The Bulgarian Constitution does not allow foreign individuals to acquire land until 2012. Bulgarian Property Taxes. The tax evaluation price is calculated with a formula that includes a basis tax value per sq m and correctional coefficients for location, quality of infrastructure, individual characteristic, height and age of the property. These assumptions are critical. The flipside is that Bulgarian property is now remarkably affordable and probably appropriately priced. Property Tax. The Bulgarian tax authority is the National Revenue Agency. Income tax on individuals. Depending on the type of tenant, the tax is paid in different ways: All income earned in Bulgaria is taxed on a flat rate of 10%. The last time the basis tax value was recalculated was in 2002.This makes Bulgaria the country with lowest property tax in the whole European Union. Valid Tax Evaluation Document - This paper is issued by the Local Tax services Office in the Municipality where your property is located. To obtain Bulgarian tax residency you are not required to stay for 183 days in Bulgaria. Where a double taxation agreement exists between Bulgaria and your home country, which provides for double taxation relief, then a deduction for tax paid in the foreign country can be offset against tax on the same income in your home country. The rates vary between 3.3% and 6.6% for all other beneficiaries. For example the annual property taxes and the annual garbage taxes for a property in a big Bulgarian city or in a resort area are 50-70 EUR. In total the employee pays 12.9% and the employer contributes what corresponds to 17.9%. If the rent is payable to a non-Bulgarian tax resident, a 15% withholding tax is levied. Verila 5 1463 Sofia, Bulgarien Tel: (+359) 2 868 45 99 E-Mail: office@ruskov-law.eu But a longer holding period often results in no capital gains tax being payable. Property tax covers the cost of registering the title deeds with the municipality and is equal to 0.15 per cent of the purchase price. These have no reason to be expensive whilst still effective. m area they are 30 in total. There are usually two property taxes to be paid: property tax and garbage collection (which is optional), which are paid at the local municipality. For all other beneficiaries, the inheritance tax rates vary, depending on the relationship between the donor and the heir. Additionally, in 1997 the government of Bulgaria began paying closer attention to the transactions of foreign companies who were doing business within Bulgaria. Bulgarian Income Tax : For non-resident individuals, the applicable tax on rental income will depend on whether the tenant is an individual or a company. According to officials taxes on farm land will revitalize the market for this type of estates. If the real estate and/or the movable property are owned by more than one person, the income is divided in proportion to the participation in the ownership. You will also be obliged to file a tax return detailing your worldwide income in your home (tax resident) country. A foreign domiciled person is subject to inheritance tax only on property … Double Tax Treaties generally do not provide relief for this tax. Homestead Exemption is a savings allowed for those property owners who own and live at their primary residence. Rental income or income from disposal of real estate property located in Bulgaria is considered Bulgarian-source income. Rents earned in a Bulgarian company are taxed at 10% after deduction for costs including loan interest and building depreciation. Everybody who set up a company for the purpose to buy real estate in Bulgaria ( house, land, apartments, etc) have to declare annual company tax reports every year. use (also known as Act 16) has been issued prior to 60 months are exempt, unless the seller opts out to treat them as VATable. BULGARIAN PROPERTIES™, BULGARIANPROPERTIES.COM™ and the logos are trade marks of Bulgarian Properties Ltd., registered in Bulgaria under VAT#BG131164582 with address: 22, Zlaten Rog Str., Sofia 1407, Bulgaria. The transfer of Bulgarian real estate is subject to a transfer tax @2% plus a State Entry fee of 0.1% of the purchase price (Notary Deed price). Properties that sold for €80,000 10 years ago are widely available now for €25,000. Once you have established a Bulgarian company, you have to do an annual company tax reports and declaration. Otherwise you will be charged with a penalty fee. If you sell a property in Bulgaria and you have a switched-on agent, it should be declared as your single and sole Bulgarian residence. Scope of taxation. Option to pay per Job or time spent. Option to pay per Job or time spent. The rate on capital gains from securities is equal to one half of the applicable rate as per the national legislations of Bulgaria and Israel. As we told the income tax rate is 10% and you have to submit an annual tax return. The flipside is that Bulgarian property is now remarkably affordable and probably appropriately priced. In many countries a holding period of less than 5 years results in capital gains being taxable. Any rental income you have from the property is subject to 15% Bulgarian withholding tax. Historically Bulgaria property sales included the common practice of under-declaring the actual value of a property on the title deed in order for both the seller and the buyer to save on property taxes. Certain exemptions apply, among them that profits of CFCs with substantive economic activity will not be subject to Bulgarian tax. This transliterates to danŭk kŭshta. Obtaining a Bulgarian ID card is a precondition to be granted tax residence of Bulgaria. Notary Public’s Fees. The most common mistakes made when buying a property in Bulgaria can be summarized as: Paying a deposit to reserve a property. But a longer holding period often results in no capital gains tax being payable. The garbage collection tax varies from 0.025 to 0.027 of the tax evaluation price. 