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LEGAL ISSUE OF OWNERSHIP OF PROPERTY IN BULGARIA:
According to the Bulgarian Constitution foreign nationals and foreign legal entities may not directly acquire ownership rights on land. Any foreigner who inherits land in the country is obliged to transfer the ownership of the land to local natural or legal person within three years after the inheritance becomes effective. Foreigners however, are permitted to acquire the ownership of buildings and premises within a building as well as limited property rights. Under limited property rights the Bulgarian law understands the right of use (usus), the costruction right (superficie) and the servitudes.
The above restrictions, however, do not apply to Bulgarian companies, irrespective of the percentage of the foreign participation in the company. Thus foreign persons can acquire full land ownership rights, including ownership rights on agricultural land by setting up or joining a company incorporated under the Bulgarian legislation.
The amendments in the Constitution, adopted by the Parliament in February 2005, aiming to revise the basic law in the context of the country’s accession into the European Union, liberalize the restrictive regime for acquisition of land by foreigners. According to the amendments foreign individuals and legal entities will be permitted to acquire and own land in three hypotheses: (i) the citizens of the EU Member States - in compliance with the terms and conditions of the Accession Treaty which inter alia will provide for a 7-year suspension period; (ii) by virtue of a ratified international treaty and (iii) in case of ex lege inheritance. Citizens of the EU States will be exempted from the 7-year suspension period and will be entitled to acquire land immediately as of the country’s accession in January 2007 provided that they fall into any of the following two categories: if they reside continuously in Bulgaria or if they are self-employed persons having permanent residence in Bulgaria and carry out agricultural activity in the country.
Taxes and fees
According to the Local Taxes and Fees Act the immovable property and the limited ownership rights acquired against payment are subject to taxation.
The tax has to be paid by the acquirer of the property. In case it is stipulated that the tax is due by the both parties, they are jointly responsible. When the parties have stipulated that the tax is due by the transferor, the other party is a surety.
The tax for property acquisition is 2% of the valuation of the transferred property. It is determined on the base of the higher value between the tax assessment and the negotiated sell price as declared in the draft notary deed or in the contract.
The proprietor must pay also notary fee for immovable property acquisition according to the prescriptions of the Notary and the Notary Activity Act (NNAA). The exact amount of the notary taxes is defined in Notary Taxes Tariff (article 8) as follows:
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| Certified material interest in BGN |
Notary fee in BGN |
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| Under 100 000 |
15.000 |
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| From 100. 001 to 1,000.000 |
15.000 plus 1.5 % for the amount over 100.000 |
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| From 1,000. 001 to 10,000: |
28.5 plus 1 % for the amount over 1, 000 |
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| From 10,000. 001 to 50,000: |
118.5 plus 0.5 % for the amount over 10, 000 |
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| From 50,000. 001 to 100,000: |
318.5 plus 0.2 % for the amount over 50, 000 |
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| Over 100,000: |
418.5 plus 0.1 % for the amount over 100,000 but less than 3,000 |
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The VAT due is 20 % after the paid taxes and fees for the transfer have been discounted.
There is no VAT on land transfer deals. |
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Necessary Documents for the notary procedure:
1. Draft notarial deed for transfer of property
2. Documents identifying the participants in the proceedings
3. Letter of authorization if agent represent one of the parties
4. Documents certifying the property right
5. Declarations by the parties certifying their civil, marital and property status
6. Declaration by the person who acquire the property certifying the origin of the funds, in case the value of the estate is over 15000 euros
7. Declaration by the interpreter that his translations are reliable
8. Certificate for tax assessment and paid taxes
9. Receipt for paid local tax for acquisition of real estate
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