Questions & Answers
How long will it take to buy a property?
Generally it will take 3 weeks to buy a property. This is dependent on a number of factors, not all of which are in your control. The terms and conditions of the sale can be negotiated very quickly, depending on how easily we can instruct an independent surveyor to assess the property, which is our usual practice. It is important to have an accurate picture of the condition of the property, likely repairs that will be needed and its consequent value. Usually a surveyor can prepare a report within a week of instructions. The legal title to the property can be checked at the Land Register in a day or two. Searches with the local authority, trying to confirm the uses and building permissions associated with the property, will similarly take several days. The Preliminary Contract is then exchanged and a deposit paid. There is then a period of, at maximum, a few days while the money transfer is arranged and any final checks made. The sale will take place in front of a Notary at an agreed date and time.
What level of capital growth can I expect on the value of my property?
It is not possible to say with certainty how the property market will react in the future. However, the property markets of the Czech Republic and Poland, two of the most recent new members of the EU have risen by approximately 250% in the five years to today's date. Bulgarian property prices themselves have increased by 17% nationwide over the last 9 months. The increase of the value of a property depends on a number of factors, including the condition of the house, its location and the type of property.
Which are the preferred types of business organizations with foreign investment?
The most common form of organization for foreign investors is a limited liability company. Other types are general partnership, limited partnership, joint stock company, sole proprietorship, joint venture, branch, holding, cooperatives, representative office. Limited liability companies, unlimited partnerships, public limited companies, limited partnerships, holdings and cooperatives are legal entities. Branches and representations are not independent legal entities: branches may engage in economic activities, they have their own property and compile a separate balance sheet; representations may not engage in economic activities.
Do we need a visa to travel to Bulgaria and how long can we stay?
UK passport holders do not require a visa in order to visit Bulgaria for a period of 30 days. Long-term visa (D) can be obtained from the Bulgarian Consular service in London. Visa control has been considerably relaxed between the UK and Bulgaria. For further information please contact the Bulgarian Embassy in London on 0207 584 9400 or check www.bulgarianembassy.org.uk. The British Embassy in Bulgaria also provides information at www.british-embassy.bg.
What are the living costs in Bulgaria? How much one pays for house insurance, gas, electricity, local and national taxes, to hire a gardener or a builder, to drive a car?
It's not possible to compare living costs in Bulgaria and Western Europe. Living costs in Bulgaria are extremely low! For example the food is generally twice cheaper than UK. House insurance: around 100-200 EURO per year depending on the type of house, together with the belongings and furniture inside. For a property of price 30,000 EURO insurance against theft, flood and fire costs about 125 EURO per year with a decent insurance company like Allianz. Gas: the gas system network is not developed in Bulgaria yet. People here mostly use electricity to cook. For heating: there are central heating systems in the big cities: monthly costs for a 2-bedroom apartment around 120 EURO. In the small places people use charcoal and wood, which is even cheaper way to heat a house. For electricity, when used for cooking, light or hot water one pays about 30 EURO monthly. Local and national taxes for owning a property: depending on the place where the property is located, the most expensive area is the capital Sofia, where the annual taxes of 2 bedroom apartment are around 150 EURO per year, but the rest of the country is around 80 EURO per year. In the villages is even cheaper around 20 EURO per year. To employ a gardener or maintenance man or builder you will not pay much. The average salary in Bulgaria is 200 EURO per month.
What is the state of the Bulgarian real estate market?
Like everything else in Bulgaria, property is very good value. This is the result of a general neglect of Bulgarian asset markets (at the moment). Foreign investors in Bulgaria will profit in the long run.
How do I invest in property in Bulgaria?
The upturn in the Bulgarian economic climate, coupled with the preferential conditions and guarantees for foreign investors, has generated excellent business opportunities and investment growth potential. The imminent acceptance of Bulgaria in the European Economic Community, with full integration planned between 2006 and 2008, is attracting more and more foreign investors to Bulgaria, providing unprecedented economic growth potential. In July 2000, Bulgarian Property Law was changed to remove the restrictions on foreign investment in Bulgarian land and property. In common with other European countries, the only remaining requirement is to register the investor or investing company in Bulgaria before any transactions can take place and capital invested.
Value Added Tax (VAT)
Transactions with land and lease of property for residential purposes are exempt from Value Added Tax. All other real estate transactions are subject to VAT at the uniform rate of 20%. The buyer/lessee is entitled to a VAT refund, provided that it is registered for VAT purposes.
Local taxes and rates
The owner of a building or a plot is obliged to pay a real property tax. Where a building is built on a State or municipal plot, the value of the plot will also be included in the tax base. The tax is equal to 0.15% of the book value of the property. Arable land is exempt from local taxes. In addition to the real property tax, owners also pay waste-collection fees.
Transfer taxes
Apart from corporate tax, no other direct taxes are levied on the transfer of real property. The transfer is, however, subject to notary and municipal fees. The notary fees are paid on the higher of the market price or the book value of the property at varying rates. In addition, 2% of the market value of the property is paid to the municipality in which the real property is situated.
