Buying land in Bulgaria

Bulgarian constitution allows foreigners to buy buildings but not land. The situation is to be changed in the near future with compliance to Bulgaria's forth-coming entry to EU. For the moment to buy land first you need to set up a limited liability company which will then buy the land. In fact the procedures of establishing a company are quite simple and normally should not in any way affect the deal. It takes 2 - 3 weeks to do it and costs about 500 euros. The shareholders’ capital (2500 euro) should be deposited in your company's bank account and could be refunded in full after 3-4 weeks. Please note that we can arrange all this for you.

Prices and procedures

Due to the considerably low property prices at the moment and the expected rise in 2007 (when the country will join the EU), Bulgaria is very attractive both to people who are looking to buy a holiday or retirement home or just to invest and make a capital gain in the near future. Prices of properties start from some 3000 euro, and end to several hundred thousands. In either case we recommend that you see what you are offered first, check all documents yourself with the help of a local lawyer, and only after that pay the required deposit. Please remember that due to the flourishing real estate market at the moment some attractive properties are sold within weeks, so sometimes it’s necessary to proceed quickly. You can rely on our sales agents throughout the purchase process.

Taxation

Apart from the corporate tax, 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 or the book value of the property at varying rates, with the maximum being BGN 3,500 (1780 euro).

Local taxes and rates

Local taxes consist of property transfer tax(paid at concluding of the deal), property tax and waste-collection tax (paid annually).

Propery transfer tax is 2% of the market value of the property and is paid to the municipality in which the property is situated upon completion. This is a little like the UK equivalent of Stamp Duty.

The owner of a building or a plot is obliged to pay a 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. Waste-collection tax is determined when you register your ownership with the municipality, which should be done within 60 days of completion of the deal. It differs for regions around Bulgaria.

Small fines are levied where property registration is done after 60 days.

Value Added Tax

Transactions 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% assuming that the seller is VAT registered. The buyer is entitled to a VAT refund, provided that it is registered for VAT purposes.