Due to the differences in the legal system in Bulgaria with regard to foreign investors acquiring property and or land in the country and because of the arising questions concerning the practical use of the Bulgarian legislation, it is advisable to understand some of the basic concepts, connected to purchase and sale of property.
If you are a foreigner interested in buying land in Bulgaria, you must register a Trade Company. In Bulgaria it is forbidden a foreigner to buy land as an individual. This limitation will cease after 2014.
The procedure of registration as a legal person is the following:
- You have to pay taxes and present the necessary documents in the court. You can register a company in every court. No matter where the registration is done, your company will have the right of operate in the whole country.
- If you are a trader you can be the sole owner of the capital and sole representative of it. Your company can have more than one partner in order to do business together as a LTD company. It is considered as a trade company from the day of the entry in the trade register of the Court. The company should also be registered with the National Statistics Institute ( BULSTAT ), the National Social Insurance Institute ( NOI ) and the TAX authorities.
- You have to deposit 5000 BGN ( 1785 GBP ) in your company account as a prove that you have some capital to start and run a business. This money can be released after you company is set up. You can use it as a payment for your new property.
- After all this you will receive original documents confirming that the company is registered according to all Bulgarian laws. Before the deal you have to sign a protocol, declaring the intention to buy a particular property. After the deal you will need to register the property in the Local Tax department so that you are registered as the new legal owner.
- The difference between EOOD ( Single person limited company ), OOD ( Multiple person limited company ) and Sole Trader ( ET ) is that the Sole Trader is responsible for his duties regarding the business liabilities but if your company is LTD ( = EOOD or OOD ), each partner is responsible only to the extent of their share in the total capital.
- The procedure of registering your company will take up to 10 working days
Please, also note that in Bulgaria there is a Tax estimation price /similar to ratable value in UK/ which is usually several times lower than the purchase price. Because of various reasons (saving on taxes and VAT) most vendors prefer that this lower price rather than the real sale price is written in Title deeds. Due to this practice it is good to ask on each individual offer how it’s being transferred.
Property transactions in Bulgaria have a number of peculiarities in connection with the Bulgarian property registers, the form of transactions, encumbrances, taxation and etc. That is why a professional and high-quality study of the status of specific properties and the ownership rights is of really great importance. After signing the preliminary contract and giving a deposit the Bulgarian property is taken out of the market for a period of time negotiable with the seller after which the buyer have to start purchasing process and pay the rest of the price. The buyer should do the standard checks on title documents, debts on title, licenses and permissions, terms of contract etc. We offer help for the whole process of changing the ownership of the Bulgarian property to the signing of title deed (notary act) before a notary – checking the Bulgarian property documentation, ownership and right to sell and preparing all necessary paperwork.
If you are a foreigner interested in buying apartment in Bulgaria there are a few things that you have to pay attention to:
- To buy an apartment in Bulgaria, you don’t need to register a Ltd company as this is valid only when you are buying land or a house. For the apartments you are actually buying the right to build (not the land) that’s why company formation is not required. There is no reason to worry about that, as once you have bought the apartment you will have legal document for ownership – Notary deed which is not limited in the time and is issued by legal Notary, practicing in the area where is the property.
- Once you have chosen the apartment that you like, the standard way to reserve it is by putting 1000 EUR reservation fee which takes the property off the market. The reservation fee is not refundable, but is deductible from the first payment.
- Once the apartment has been reserved, your passport details and home address is required so that a preliminary contract can be made. In this contract is described everything regarding your purchase – apartment number and price, amounts and dates of payments and also penalties – for you, if you are late with the payment or for the developer if there is delay with the building process.
- Usually 1 month after the reservation you will need to transfer the first payment for the apartment into a bank account in Bulgaria.
- As all the property prices in Bulgaria are in EUR (as the rate is fixed with the LEV and it is 1.95583 BGN for 1 EUR), a EUR payment will be required for your apartment.
- Once the building where is the apartment is finished (if you are buying off-plan) and all the payments are made, the property will be transferred into your name in the local Notary.
- After the deal you will need to register the property in the Local Tax department so that you are registered as the new legal owner. Also according to the Bulgarian Law you will need to register in the Bulgarian Statistics Institute (BULSTAT) and take a BULSTAT card. You need to do this within 7 days after the purchase.
