Ownership of real estate
Foreigners may acquire the ownership of buildings and premises within a building as well as obtain property rights, and all property in Bulgaria is freehold. However there are some restrictions relating to land ownership which however do not apply to Bulgarian companies. Thus foreign persons can acquire full land ownership rights, including ownership rights on agricultural land by setting up or joining a company incorporated under the Bulgarian legislation. Irrespective of the percentage of the foreign participation in the company.
Necessary documents for the notary procedure:
• Draft notarial deed for transfer of property
• Documents identifying the participants in the proceedings
• Letter of authorization if agent represent one of the parties
• Documents certifying the property right
• Declarations by the parties certifying their civil, marital and property status
• Declaration by the person who acquire the property certifying the origin of the funds, in case the value of the estate is over 15000 euros
• Declaration by the interpreter that his translations are reliable
• Certificate for tax assessment and paid taxes
Foreign nationals and foreign legal entities who acquire real estate in Bulgaria are obliged to register at the Registry Agency under the registration system BULSTAT for issuance of an identification number within 7 days as of acquiring of the property. The application for registration is to be submitted at the Registry Office in the region where the real estate is located.
Finance, Taxes and fees
According to the Local Taxes and Fees Act the immovable property and the limited ownership rights acquired against payment are subject to taxation.
The tax has to be paid by the acquirer of the property. In case it is stipulated that the tax is due by the both parties, they are jointly responsible. When the parties have stipulated that the tax is due by the transferor, the other party is a surety.
The tax for property acquisition is 3% of the valuation of the transferred property. It is determined on the base of the higher value between the tax assessment and the negotiated sell price as declared in the draft notary deed or in the contract.
The proprietor must pay also notary fee for property acquisitions as regulated by government authorities. Fees range from BGN15 to BGN 400 dependng on the property value.
Advocate (Solicitor) fees are usually up to £650 depending on complexity of the transaction.
The VAT due is 20 % after the paid taxes and fees for the transfer have been discounted.
Procedure Prior to Purchasing a Bulgarian Property
A limited company is required if you intend to own freehold property that includes land. On forming your company, you can purchase multiple properties and/or land through this entity.
Who can form a Limited Liability Company and how?
Any person either foreign or Bulgarian, (including corporations, partnerships or other legal entities). The client (who may be one or more persons or corporate entities) will be liable for the company's obligations to the value of their share in the company's registered capital. The client will state the commercial activities it is intend to engage in. Based on this, Articles of Incorporation are prepared & signed by the client.
A dedicated bank account is opened to collect all share capital. The minimum share capital required is 5,000 Leva.
The company details are then added to the Commercial Register of the District Court in the area in which the company will be based. The entry is made upon issue of a District Court decision for the Incorporation. The following documents must be available at the time of the submission of registration application to the district court.
1. Articles of incorporation
2. Memorandum for appointment of Director/ Directors;
3. Proof that the correct share capital has been paid into the company bank account.
Publication of the company entry in the Commercial Register of the Bulgarian State Gazette completes the first part of your company formation. Thereafter, the new company will be registered immediately with the National Tax Register Authority.
At this point, if required, all or part of the deposited share capital can be accessed and withdrawn.
The complete process can take anywhere between a few days to three weeks depending on the number of directors, whether the forming entities are real persons or corporations, and whether the company is intended to trade in any regulated activity.
Details Needed to Form a Ltd Company
If applying from the UK using our legal services.
1. Company Name
2. Partners
3. Managing Director if more than one Partner
4. Passport No
5. Name as in Passport
6. Nationality
7. Date of birth
8. Place of birth
9. Passport date of issue
10. Passport date of expiry
11. Current address
12. Copy of Passport
We can prepare all relevant documents for you prior to you visiting Bulgaria. If you supply the above information our costs for all legal, translation, tax and court papers is €600.
The company does not need to be actively engaged in any kind of trade or business. It is simply a legal tool enabling the purchase of land in Bulgaria.
Since the company is a Bulgarian Business Entity it is required by law to pay taxes to the Bulgarian Tax Authorities. 31st March every year is the deadline for submitting Company Accounts and Corporation Tax Returns (Tax Declaration) for companies incorporated before 31/12/the previous year. A penalty may occur if you do not submit the relevant documentation before the above deadline. We strongly recommend our customers to seek a help from a chartered accountant in Bulgaria or alternatively our Client Management Service can assume all necessary responsibilities on your behalf.
