of professional accountants can help you to optimize your tax in Bulgaria.

Bulgaria Double Taxation treaties

Bulgaria has signed double taxation treaties with more than 60 countries in order to avoid double taxation for foreign investors. This measure offers tax relief for companies operating in multiple countries. Along with the double tax treaties, Bulgaria also signed exchange of information protocols in order to have a clear image of the legal entities requesting double taxation relief.

Bulgaria has signed double tax treaties with the below countries

The countries which concluded double taxation treaties with Bulgaria are: Albania, Algeria, Armenia, Austria, Azerbaijan, Bahrain, Belarus, Belgium, Canada, China, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, India, Indonesia, Iran, Ireland, Israel, Italy, Japan, Jordan, Kazakhstan, Democratic People’s Republic of Korea, the Republic of Korea, Kuwait, Latvia, Lebanon, Lithuania, Luxembourg, Macedonia, Malta, Morocco, Qatar, Moldova, Mongolia, Netherlands, Norway, Poland, Portugal, Romania, Russian Federation, Spain, Singapore, Slovakia, Slovenia, South Africa, Sweden, Switzerland, Syria, Thailand, Turkey, Ukraine, United Arab Emirates, United Kingdom, United States of America, Uzbekistan, Vietnam, Yugoslavia, Zimbabwe.

Brief overview of Taxation in Bulgaria

•  Corporate Income Tax Rate – 10%.

•  Capital Gains Tax Rate – 10%

•  Capital gains derived from sale of shares through the Bulgarian Stock market or a regulated market in an EU/EEA member state – 0%

•  Tax on Dividends – 5%

•  Dividends paid to legal entities which are tax residents in an EU/EEA member state – 0%

•  Interest and Royalties – 10%

•  VAT – 20% * Refund period is 2 months under certain conditions. If your annual company turnover is less than EUR 25,000 VAT registration in Bulgaria is not mandatory

•  Personal Income Tax – 10%

•  Mandatory Social Security
  Employer: – 17.4%
  Employee: – 12.9%

•  Maximum monthly taxable base – BGN 2,600 (approx. EUR 1,350)

Please take a look at our prices to see the most competitive prices for establishing Bulgarian companies.

If you would like to obtain more details about Taxation in Bulgaria and becoming Bulgaria Tax Resident, please do not hesitate to contact us.