1. If the real estate and/or the movable property are owned by more than one person, the income is divided in proportion to the participation in the ownership. 2) during the Bulgarian tax year the person sells not more than one residential property regardless of the date of its acquisition; 3) during the Bulgarian tax year the person sells not more than two properties, if they have been owned for more than 5 years. Several European countries apply an attractive corporate tax regime but tend to neglect the personal income tax aspect. The seller insists that a lower price is put on the title deed (tax evasion). If you work as an employee with only a labor contract, you are not required to submit a tax return. Any subsequent property sold in the same year will attract around 10% tax on any profit made. Homestead Exemption is a savings allowed for those property owners who own and live at their primary residence. A notary public charges for preparing the preliminary contract and notary deed and for any checks he makes on a property. Explanation and practical tips. Employment income earned in Bulgaria is also subject to various social security insurance contributions. Once the local Tax services have the property declaration they can calculate your annual taxes and waste collection fees. Change in any of those parameters leads to change in the tax evaluation price. Due to the Integrated Information System for Cadastre and Property Registration (IKAR, founded in 2008) all information on Bulgarian properties are publicly available on the website of the Land Registry Agency. The rule of thumb: sell one property per year tax free. Bulgarian residents are subject to tax on their income from sources in Bulgaria and abroad (including the business as a sole trader) and the incomes of foreign individuals are taxed only if they are acquired from sources in Bulgaria. Bulgarian Corporate Tax Verila 5 1463 Sofia, Bulgarien Tel: (+359) 2 868 45 99 E-Mail: office@ruskov-law.eu Withholding tax is levied on: Any dividends and shares in a liquidation surplus, as distributed (apportioned) by any resident legal person in favour of: The VAT rate in Bulgaria is 20%. Ongoing property taxes: Bulgarian Income Tax: For non-resident individuals, the applicable tax on rental income will depend on whether the tenant is an individual or a company. Bulgarian Property repair, renovations. Tax on purchase: Professionals in Bulgarian Property Sales for Irish and British Investors We have been successfully representing Irish and British investors to Buy, Sell and Manage their properties in Bulgaria for over twelve years. Back to Our Services, Non-residents are taxed in Bulgaria on income arising from Bulgarian sources only. Once you purchase a property in Bulgaria you have to declare it in the local Tax services. Selling Bulgarian property involves a variety of bureaucratic procedures that must be followed to enable the vendor to legally complete the transfer of the ownership to any new owner. The value of deceased’s property is defined in the local currency, Bulgarian Leva (BGN), in the following manner: However in Bulgaria property prices show growth of more than 20% every year. Specific tax planning advice to your circumstances should be sought. There is an inheritance and gift tax of between 0.4% and 6.6%, depending on the relationship of the beneficiary. That is why it is extremely difficult to keep up to day with market values. Bulgarian Property Taxes. Bulgarian Capital Gains Tax : For non-residents, withholding tax of 10% is deducted from Income derived from the sale or exchange of property – this is determined as 90% of the difference (if positive) between the selling price and the acquisition cost. Bulgarian Transfer Fees. Bulgaria-domiciled individuals are subject to inheritance tax on inherited property both located in Bulgaria and abroad. 20% of the income is regarded as non-taxable. If you are resident in Ireland or the UK, you will be obliged to declare and file your Bulgarian income in Ireland/ UK also. Capital Gains: The sale of real estate by nonresidents in Bulgaria is subject to 10% withholding tax on the net gains received. If the tenant is a Bulgarian company, the tenant w ithholds tax @ 10% from gross rents with no deduction for costs. These assumptions are critical. The Bulgarian tax authority is the National Revenue Agency. Withholding tax is deducted by the buyer of the property and paid over to the Bulgarian Tax Authorities by the end of the month following the end of the quarter in which the change of ownership took place (the Notary Deed date is to be considered as the date of the transaction). A new VAT Act was published in 2007. If you work as an employee with only a labor contract, you are not required to submit a tax return. These taxes are due by March each year with liability for the previous year. Transactions with new buildings remain subject to VAT, while transactions with buildings for which the permission to use (also known as Act 16) has been issued prior to 60 months are exempt, unless the seller opts out to treat them as VATable. The