If the company has been used only for the purchase of property and no other activities e.g. selling or renting out the property or other activities classed as trade, then the appropriate documentation must be sent to the relevant authorities i.e. a tax declaration for zero income.
Tips Before Buying in Bulgaria
1. Ask yourself "what do I want?î Perhaps it is a retirement home, or possibly a holiday home that you want to rent out when not in use; or maybe a medium to long term investment property that you will not personally occupy. Each of these scenarios will normally relate to quite different properties with different priorities regarding location, size, type and purchase price.
2. The amount of mortgage that you can raise against a property in Bulgaria is dictated by the lower of either a % of the value of the property (commonly 70%) or the purchase price on the Notary deed.
3. If you are buying an off-plan property it is common to have to make staged payments during the build process. Although some banks do offer staged payments this is a new and relatively untested product addition and hence you should be prepared to make all the staged payments out of cash and then recoup this money when the bank lends on completion.
4. Ask your sales agent for testimonials from satisfied clients and if they have developed previous properties see if you can look at the finished article. We have seen properties in Bulgaria that are 2 years old but look 20.
5. Protect yourself! When you sign a contract you become legally obliged to purchase the property, the time frame between committing to buy and actually taking ownership can be over one year and hence you should consider insurance to cover you for any unknown eventuality.
6. Donít believe everything you are told. I suggest that before you do anything you should make sure you know what you are talking about or at least listening to. A little research can save a lot of pain.
7. Make sure you read the small print. It is too easy to just feel obliged to sign something without first studying and understanding the contract. Donít be afraid to ask lots of questions and take independent advice.
8. Ask to see the ownership certificate to prove that the company selling the property has the right to do so. It has been known for foreigners to buy a property from someone who was not entitled to sell it.
9. If it is too good to be true it usually is! We donít wish to sound sceptical, great opportunities do exist in Bulgaria but if something seems ridiculously cheap or the deal seems very slanted in your favour, you should be cautious.
Foreigners may acquire the ownership of buildings and premises within a building as well as obtain property rights, and all property in Bulgaria is freehold. However there are some restrictions relating to land ownership which however do not apply to Bulgarian companies. Thus foreign persons can acquire full land ownership rights, including ownership rights on agricultural land by setting up or joining a company incorporated under the Bulgarian legislation. Irrespective of the percentage of the foreign participation in the company.
Necessary documents for the notary procedure:
• Draft notarial deed for transfer of property
• Documents identifying the participants in the proceedings
• Letter of authorization if agent represent one of the parties
• Documents certifying the property right
• Declarations by the parties certifying their civil, marital and property status
• Declaration by the person who acquire the property certifying the origin of the funds, in case the value of the estate is over 15000 euros
• Declaration by the interpreter that his translations are reliable
• Certificate for tax assessment and paid taxes
Foreign nationals and foreign legal entities who acquire real estate in Bulgaria are obliged to register at the Registry Agency under the registration system BULSTAT for issuance of an identification number within 7 days as of acquiring of the property. The application for registration is to be submitted at the Registry Office in the region where the real estate is located.
Finance, Taxes and fees
According to the Local Taxes and Fees Act the immovable property and the limited ownership rights acquired against payment are subject to taxation.
The tax has to be paid by the acquirer of the property. In case it is stipulated that the tax is due by the both parties, they are jointly responsible. When the parties have stipulated that the tax is due by the transferor, the other party is a surety.
The tax for property acquisition is 3% of the valuation of the transferred property. It is determined on the base of the higher value between the tax assessment and the negotiated sell price as declared in the draft notary deed or in the contract.
The proprietor must pay also notary fee for property acquisitions as regulated by government authorities. Fees range from BGN15 to BGN 400 dependng on the property value.
Advocate (Solicitor) fees are usually up to £650 depending on complexity of the transaction.
The VAT due is 20 % after the paid taxes and fees for the transfer have been discounted.
Procedure Prior to Purchasing a Bulgarian Property
A limited company is required if you intend to own freehold property that includes land. On forming your company, you can purchase multiple properties and/or land through this entity.
