Legal Advice

General
Bulgaria is a politically stable country, and the introduction of a currency board in 1997 stabilised the country's economy. A foreign investor can invest in properties in Bulgaria either directly or through a local entity. Only Bulgarian-resident individuals and entities can acquire title to land, while non-residents may acquire only buildings and limited rights (e.g., leasehold and construction rights) to land.
If the property you intend buying comes with land then you will need to register a Bulgarian Ltd company to own the land. According to the substantial legislation the company registered will be a Bulgarian legal entity owned by the capital holder and any property may be acquired in the name of such company without limitation.
It is generally accepted that the purchasing of an apartment, a store or an office in a multi-storey building does not require you to set up a company, as it has no or very minimal land ownership.
Foreign investors are guaranteed full repatriation of profits resulting from an investment in Bulgaria. The transfer abroad can be made only after the bank effecting the transfer is presented a certificate proving payment of all Bulgarian taxes due.

Preferred types of business organizations with foreign investment
The most appropriate types of companies for carrying out business in Bulgaria are: a private limited company (OOD), a single-person private limited company (EOOD), a public limited company (AD), a holding, a branch, a representative office and a joint venture. All of these (with the exception of a representative office) have to be entered into the commercial register kept with the relevant district court.
Private Limited Company (a limited liability company) - "OOD"
A single-person private limited liability company is called "EOOD".
Public Limited Company (a joint stock company) - "AD"
Holding
Branch
Representative Office
Joint Venture
What are guarantees for foreign investment in Bulgaria?
According to Law on Foreign Investments companies which capital is owned by foreigners have the same rights under Bulgarian laws as Bulgarian companies.

The most popular form of engaging in business in Bulgaria is via Limited Liability Company (OOD or EOOD)!

Who can form a Limited Liability Company & how?

A foreign or Bulgarian person (judicial or physical). The person/persons will be liable for the company's obligations to the value of his/hers share in the company's registered capital. The shareholders conduct preliminary discussions on the commercial activities they intend to engage in. Based on their agreement, Articles of Incorporation are prepared and signed by all shareholders.
A dedicated bank account is opened to collect all share capital. The minimum share capital required is 5,000 leva (approximately ?1,700). It is not the cost of setting up the company, just the amount required to be deposited as a condition of setting up the company!!! Once the entire share capital has been paid up these funds can be accessed and withdrawn. Shareholders at time of registration must have paid at least 1/3 of their respective shares. It is required that at least 70% (3,500 leva) of the capital is raised at time of registration.
The company exists from the moment it is added to the Commercial Register of the district court of where the company will be based. The entry is made upon issue of a district court decision for the incorporation. The following documents must be available at the time of the submission of registration application to the district court.

1. Articles of incorporation;
2. Memorandum for appointment of Director/ Directors;
3. Proof that each shareholder has paid at least one third of its interest, but not less than 10 leva;
4. Proof that at least 70 per cent of the registered capital has been paid.

The Bulgarian State Gazette is the official paper of Bulgarian State. All Bulgarian legislation is published there for the law to take effect. Publication of the company entry in the Commercial Register does not complete your company formation, it announces to the general public the act of formation.
The process of forming your company can take anywhere between a few days to a few weeks.
Finally, your new company will need to register immediately with the National Tax Register Authority, National Companies Register and the National Social Security Institute.

If you choose to use our cervices about the company registration (recommended) we will charge you 450 €, including all administrative costs.

Real Estate Tax Summary

Transfer taxes
Apart from corporate tax (15% in 2005), 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 (about EUR 1,750). In addition, 2% of the market value of the property is paid to the municipality in which the real property is situated upon completion.

Capital Gains Tax
There is no Capital Gains Tax on the profit when your company sells the property but the standard rate of corporate tax (15% in 2005).

Local taxes and rates
The owner of a building or a plot is obliged to pay a real 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. In addition to the real property tax, owners also pay waste-collection fees.

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%. The buyer/lessee is entitled to a VAT refund, provided that it is registered for VAT purposes.