Bulgaria - Tax Overview
All non-resident property owners in Bulgaria are only taxed on income raised in Bulgaria. A number of property taxes as outlined below will also apply. To be classed as resident in Bulgaria, you would either need to spend more than 183 days in the country or hold a permanent residence there.
It is not possible for non-resident ’s to purchase land in Bulgaria. If a non-resident wishes to purchase land with their building, they will need to complete the purchase under a Bulgarian company name. A non-resident can set up a company name in order to purchase land, and will be taxed under Bulgarian corporation tax laws.
Bulgarian BULSTAT Identification code
All non-resident property owners in Bulgaria are required to register under the BULSTAT system either by the issue of a personal foreigner’s number (PFN) or a personal identification number (PIN) within 7 days of the purchase of the property.
For Bulgarian companies that have been set up, a BULSTAT registration is required within 7 days of the court registration. The company will then be issued with an identification card that shows the identification code of the company under the BULSTAT system.
Bulgarian property taxes payable when purchasing a property are as follows:
Bulgarian Transfer fees are calculated at 2% and there will also be a state entry fee of 0.1% of the purchase price payable. The notary must verify the property purchase price. VAT will also be applicable at a rate of 20% for buildings, and it also applies when purchasing a property from a company that is registered for VAT.
Ongoing Bulgarian property taxes payable are as follows:
From the 1st of January 2007, all non-resident landlords are subject to a 10% witholding tax on their gross rents. There is no allowance for deductions for cots against the gross rental income. When filing for a previous year, this witholding tax is increased to 15%. The management companies who withhold the 10% are obligated to submit the witholding tax return, showing the tax deducted and the rents received.
Bulgarian Corporate Income Tax is payable if property is purchased through a company and is calculated @ 10% as of January 1st 2007 (15% previous years) on the company profits. Full deductions will be given for eligible costs incurred in connection with the property.
A Bulgarian corporate income tax return must be filed every year even in cases where a nil return has occurred.
Bulgarian Local Property taxes (rates) are also payable quarterly and vary per location. Inhabited house duty is calculated @ 0.16% of the Tax evaluation of the property (defined each year) and a Waste Collection Duty applies; it differs from municipality and property location. In general it varies from 0.20% to 0.80% of the property’s tax evaluation value.
Other applicable taxes are as follows:
Bulgarian Capital Gains Tax
Bulgarian capital gains tax is payable on any gains realized since acquisition at a rate of 10% from the 1st of January 2007. Previous years to this incur a rate of 15%. The CGT is calculates on the difference between the original purchase price versus the selling price, but allows for inflation indexation. No Bulgarian CGT is payable if you hold one property for more than 3 years, or you hold 2 properties for more than 5 years in Bulgaria..
Bulgarian Inheritance Tax
Bulgarian inheritance tax is payable by non-resident beneficiaries on certain transferred assets. The tax rate depends on the relationship between the parties and the size of the inheritance. The lineal heirs are completely exempt from this tax. For all other beneficiaries the tax rate will apply only on property with a valuation above €125,000. Brothers and sisters pay 0.7% Bulgarian IHT on the amount above €125,000; any other person pays 5%.
Non-Resident property owners may be liable to declare Bulgarian rental income as worldwide income within their annual tax return.
UK and Irish residents are obliged to declare Bulgarian sourced income in their annual resident tax return. There is a Double Tax Treaty agreement between Bulgarian, the UK and Ireland so relief for certain French taxes will be given against Irish/ UK taxes payable on your Bulgarian property.
Property Tax International specialise in the completion and filing of non-resident Bulgarian income tax returns. PTI also provide a complete range of Irish and UK domestic tax filing services for the self-assessed and self-employed.
The information provided above is intended as a guide only. While Property Tax International Limited makes every effort to ensure that the information contained herein is accurate, we take no responsibility or liability for any inaccurate, delayed or incomplete information, nor for any actions taken in reliance thereon.
Page added August 2010