Who can form a Limited Liability Company and how?
Any person either foreign or Bulgarian, (including corporations, partnerships or other legal entities). The client (who may be one or more persons or corporate entities) will be liable for the company's obligations to the value of their share in the company's registered capital. The client will state the commercial activities it is intend to engage in. Based on this, Articles of Incorporation are prepared & signed by the client.
A dedicated bank account is opened to collect all share capital. The minimum share capital required is 5,000 Leva.
The company details are then added to the Commercial Register of the District Court in the area in which the company will be based. The entry is made upon issue of a District Court decision for the Incorporation. The following documents must be available at the time of the submission of registration application to the district court.
1. Articles of incorporation
2. Memorandum for appointment of Director/ Directors;
3. Proof that the correct share capital has been paid into the company bank account.
Publication of the company entry in the Commercial Register of the Bulgarian State Gazette completes the first part of your company formation. Thereafter, the new company will be registered immediately with the National Tax Register Authority.
At this point, if required, all or part of the deposited share capital can be accessed and withdrawn.
The complete process can take anywhere between a few days to three weeks depending on the number of directors, whether the forming entities are real persons or corporations, and whether the company is intended to trade in any regulated activity.
Details Needed to Form a Ltd Company
If applying from the UK using our legal services.
1. Company Name
2. Partners
3. Managing Director if more than one Partner
4. Passport No
5. Name as in Passport
6. Nationality
7. Date of birth
8. Place of birth
9. Passport date of issue
10. Passport date of expiry
11. Current address
12. Copy of Passport
We can prepare all relevant documents for you prior to you visiting Bulgaria. If you supply the above information our costs for all legal, translation, tax and court papers is €600.
The company does not need to be actively engaged in any kind of trade or business. It is simply a legal tool enabling the purchase of land in Bulgaria.
Since the company is a Bulgarian Business Entity it is required by law to pay taxes to the Bulgarian Tax Authorities. 31st March every year is the deadline for submitting Company Accounts and Corporation Tax Returns (Tax Declaration) for companies incorporated before 31/12/the previous year. A penalty may occur if you do not submit the relevant documentation before the above deadline. We strongly recommend our customers to seek a help from a chartered accountant in Bulgaria or alternatively our Client Management Service can assume all necessary responsibilities on your behalf.
If the company has been used only for the purchase of property and no other activities e.g. selling or renting out the property or other activities classed as trade, then the appropriate documentation must be sent to the relevant authorities i.e. a tax declaration for zero income.
Tips Before Buying in Bulgaria
1. Ask yourself "what do I want?î Perhaps it is a retirement home, or possibly a holiday home that you want to rent out when not in use; or maybe a medium to long term investment property that you will not personally occupy. Each of these scenarios will normally relate to quite different properties with different priorities regarding location, size, type and purchase price.
2. The amount of mortgage that you can raise against a property in Bulgaria is dictated by the lower of either a % of the value of the property (commonly 70%) or the purchase price on the Notary deed.
3. If you are buying an off-plan property it is common to have to make staged payments during the build process. Although some banks do offer staged payments this is a new and relatively untested product addition and hence you should be prepared to make all the staged payments out of cash and then recoup this money when the bank lends on completion.
4. Ask your sales agent for testimonials from satisfied clients and if they have developed previous properties see if you can look at the finished article. We have seen properties in Bulgaria that are 2 years old but look 20.
5. Protect yourself! When you sign a contract you become legally obliged to purchase the property, the time frame between committing to buy and actually taking ownership can be over one year and hence you should consider insurance to cover you for any unknown eventuality.
6. Donít believe everything you are told. I suggest that before you do anything you should make sure you know what you are talking about or at least listening to. A little research can save a lot of pain.
7. Make sure you read the small print. It is too easy to just feel obliged to sign something without first studying and understanding the contract. Donít be afraid to ask lots of questions and take independent advice.
8. Ask to see the ownership certificate to prove that the company selling the property has the right to do so. It has been known for foreigners to buy a property from someone who was not entitled to sell it.
9. If it is too good to be true it usually is! We donít wish to sound sceptical, great opportunities do exist in Bulgaria but if something seems ridiculously cheap or the deal seems very slanted in your favour, you should be cautious.