Buying Procedure

Buying a property in Bulgaria is a simple and straightforward process. We at Inter Bulgarian Properties SA. are here to help and guide you through every stage of your purchase. There are several important steps that must be made to purchase a property in Bulgaria and our friendly and efficient staff will be always ready to guide you with their expertise in the Bulgarian property market.

Buying in Bulgaria is not more or less difficult than buying in any other foreign country. There is only one area which must be taken into consideration and it is that according to the Bulgarian Constitution and legislation, foreign persons currently are prohibited from owning land and can acquire only buildings but not land on which the buildings are built.

This is easily overcome by forming a Bulgarian registered company with you being a sole owner and director.

This law is due to be removed before the planned date to full EU membership in 2007 and it is one of the main reasons that property prices are so attractive compared with Western Europe.

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Setting Up A Company

Setting up a company in Bulgaria is very easy and we can recommend good independent lawyers who will navigate you through this simple procedure. The preferred form of business is a Limited Liability Company. It usually takes up to 4 weeks for a company registration. You do not need to be present while your company is being registered as your lawyer will do this for you. Charge for setting up a Ltd. Company is about 600 Euros which includes all state, legal and solicitor’s fees.

Please find bellow the summarized steps for buying a property:

Find and reserve a property with Inter Bulgarian Property Determine whether the sale is with land. If the sale is with land a company needs to be incorporated to hold the land. If sale is without land no company is needed.

Once you are decided on a property or properties, the next step is to take the units off of the market by payment of a reservation deposit and sign the property reservation document which will have detailed the unit you are looking at. There will be a separate form for each property should you be purchasing more than one. This secures the property for you exclusively and most importantly fixes the price. This deposit will be paid in Euros, and is approx 3,000 euros per unit.

This information is then transferred to your lawyer, who will perform detailed checks on title documents, building permissions, debts on title, etc. If the property that you are intending to buy comes with land or should you be buying more than one unit, your lawyer will then commence setting up the Bulgarian Company in which the properties will be purchased.

Sign the Notary Act (Contract of purchase) in front of a Bulgarian Notary either in Bulgaria or at a Bulgarian embassy near to you. You will have to pay a translator to be present and this costs approximately 20 euros. Its at this point you will pay the next payment which depending on the property can be anywhere between 30% - 50%.

Please note that the final Notary Act is not signed until the building is completed in the case off plan developments.

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Purchase Costs

(these are in addition to the advertised price of the property)

The harmonisation of Bulgarian legislation with that of the European Union makes the procedure of a real estate transaction in Bulgaria not much different than the procedures in other European countries.

The costs associated with the transaction are, however, lower approx 3% in total after VAT has been paid. The breadown of this is described below. As elsewhere in Europe, the purchase is subject to notary and municipal fees. The notary fees are approximately 0.4% of the declared price. The municipal fees are 2% of the declared price of the property and are paid to the municipality in which the real property is situated. You will also of course have to pay for your legal representation throughout the buying process, and this can range from 0.5% - 1% depending on the charges of the law firm you choose.

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Ongoing Costs Of Property Ownership

A property in Bulgaria generally has much lower running costs, compared to those in other European countries. The owner of a property is obliged to pay an annual property tax, which is equal to 0.15% of the declared value of the property. If your property is part of a residential complex then you will also be liable for a communal charge for maintenance and upkeep of the communal areas. This varies from development to development but is usually in the region of Euros 10/m sq/pa. You may also have taxes that need to be paid, but as we are not tax advisers, and this varies from individual to individual, please do consult your lawyer or a tax adviser.

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Double Taxation Treaties

Bulgaria is a signatory to a Treaty for the Prevention of Double Taxation with many countries all over the world. Draft agreements with additional countries are at the discussion stages.

A Double Taxation Prevention Treaty, in principle, enables offsetting tax paid in one of 2 countries against the tax payable in the other, in this way preventing double taxation.

Another important factor is the grant of an exemption or tax at a reduced rate on certain receipts such as interest, royalties, dividends, capital gains and others that are connected with a transaction carried out between parties associated with the Double Taxation Prevention Treaty.

It is of the utmost importance to stress that the Double Taxation Prevention Treaty takes precedence over the Bulgarian Income Tax Ordinance. In other words, if certain income is taxable under the Bulgarian Income Tax Ordinance but there is an exemption (reduced tax) under any Taxation Treaty, the income is taxed, if at all, but only according to the provisions of the Taxation Treaty.

Double Taxation Agreements: List of Countries
Albania	India	Portugal
Armenia	Indonesia	Romania
Austria	Ireland	Russian Federation
Belarus	Israel	Spain
Belgium	Italy	Singapore
Canada	Japan	Slovak Republic
China	Kazakhstan	South Korea
Croatia	Lebanon	Sweden
Cyprus	Luxembourg	Switzerland
Czech Republic	Macedonia	Syria
Denmark	Malta	Thailand
Finland	Morocco	Turkey
France	Moldova	Ukraine
Georgia	Norway	United Kingdom
Germany	The Netherlands	Vietnam
Greece	North Korea	Yugoslavia
Hungary	Poland	Zimbabwe

The information above was supplied by www.worldwide-tax.com

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