Power of Attorney

    It is common practice in overseas property transactions, to avoid the purchaser having to make numerous visits to Bulgaria, to give a power of attorney to the lawyer taking care of your affairs. This grants him the right to sign on your behalf the final Notary Deed.
    There are three options of certifying a Power-of-Attorney (POA):
           1. Appearing before a Bulgarian Notary Public. Before leaving Bulgaria you can sign a POA in front of a Notary Public.
         2. Appearing before the Bulgarian Embassy/Consulate. You sign the POA in Bulgarian in the Bulgarian Embassy/Consulate closest to you and then forward it by courier to your lawyer in Bulgaria.
           3. Using the terms of the Apostille procedure. You can sign the POA in your language in front of the local Notary Public. Afterwards the POA should be presented before a competent authority specific for each state (i.e. the Foreign and Commonwealth Office in the UK and the Department of Foreign Affairs in Ireland) for receiving a quadrangular stamp (the Apostille Certificate). The document which is signed with the Apostille can be then sent to your lawyer. Afterwards the POA should be translated in Bulgarian and is ready to be used for the signing of the title deed.

    Formation of a LTD Company

    When a foreign citizen or company is buying a plot of land or a property with land in Bulgaria it is necessary to set up a Company in Bulgaria /most advisable is a limited company/. Thus the company owned by the respective foreign person can buy the land. This is not necessary in case of buying only properties, apartments or “off plan” properties without land. From the 1st of January 2012, residents of the member states of EU will be able to own land in Bulgaria without necessarily creating a limited company.
    The procedure of forming a LTD company involves checking the availability of the desired company name and reserving it, opening a deposit account with the capital for the company (the minimum is 5 000 BGN) and transferring the capital into an operational account, once the company is registered. An official stamp of the company also needs to be prepared.
    It is best to provide your lawyer with a Power of Attorney and he will take care of all the details on your behalf.

    BULSTAT and Tax registration

    Upon signing the Title Deed, each new Bulgarian property owner needs to register the new acquired estate with the Bulgarian BULSTAT and Tax Authorities. As this requires visiting the relevant institutions, it might be a good idea to ask your lawyer to do this on your behalf.
    The newly enacted law for register BULSTAT concerns all foreign physical persons, who do not possess a Bulgarian personal number or a personal number for foreign Bulgarian Residents and are owners of Bulgarian real estate properties. The registration should be performed in the entry office of the regional court in the region where the property is located, within 7 days after the acquisition of the property. A state tax should be paid for the registration of each person.
    The owner of any newly required property shall notify the local tax authorities of the location of the property within two months after the acquisition by submitting a tax declaration for annual immovable property taxation.

    Water and Electricity registration

    After the Notary Deed is signed and the BULSTAT registration card is obtained the property needs to be registered in your name for the electric and water consumption. The registration is with the local water and electricity companies and a small fee applies.
    To save the time you can ask your lawyer to do that on your behalf.

 

    Taxes

    Value Added Tax – paid once


    20% VAT is chargeable on the sale of real estate in Bulgaria. Normally this is included in the purchase price of the property. The seller submits then the VAT to the state. All of Tebsa properties are inclusive of VAT but be careful as this is not the case with all properties.

    Property Tax – paid annually

    The tax is due from the month following the month of acquisition of the property and is calculated on the basis of the tax evaluation. The tax evaluation of the property is determined by the tax authorities and depends on factors including the type of the property, its location, the total area and construction type. The rate for residential purposes is fixed by the local authorities. The real estate tax is due regardless whether the property is used or not. The tax can be paid in one sum at the beginning of the year or quarterly in four installments. This tax usually represents 0.25% of half the tax evaluation for your property.

    Rental Income Tax (Capital Gain tax) – paid annually

    Non-residents are taxed as per their annual Income Tax Declaration, that needs to be submitted to the tax office up to 30 April of the year following the year in which the income occurred. Income over 2400 BGN for the year is taxed at 10%. Non-residents pay tax only on the income gained in Bulgaria, no tax is due on foreign income.

    Corporate Tax – paid annually

    The companies are liable for this tax on its income. From 2007, standard corporate tax in Bulgaria is 10%. Foreign companies with no income arising in Bulgaria do not owe corporate tax.

    Income tax for Individuals on Property Sale – paid annually

    Both residents and non-residents do not owe income tax as physical persons on the sale of one residential property, regardless of the date of acquisition, and on the sale of up to two residential properties, provided that the properties have been acquired more than five years ago.

    Non-Double taxation agreement

    Bulgaria has signed a non-double taxation agreement with most of the EU countries. This means that any taxes paid in Bulgaria will be deducted from the taxes you have to pay when bringing your capital gain back to your country of residence.
    Taxes can be subject to change.

    Fees

    Notary and Municipality Fees – paid once

    At the date of signing the Notary Deed, around 3,5% of the sales price is due as Notary and State taxes – a legal requirement for notary fees and tax on acquiring a property in Bulgaria.

    Garbage Collection Fees – paid annually

    The garbage collection fee is paid together with the property tax and as the property tax the amount is based on half the official property tax evaluation and is in the region of 150 Euros annually.

    Water and Electricity Fees – paid once

    A small registration fee for electricity and water in your name is applicable.