taxable base for Bulgarian inheritance tax is equal to the value of the inherited property (e.g., an apartment, shares of a company, and a car). Notary Public’s Fees. However, the foreign individual can purchase the land via a Bulgarian registered company. Some rural properties are billed as little as 15 Euros / year, other regular size Sofia apartments will typically be 150 Euros / year. Other – Insurance contracts covering risks in Bulgaria are subject to a 2% tax … Bulgaria outcompetes other EU member states by offering the best of both worlds and offers fabulous opportunities for both companies and individuals. Brief information on taxation is provided within the Living in Bulgaria guide. Changes in the law are vividly discussed in order to have small taxes on agricultural land but still nothing is publicly accepted. Heirs at law or by will are required to pay inheritance tax except from the surviving spouse and heirs in direct line. Ongoing property taxes: Bulgarian Income Tax: For non-resident individuals, the applicable tax on rental income will depend on whether the tenant is an individual or a company. 1. In addition to the real estate tax, owners also pay waste-collection fees unless they are unsubscribed from it. Done this way, there is no Capital Gains tax to pay. Ongoing property taxes: For example the annual property taxes and the annual garbage taxes for a property in a big Bulgarian city or in a resort area are 50-70 EUR. The VAT rate in Bulgaria is 20%. Bulgarian residents in the US: Bulgarian citizens working in the United States must comply with the appropriate visa requirements, labour and tax laws. Obtaining a Bulgarian ID card is a precondition to be granted tax residence of Bulgaria. As part of the Nyama Problemi Ltd group of sites, it was determined a real need for a property repair service covering the smaller repairs. The request for issuing this paper could be submitted only by the owner of the property or his legal attorney. According to the Bulgarian legislation you can claim Bulgarian tax residency if 1. Once you have established a Bulgarian company, you have to do an annual company tax reports and declaration. In a small town (like Karnobat town) for a house, 65 sq. Most foreigners buying property in Bulgaria must form a limited company to purchase land, so they will be subject to corporation tax. Moreover it will make owners of small plots sell or re-allot with others. It is not their sole or principal residence. The property was worth US$250,000 or 250,000 at purchase. A foreign individual who decides to invest in property in Bulgaria has two options: The governing legislation in Bulgaria regulating the legal aspects of the subject is the Bulgarian Inheritance Act (Bulgarian: Закон за наследството). For a solid house, 90 sq.m area in the Super Center Zone in Bourgas the annual real property tax is around 55 BGN and the waste collection fee is 60 BGN. Everybody who set up a company for the purpose to buy real estate in Bulgaria ( house, land, apartments, etc) have to declare annual company tax reports every year. It is not their sole or principal residence. The buying process varies in Bulgaria depending on whether you buy an apartment or a landed property. If the tenant is a Bulgarian company, the tenant w ithholds tax @ 10% from gross rents with no deduction for costs. Bulgarian VAT Law firm Ruskov & Kollegen ul. Bulgarian inheritance tax is levied on property exceeding BGN 250,000 (approximately EUR 125,000) and amounts to 0.7% for property inherited by brothers, sisters and their descendants, and 5% - for other heirs.] You are considered tax resident in Bulgaria if you spend at least 183 days there per year or if your main resident home is located in Bulgaria. 2. Inheritance Inheritance of direct descendants is not taxed. Bulgaria applies a worldwide income tax system and residents are taxable on their worldwide income. It shouldn't be a lot of money, and would certainly amount to far less than the tax for a similar property in Western Europe or the British Isles. 20% of the income is regarded as non-taxable. Personal Income Tax- 10% (flat rate taxation) Mandatory Social Security Contributions Employer: - 17.4% Employee: - 12.9% Maximum monthly taxable base - BGN 2,000. The rule of thumb: sell one property per year tax free. Heirs at law or by will are required to pay inheritance tax except from the surviving spouse and heirs in direct line. Bulgaria’s flat tax framework is undoubtedly exceptional from a EU perspective.Bulgaria is situated in South Eastern Europe and is bordered by Serbia and … This salary constitutes a tax deductible cost for the Bulgarian company and the receiving individual pays 10% Bulgarian personal income tax on that income in Bulgaria. Local Property Tax (Rates): are payable quarterly and vary per region / Municipality. The investors should be aware that the tax evaluation price is times less than the market one. The real estate market in Bulgaria in the current 2019 has been really dynamic. A non-Bulgarian resident can (i) become professionally active in Bulgaria and (ii) receive a (high) salary from a Bulgarian company as a compensation for these activities. You must do it if you are freelancer or work both like employee and freelancer. For a flat in a quarter in Bourgas with 45 sq. Bulgaria applies a worldwide income tax system and residents are taxable on their worldwide income. The tax year runs from 1 January - 31 December. A double taxation agreement exists between Bulgaria and Ireland / UK. Our skill set covers all areas of work from Electrics to Bathrooms and roof repairs. The tax legislation in Bulgaria includes the principles of establishment and functioning of the tax system. Everybody who set up a company for the purpose to buy real estate in Bulgaria ( house, land, apartments, etc) have to declare... 