Properties in Bulgaria

Since the introduction of the currency board in 1997 Bulgaria has been politically stable country with a developing economy and the preferential conditions and guarantees for foreign investors have generated excellent business opportunities and investment growth potential. Bulgaria real estate prices are by far lower than other destinations in Europe but the estimated acceptance of Bulgaria in the European Union provides unprecedented growth potential that will certainly boost the prices of the Bulgaria real estate in the near future. Bulgarian market or real estate is still unexplored and undeveloped to a certain extent, which makes it very attractive and profitable.

According to the Bulgarian law, embodied in the Constitution of the Republic of Bulgaria and the Property Act foreign physical and also juridical persons such as companies cannot acquire the ownership of land in the country. However, they are permitted to acquire the ownership of houses or flats and limited ownership rights with regard to every kind of immovable property situated in Bulgaria. Under the heading limited ownership rights the Bulgarian law understands the rights of use (usus), the right to build a house on a piece of land (superficie) and the servitudes (e.g., the right of access to the street through another person's piece of land).

The limitation to acquire ownership of land does not exist for local judicial persons – such are all the judicial persons registered in Bulgaria no matter the size of foreign participation.

TAXES

According to art. 44 of the Law for local taxes and fees subject to levying with tax are the immovable properties and the limited real rights in them acquired for payment.

The tax has to be paid by the acquirer of the property. In case it is agreed that the tax is due by the both parties, they are jointly responsible. When the parties have agreed that the tax is due by the transferor, the other party is a surety. When the acquirer of the property is abroad the tax obliged is the transferor.

For acquisition of property the tax is 2% of the valuation of the transferred property.

The non-money inputs in the capital of a commercial company, cooperation or non-profit corporate body are exempted from taxes. When this kind of property is transferred to third parties the non collected tax becomes due if it is proven that the transfer is not connected with the cases pointed out as grounds for exemption from tax.

The legal definition of immovable property is the following: Immovable properties are land, plants, buildings and other structures and, in general, everything which either naturally or through a human act is firmly fixed to the land or to the structure.

Talking about immovable property in the context of the Law for local taxes and fees the Bulgarian legislation does not make difference between the acquisition of land, buildings or apartments. The acquisition of the above listed – land, buildings, apartments require the payment of taxes.

The proprietor must pay also notary fees for immovable property acquisition according to the prescriptions of the Law for the Notary and the Notary Activity (LNNA). The exact amount of the notary taxes is defined in Notary Taxes Tariff (article 8) as follows:

Certified material interest

Notary fee

Under 100 BGN BGN 15

From 100, 001 BGN to 1000 BGN BGN 15 plus 1.5% for the amount above 100

From 1000, 001 BGN to 10 000 BGN BGN 28,5 plus 1% for the amount above 1000

From 10 000, 001 BGN to 50 000 BGN BGN 118,5 plus 0.5% for the amount over 10000

From 50 000, 001 BGN to 100 000 BGN BGN 318,5 plus 0.2% for the amount above 50000

Over 100 000 BGN BGN 418,5 plus 0.1% for the amount above 100000, but less than 3000 BGN

Property Investment in Bulgaria

The Bulgarian property market is made up of three distinct opportunities. Firstly, the ski resorts and chalets around Bansko and Borovets, secondly, Sofia the capital and thirdly, the Black Sea Coast.

Here are some very good reasons for investment

1. Bulgaria is a small and a politically stable country
It is not reliant on old fashioned heavy industry and therefore does not have many of the economic and structural problems of other former Eastern Block countries. It has a well educated low cost labour force with significant cost advantages.

2. It is well situated geographically
It straddles the main overland route between Western Europe and the Middle East, and it provides access to the Black Sea through its ports. The combination of its geographical location and its labour force makes it an attractive location for multi national companies to set up operations.

3. The Bulgarian economy is growing steadily
Strong growth in industrial production, employment and credit has resulted in high GDP growth over the last few years. The economy has grown at an average rate of 4.8 per cent over the last five years yet despite this, inflation has been reduced to 4 per cent. Foreign Direct investment has increased year on year from 32 million USD in 1992 to 5.2 billion in 2004. The growth in the Bulgarian economy should underpin a strong property market and is expected to lead to increased property prices.

4. Property Prices are low
Prime residential property in Sofia sells in the region of € 1.000 - € 1.200 per square meter or approximately Pound Sterling 67 to 80 per square foot.

To give regional comparisons, the best residential property in Zagreb, Croatia sells for
€ 2.300 - € 2.600 per square meter, in Belgrade, Serbia € 2.200 - €2.400 per square meter, in Romania for over € 1.600 per square meter and in Athens for € 7.800 - € 9.000 per square meter.

It is clear, property in Bulgaria is cheaper than in any other countries in the immediate area. By way of comparison, in London, property in a number of residential areas ( such as Knightsbridge, Chelsea and Kensington ) can sell for approximately € 16,000 per square meter ( Pound Sterling 1000 per square foot ) !

5. Multinationals are starting to establish themselves in Bulgaria
As Bulgarian integration into the mainstream European economic life continues, multinationals are starting to set up operations in Bulgaria. For example, Unilever, Proctor and Gamble and the Metro Group, just to name a few have recently invested in Bulgaria.

6. 10 Year Transition to a Free Economy from Communism
EU accession in 2007 is well on track. Property prices are predicted to outperform the Eastern European 8 which have recently joined. Inward investment should continue to stimulate the Bulgarian economy and the Bulgarian property market.

7. Currency Board Arrangement
Bulgaria has aligned its currency ( the Lev ) to the Euro. The choice of the Euro as a peg currency is designed to reinforce accession to the EU. ( 1€ = 1.9558 Levs )

8. The mortgage lending market
Mortgage rates are currently around 7%. When Bulgaria introduces the Euro, interest rates are expected to decline in line with the rest of the EU.

9. Interest Rates are currently high for domestic Borrowers for a Bulgarian Mortgage
Supply is currently limited however, more suppliers are expected as demand increases and some of the larger international mortgage lenders enter the market.

10. Foreign indirect investment
General tourism is up by over 25% last year and is predicted to explode over the next few years due to the lowest cost of living in Europe and the increase in flights, particularly from budget airlines.

11. Key Macroeconomic Indicators
These are positive and stable with future policy set to continue this trend.

Drugi zaglavia

In Bulgaria, foreigners and foreign companies can acquire any type of real estate, including land, by registering a Bulgarian company to act as acquirer. It is possible for such a company to be 100% owned by the foreign investor.

The types of commercial companies are exhaustively provided for in the Commerce Act and an investor may only choose among the list. In particular, the types of commercial companies are. In Bulgaria, foreigners and foreign companies can acquire any type of real estate, including land, by registering a Bulgarian company to act as acquirer. It is possible for such a company to be 100% owned by the foreign investor.

The types of commercial companies are exhaustively provided for in the Commerce Act and an investor may only choose among the list. In particular, the types of commercial companies are.

Drugi zaglavia

The types of commercial companies are exhaustively provided for in the Commerce Act and an investor may only choose among the list. In particular, the types of commercial companies are.

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