Property investors in Bulgaria are responsible for taxes and fees indicated below.

Value Added Tax

VAT in Bulgaria is 20%. There is a reduced rate of 7%, applicable to accommodation provided by a hotelier, where part of a package tour. VAT is payable on assets and services in Bulgaria as well as on imports into Bulgaria. In case of buying land or shares, the VAT is not countable.

Every business that had a turnover in excess of BGL 50,000 in the previous 12 months must register with the VAT authorities. A 'VAT' bank account must be opened that will be used for payments of VAT and receipt of refunds.

Corporate tax

The standard rate of tax for a Bulgarian corporate tax in 2008 is 10%.

Income Tax for an Individual

Since January 1, 2008, income of any individual is subject to a flat income tax rate of 10% in Bulgaria, replacing the 10%-24% tax rates in 2007. There is a 10% deduction for rental income as well.

Capital gains

An individual who sells one moveable asset pays tax on the difference between the sale price and the cost of the asset sold on adjusting the cost to the rate of inflation.

Capital gains tax for companies in Bulgaria is added to the regular income.

The tax rate for dividend income and income from sale of shares is 5% for individuals.

Costs and expenses of purchasing real estate

Transfer tax – specified by the Municipal Council of the respective municipality, where the real estate is located, which transfer tax may vary between 2% and 4% over the higher of the purchase price agreed between the parties and the tax valuation made by the tax office prior to the transaction. According to the law the transfer tax is due by the acquirer.

Fee for registration in the Real Estate Registry – 0.1% over the higher of the purchase price agreed between the parties and the tax valuation made by the tax office prior to the transaction. The fee may be shared between the parties or be borne by just one of them.

Notary fee – according to the statutory Notary Tariff, but not more than BGN 3,000 (approx. Euro 1,550) per transaction. The fee may be shared between the parties or be borne by just one of them.

Property tax

The rate of tax on real estate that is not used for residential purposes is 0.15% - 0.3%.

Also the owners of real estate properties have to pay fee for the treatment of the trash, which fee is different for the territory of every one municipality. The fee is defined every year by the municipality’s council.

Bulgaria Inheritance Tax

Inheritance Tax is levied on individuals inheriting Bulgarian property. The tax rate is 0.7% for close relatives, up to 10% for non close relatives. There are exemptions for property valued under BGN 250 000.

Double Taxation Prevention Treaties

Bulgaria is a signatory to a Treaty for the Prevention of Double Taxation with many countries all over the world. A Double Taxation Prevention Treaty, in principle, enables offsetting tax paid in one of 2 countries against the tax payable in the other, in this way preventing double taxation.

 

Note: The information is for guidance only. It is recommended to use professional advice before taking practical tax decisions.