25.10.2016 Bulgaria- one of the most preferable destinations to buy holiday residential property Invest in property which he purchases as an individual. Personal income tax rates. As part of the Nyama Problemi Ltd group of sites, it was determined a real need for a property repair service covering the smaller repairs. The withholding tax is levied on the gross amount of the rental income and no expenses can be deducted. Invest in property which he purchases as an individual. The basis tax value deserves special attention. For more details see the Data FAQ These are different in value and depend on the size of populated area and its situation in the country, the neighborhood, the sq. Bulgarian taxable persons are obliged to keep a special register of their CFCs, containing a list of information as laid down in the legislation. Annual company accounts and tax returns for Bulgarian Ltd. 27.03.2017. Due to the Integrated Information System for Cadastre and Property Registration (IKAR, founded in 2008) all information on Bulgarian properties are publicly available on the website of the Land Registry Agency. does not allow foreign individuals to acquire land until 2012. If a building is built on a State or municipal plot, the value of the plot will also be included in the tax base. Once you have accepted an offer for your property and a deposit has been collected the conveyancing procedure must get underway. Such value is calculated on the date when the inheritance is disclosed. Becoming a Bulgaria Tax Resident, you can benefit from the lowest tax rates in the entire European Union. Transactions with the underlying plots of the buildings are subject to the same rules. In many countries a holding period of less than 5 years results in capital gains being taxable. The tenant pays this tax over to the Bulgarian Authorities, quarterly, on your behalf. The property was worth US$250,000 or 250,000 at purchase. Transactions with the underlying plots of the buildings are subject to the same rules. You reside in Bulgaria for not less than 183 days annually or 2. If the tenant is a Bulgarian company, the tenant withholds tax @ 10% from gross rents with no deduction for costs. To get around this investors wanting to buy a house or villa must first set up a Bulgarian registered company. Bulgarian companies are required to withhold tax on payments of dividends and liquidation proceeds; interest (including that incurred under finance lease agreements and on bank deposits); royalties; fees for technical services; payments for the use of properties; payments made under operating leasing, franchising, and factoring agreements; and management fees payable to non-residents. The governing legislation in Bulgaria regulating the legal aspects of the subject is the Bulgarian Inheritance Act (Bulgarian: Закон за наследството). As we told the income tax rate is 10% and you have to submit an annual tax return. The tax amount varies from 0.10% to 0.15% of the tax evaluation price of the property. It includes a 0.15% Inhabited house duty and a 0.16% Waste Collection duty. If the tenant is an individual, s/he must pay gross rents to the landlord and the landlord must pay income tax @10%, quarterly, to the Bulgarian tax office. Selling your Bulgarian property Selling your house, land or apartment is a very important action, particularly if it is owned by a domestic registered limited liability company in your name. Inheritance law regulates the financial consequences that arise as a result of the death of individuals, as well as the subsequent transfer of their assets. These have no reason to be expensive whilst still effective. The fine is also very small. We offer services to acquire and conclude your tax bill for you for an administrative charge of 50 Euros + the tax … Verila 5 1463 Sofia, Bulgarien Tel: (+359) 2 868 45 99 E-Mail: office@ruskov-law.eu Non-residents are taxed in Bulgaria on income arising from Bulgarian sources only. Law firm Ruskov & Kollegen ul. Bulgaria Tax Residency. Once you have established a Bulgarian company, you have to do an annual company tax reports and declaration. Every owner is liable to pay annual municipal property tax to the government. You submit a standard form along with a copy of your notary deed. If you buy a property with land in Bulgaria, you must form a limited company and pay corporation tax. Inheritance law regulates the financial consequences that arise as a result of the death of individuals, as well as the subsequent transfer of their assets. Property tax covers the cost of registering the title deeds with the municipality and is equal to 0.15 per cent of the purchase price. However, the foreign individual can purchase the, 2) during the Bulgarian tax year the person sells not more than one residential property regardless of the date of its, 3) during the Bulgarian tax year the person sells not more than two properties, if they have been owned for more. A flat tax rate of 10% applies to all personal income, with some exceptions. The corporate tax in Bulgaria is only 10% flat rate compared to 33.9%+ in Belgium, 33.3%+ in France and 25%+ in Austria. 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