Investors Guide to Bulgaria

The Purchasing Process

Buying property in Bulgaria is considered to be a straight forward process, although some people are daunted by the idea of setting up a Bulgarian company in order to purchase a property with a freehold status.

The situation of buying a property through a company name has been set up to avoid the 7 year wait established when Bulgaria joined the EU, meaning that after 7 years, it will be possible for non-residents to purchase freehold without setting up a company, this 7 year period is due to expire in the year 2014.

To own the property freehold, setting up a Bulgarian company will be required, a lawyer specialising in Bulgarian property purchases will be very familiar with the process. The Bulgarian registered company will be set up with the buyer of the property being the owner and director of the company. Approximately €2,500 minimum will need to be deposited into a bank account as the business capital. The company is then registered with the local social security and tax offices and is technically completed.

Many real estate agents are able to begin the process and assist with all of the required steps for setting up a business and buying a property through the corporate route, as it is often a part of the services offered with the purchase.

Fees & Taxes

Fees and Taxes associated with buying property in Bulgaria rarely go above 5% of the property purchase price, although VAT added to the purchasing costs brings the costs up to over 20%.

• VAT: 20% - the buyer is entitled to a VAT refund when registered for VAT purposes
• Municipal tax: 2%
• Notary fees – up to 1.5%
• Registration fees – 0.1%

Financing the Property

Financing a property purchase is a straight-forward process that can be arranged from a Bulgarian bank or a bank in the buyer’s home country. If opting for a loan arranged through a Bulgarian bank, the loans will be available only in Euros.

These loans are available for both purchasing and re-financing purposes and Interest Only mortgages can also be arranged. Minimum loans amounts are usually around €30,000 and the maximum if normally calculated at around 75% of the purchase price.

The types of loans and the particular details will vary depending upon the financial company used, however proof of income will almost certainly be required and the maximum term of the loan will be around 25 years, or up to 70 years of age at maturity. More about overseas property finance

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