Home » Investor's Guide »

Legal Information - Buying Property in Bulgaria

Real Estate Ownership Formation

According to the Bulgarian Constitution foreign nationals are not entitled to directly acquire the ownership rights of land.

However, foreigners are permitted to obtain ownership of buildings, individual dwellings within a building and maintain limited property rights. The limited property rights under Bulgarian law include the right of use and to perform construction.

The restrictions do not apply to Bulgarian companies regardless of the percentage of foreign ownership. Under this arrangement foreign persons can maintain full land ownership rights.

Types of Companies

Bulgarian legislation in force specifies the following types of commercial enterprises:

  1. General Partnership
  2. Limited partnership
  3. Limited liability company
  4. Joint-stock company
  5. Association limited by shares
  6. Sole proprietorship

All of the above, excluding the sole proprietorship are legal entities. Both domestic and foreign physical and legal persons can establish them. All enterprises will be entered in the commercial register, with a resolution from the District Court on the location of company’s main office (for Sofia - in the Sofia city court). The decision of court is to be promulgated in the official state newspaper. Regarding taxation, there is no distinction between the enterprises. Registration with insurance authorities is mandatory as well.

Partnership: Partnership is the most common form of personal companies. The number of partners should be not less than two and they carry the joint and unlimited responsibility under obligations of the company. Mutual relations between founders are determined by the constituent contract. They are obligated to participate in the activity of the company in person. There is no minimum capital for setting up such a company.

Limited partnership: One or several co-founder bear joint and unlimited responsibility for the liabilities of the company and the others – only to the amount of their share in the capital. The first group of co-founders does the management. The second group doesn’t take part in the management and decision making process.

Limited Liability Company: The limited liability company is the most suitable form for the average capital. The minimum capital required by law to set up such a company is 5000 BGN (roughly 3000 USD). Due to the advantages it has, this form has received wide popularity in Bulgaria. The procedure of registration is simple, the size of minimum capital required – relatively small and there is no publicity of the activity. The share of one co-founder in the company capital cannot be less than 10 Leva. The number of founders is not limited. Management and representation are done by one or several co-founders, or a manager, who may not be a partner. The number of co-founders can be changed at any time after the company is registered. All changes in the constituent documents should be registered in court. Founders of the limited liability company could be physical or legal persons as well as just one person. Then the company is EOOD (abbreviation in Bulgarian). The founder of EOOD can personally manage and represent the enterprise or appoint another person.

Joint-stock company: The shareholders are united only by the capital. Capital is divided into equal parts. The shareholders participate in the company to the number of their shares and are not obliged to take part in management personally. The minimum capital for the joint-stock company should be 50,000 BGN (face-value of shares), and in case of formation of the company through a subscription 100,000 BGN. The operating and managing body of the joint-stock company is the board of directors.

Association limited by shares: The minimum number of the founders with limited liability should be at least three. The company is established with a contract and shares are emitted for the capital of partners with unlimited liability. Other legally established procedures are like in the joint stock company.

Sole proprietorship (ET): Physical person. A Bulgarian citizen or a foreigner having the status of constant residence in Bulgaria can establish this. There is no limit for the minimum capital of such company. The founder is liable to the whole amount of personal and company assets. The name of the company includes the name and surname of the founder.

Visas

A foreigner may enter the Republic of Bulgaria if he or she has the valid passport for travelling abroad or any other substitute documents, as well as a visa for entry.

Visas are not required when there is a bilateral agreement between Bulgaria and native country of the foreigner or an Act of the Council of Ministers of the Republic of Bulgaria for a non-visa regime.

Foreigners who are citizens of 46 specific countries i.e. the EU-countries, the USA, Canada, New Zealand, Japan, Australia, Switzerland etc can reside in Bulgaria without visas for a period of 90 days within a period of six months as from their first entry in the country, unless an international agreement provides for a different period shorter or longer.

A long-term visa shall be issued to a foreigner who can enter the country without any limits and the period of stay upon each entry shall be 90 days. The validity of this visa shall not exceed 12 months.

Additional info regarding visas can be found at the Bulgarian Ministry of Foreign Affairs

  • The price for a tourist/business visa is 30 Euro.
  • A double visa 40 Euro.
  • An express service for a single visa cost 45 Euro.
  • Transit visa cost 20 Euro.
  • Express service 30 Euro.
  • A double transit visa cost 40 Euro for 3 months and 50 Euro for 6 months.
  • The administration fee for any kind of visa is 20 Euro.

Work Permits

The work permit is required for all foreign employees employed in Bulgaria and it’s not applicable to the Managing Directors, Board Members and other representatives of top management positions from 46 countries.

An expatriate has to fill out an application form and submit the necessary documents.

The Work Permit costs 300 Euro

Transfer taxes

Apart from corporate tax of 15% in 2005 there are no other direct taxes are levied on the transfer of real property. The transfer is, however, subject to notary and municipal fees. The notary fees are paid on the higher of the market price of the book value of the property at varying rates, with the maximum being BGN 3,500 (about EURO 1,750). In addition, 2% of the market value of the property is paid to the municipality in which the real property is situated upon completion.

Capital Gains Tax

There are no capital gains Tax on the profit when you (individually) or your company sells the property.

Local taxes and rates

The owner of a building or a plot is obliged to pay a real property tax. Where a building is built on a state or municipal plot, the value of the plot will also be included in the tax base. The tax is equal to 0.15% 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. Value Added Tax Transaction with land and lease of property for residential purposes are exempt from VAT (Value Added Tax), all other real estate transactions are subject to VAT at the uniform rate of 20%. The buyer/lessee is entitled to a VAT refund, provided that it is registered for VAT purposes.