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Q : What should I look out for when finding a property? |
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A : Finding the right investment object in Bulgaria can be a daunting task without the proper connections, market know-how and considerations. As a result of the neglected title registration during 50 years of socialism, land records are often out of date; some of them still missing and this combined with a majority of non-computerised systems could create a very confusing picture. So, to find a clean title is a crucial task in this market and it is perfectly possible to buy property with its history properly and legally recorded. |
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Q : How does the purchase of a property in Bulgaria work? |
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A : First, you find a property you like. Next, you determine whether the sale is with land. If the sale is with land, a company needs to be incorporated to hold the land. (Under the Bulgarian act on Foreign Ownership, foreigners are not allowed to own land but may own buildings. Foreigners can however own land by setting up a Bulgarian company to hold the property for them. In addition, the requirement to set up a company to buy land is likely to be done away with on entry of Bulgaria to the EU in 2007.) If sale is without land no company is needed. Next you receive an initial contract of sale (similar to in the UK). If the property is already built, do the standard checks on the property using a reputable Bulgarian solicitor. Then you will sign the Notary Act (Contract of Purchase) in front of a Bulgarian Notary in Bulgaria. (Please note that the final Notary Act is not signed until the building is completed in the case of off plan developments). |
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Q : Who is the Notary? |
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A : The Notary is a public official who is there simply to put on the public record the fact that the title deed recording the sale/purchase has been signed in his or her presence and understood by the parties concerned. |
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Q : Where should the money be paid? |
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A : When the deed of sale is signed in front of the Notary either the purchase price is, in his or her presence, handed over to the person selling the house or the Seller confirms that the money has already been handed over. Proof of such payment is then incorporated into the title deeds of the property. Usually the price may be paid wherever in the world the parties agree. |
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Q : Do I have to be in Bulgaria to complete the transaction? |
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A : The person buying the house may attend in person before the Notary, but, if this is inconvenient, arrangements can be made for a Power of Attorney to be granted enabling another person to attend on their behalf. This must be in the Bulgarian form and signed in front of a Notary or in Bulgarian Embassy. |
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Q : In whose name should I purchase the property? |
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A : There are a number of ways to purchase the property: in your own name, in the joint names of you and your wife or co-purchaser(s), in your childrens names or in the name of somebody who will eventually inherit the property from you, in the name of a limited company, whether English, Bulgarian or "off-shore". Each method has its own advantages and disadvantages. Everything depends on your own personal circumstances. We shall be pleased to discuss the various ways of buying and to advise as to the most advantageous method for you. It is worth paying careful attention to this point because of the potential tax and other savings that can be made at a later stage. The tax savings also arise because of the way that each time a property changes hands, certain taxes and fees become payable. If you can minimise the number of times it changes hands, you can greatly reduce your tax liabilities. As always with tax savings schemes there is a danger that the Government can close the loopholes that allow the schemes to operate and, as always, there are disadvantages to them as well as advantages. In each individual case, you will have to weigh up the advantages and the disadvantages and decide how you wish to deal with the transaction. |
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Q : After I have settled in, what taxes do I have to pay? |
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A : The Law for taxation of the income of physical persons sets forth the rules on the taxation of incomes of individuals, residents and non-residents, sole proprietors, as well as the incomes of certain corporate entities, explicitly stated in the Act, derived in a calendar year (the calendar year coincides with the fiscal year). Under Law tax liable persons are individuals - residents and non-residents, and corporate entities explicitly enumerated in the Law. Under this Law residents, irrespective of their citizenship, are deemed those persons: who have their permanent domicile in Bulgaria; who reside in the country for more than 183 days in a 365-day period Residents are liable for their worldwide income. Non-residents are deemed those individuals who do not fit the Acts criteria for residents. Non-residents are liable only for their income derived from Bulgarian sources. Foreign experts are taxed only on their Bulgarian-source income irrespective of the duration of their stay in the country. |
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