Tips
for Buying Property in Bulgaria
Bulgaria
is an economically and politically stable country, however, legislation
that govern real estate are subjected to changes frequently, and of course
much to the advantage of the investors.
In recent
times, Bulgaria has seen a new set of people investing in real estate
properties and they are none other than Irish people.
The main
reason for the Irish people choosing Bulgaria is the prevalence of good
appreciation in values.
As a foreign
investor, you can either make direct investment or invest through local
entities in Bulgaria. Regarding acquiring title over the land, only resident
Bulgarians are entitled to title over land.
However,
non-residents can purchase and own title over buildings coupled with few
restricted rights such as leasehold or rights for construction over the
land.
There are
some rules that even permit non-residents to buy immovable properties
with prior permission from the Ministry of Finance.
As a non-resident
you are entitled to repatriate all the profits to the country where you
normally reside. However, such repatriations are subjected to appropriate
tax deductions by the bank before effecting transfer.
The prevailing
permanent establishment law governs all direct investments in Bulgaria.
The definition
of a permanent establishment under Bulgarian law is very broad. Any foreign
company that owns and rents out property in Bulgaria is entitled to create
a permanent establishment under domestic law.
In case any
foreign company that owns property does not constitute permanent establishment
in Bulgaria, then the person or the company is liable to pay only 15%
tax on the rentals and capital gains.
There is
also some variation in taxation for local entity and foreign entity. The
tax structures are very nominal much to the favour of the investors.
Many exemptions
are also allowed such as tax paid or payable, property related expenses
and depreciation. Property related expenses include cost involved in repairs,
maintenance, renovation, and interest on loans.
Regarding
depreciation, the value of the land will not be subjected to depreciation.
However,
any immovable property over the existing land, if used for business activities,
can be treated as fixed assets. The rate of depreciation is calculated
at 4% using straight-line method.
The currency
control measures are also not very stringent. A mere registration with
the Bulgarian National Bank alone is needed for a non-resident to get
a loan.
Further,
the interest costs not deducted in a given year can be deducted in the
subsequent tax period also. Interest paid to a foreign lender is subject
to a withholding tax of 15%, unless a lower rate is available under a
double tax treaty.
With so much
of friendly tax structure and better investment options, you can see your
investment grow and appreciate well in Bulgaria.
| 