Relevant taxes
The relevant taxes that investors purchasing property in Bulgaria will be liable for will vary from person to person due to a number of factors including your tax domicile, the extend of your business activities in Bulgaria, the nature of the property transaction and more. A foreign investor can invest in properties in Bulgaria either directly or through a local entity. Only Bulgarian-resident individuals and entities can acquire title to land, while non-residents may acquire only buildings and limited rights (e.g., leasehold and construction rights) to land. In the case of a direct investment, the tax treatment of the foreign investors depends on whether or not their activities constitute a permanent establishment. The definition of a permanent establishment under Bulgarian law is very broad: the mere fact that a foreign company owns and rents out property in Bulgaria (except where such activity is carried out through an independent agent) may create a permanent establishment under domestic law. The various tax treaties entered into by Bulgaria usually contain a narrower definition of permanent establishment. If the activities of a foreign person owning real property in Bulgaria do not constitute a permanent establishment, the person will be liable for only 15% withholding tax on the rentals and capital gains, unless an even lower rate is applied under a double tax treaty.
Are there any restrictions for foreigners?
According to the Bulgarian Constitution, foreign individual persons can buy buildings but not land. Therefore the most common method for foreigners buying property in Bulgaria is to set up a company which then owns the land and the buildings. We can organize the entire process from start to finish, together with all aspects of conveyancing. We expect the law to change within the short to medium term as Bulgaria opens its doors fully in line with its expected entry into the European Union (2007). This historic restriction is one of the reasons why property in Bulgaria is so competitively priced compared to Western and Central Europe.
How much is a return flight ticket to Bulgaria?
You can buy a return flight ticket to Bulgaria for about £180.
What religions are there?
Bulgarian Orthodox 82.6%, Muslim 12.2%, Roman Catholic 1.7%, Jewish 0.1%, Protestant, Gregorian-Armenian, and other 3.4%.
What's the weather like?
Bulgaria has long been a summer tourist destination, as well as offering popular winter resorts. Generally summers are longer and warmer (and guaranteed) whilst the winters are shorter but can be more severe. The Black Sea coast is less cold in the winter and rarely sees snow. For 5 months (May - September) average temperatures are 25 degrees Celsius and often above in the peak summer period .
Are credit cards commonly accepted?
Visa, MasterCard, American Express, Diners Club, Access and Airplus are all commonly accepted. They can be used for payment of all standard services in hotels, restaurants, night clubs, shops, car rentals, travel agencies, etc.
How is the climate?
The country benefits from a temperate continental climate with clearly marked four seasons. A mild Mediterranean influence is felt in the more southerly regions and the Black Sea coast with average summer temperatures of 80+ degrees (fahrenheit) and an average of 1700 sunshine hours from May to October. Winters can be cold in other parts of the country, hence its popularity as a destination for skiers.
How do I fly to Bulgaria?
Traveling to Bulgaria is easy! International airports are located in Sofia, Varna, Plovdiv and Burgas and connect Bulgaria to the rest of the world. Travelling time from London to Sofia is 2 hours 30 minutes.
How is the economy and political situation?
Bulgaria is a former communist country now striving to enter NATO in November 2003 and the European Union, which is expected to be granted in 2007. Since 1996, the country has experienced macroeconomic stability and positive growth rates (due in part, to the introduction of a currency board in 1997) and it exists under what is now a stable parliamentary democracy, with a majority in parliament and public consensus on key social and economic priorities. Bulgaria demonstrates economic growth at 4.5% (one of the highest in Europe), annual inflation at 3.8% and strong growth figures in the tourism industry (up 10% in 2002 compared to 2001). It boasts low rates of taxation across the board and has one of the lowest cost centres in Europe, though the workforce is highly skilled and qualified.The currency is the Bulgarian Lev (1 Euro = 1.98 Lev) which is already pegged to the Euro.
What is the cuisine?
Bulgaria is a renowned producer and exporter of wine to more than 70 countries in the world. On the territory of Bulgaria there are 12 wineries producing a variety of excellent wines.
Bulgarian food is close to traditional European cuisine. A traditional Bulgarian menu includes bread, yogurt and fresh milk, cheese, tomatoes, paprika, potatoes, onions, beans and fruits, grappa and red or white wine. Food specialities include:
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Shopska salad - prepared from diced tomatoes, fresh cucumbers, green peppers, topped with feta cheese and seasoned with olive oil and parsley
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Mlechna salad - prepared from strained yogurt seasoned with olives, crashed walnuts, finely diced garlic and parsley
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Tarator - cold served soup from yogurt, fresh cucumbers, seasoned with walnuts, garlic and dill
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Sirene po Shopski - feta cheese, diced tomatoes and onion topped with egg and cooked in pottery
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Kebapche - minced meat rolls seasoned with traditional spices and fine herbs and barbequed
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Kuyfte - minced meat balls seasoned with traditional spices and fine herbs and barbequed
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Shish Kebab - grilled skewered meat, onion and paprika
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Banitsa - baked filo pastry filled with cheese, meet or pumpkin
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Creme Caramel - delicious dessert prepared from fresh milk, eggs and caramelized sugar, similar to the classic French creme brulee.
History
Bulgaria has over 30,000 historical monuments from different historical epochs, 36 culture reserves, 330 museums and galleries. The Bulgarian lands are ancient crossroads. They were populated from remote antiquity and remember many ancient civilizations. The state of Bulgaria has a 1300 year old history and according to the statistics, it is ranked third (after Greece and Italy) for its number of archaeological monuments. The earliest inhabitants of the present Bulgarian lands were the Thracians. Ancient Greek historian Herodotus describes the Thracians as the second biggest tribe in the Ancient world, after the Indians. The most famous Thracians were Spartacus and Orpheus.
People
Many Bulgarian villages, located in environmentally clean regions, have preserved their traditional outlook and genuine atmosphere for developing rural tourism. They are ready to open their hospitable doors to those willing to share the rich traditions and folklore, agricultural activities, preserved old crafts, and delicious and varied local cuisine.