Tax Conditions for Property Investors in Bulgaria
We emphasize on the most important issues in this article. For additional customized advice and comments, please send us your enquiry.
There are two groups of tax liable persons – physical persons and companies. Physical persons’ taxation is explained in Section I and corporate taxation – in Section II of this article.
I. Physical persons’ incomes taxation in Bulgaria – this is applicable to physical persons who own apartments in Bulgaria.
Property owners, who have houses or plots of land in Bulgaria, please read section II. Corporate taxation is applicable in your cases as you have established limited companies in order to own property in Bulgaria.
The law makes a difference between the physical persons who are local or are citizens of EU countries and those who are citizens of countries not part of the EU. Thus, we will point out the taxation for each of those 2 groups:
1. Taxation for incomes of physical persons who are local or are citizens of EU countries or countries that belong to the EU economic area.
TAX FREE INCOMES
1. Incomes received from the sale or exchange of up to one residential property per year. It is not necessary for the owner to have lived in the property but it needs to be a residential property, not land. There is also no requirement for the term of possession of the property – this means it can have been bought at any time, even during the same year.
This gives very good opportunities for property investors who buy for investment and resale as their incomes will not be taxed.
2. Incomes received from the sale or exchange of up to 2 residential properties as well as agricultural land or forests (there is no restriction on the number of land and forests) if the above properties have been possessed by the person for more than 5 years.
Apart from property incomes, there are also a number of other sources of income which are tax free. Some of these are the incomes from deals with public limited company shares traded on the Bulgarian stock exchange. Any interest gained on funds in personal savings accounts in Bulgarian banks or international bank branches in Bulgaria are also tax free.
WHAT IS NOT AN INCOME (and is thus tax free)?
The law doesn’t regard as an income the properties which are inherited or donated. The company shares received from non-monetary installments into trading companies are also not an income.
1. The sales or exchange of more than 1 residential property per year.
2. The sale or exchange of agricultural land or forests no matter of their number if they are owned by the seller for less than 5 years. This is something that doesn’t apply for foreign persons as they cannot own land as physical persons and they need to set up limited companies, thus they need to refer to section II for corporate taxation issues.
3. Property rental incomes
2. Incomes taxation of physical persons who are not local or are not citizens of EU countries or countries that belong to the EU economic area.
All incomes from the sale, exchange, rent or any other property right, which is paid for, received by persons who are not local and are not citizens of EU countries or countries in the EU economic area, are taxed. The tax rate is 10% and is collected and paid by BulgarianProperties if they serve as an agent in the deal.
3. Dividend tax
The dividend tax rate is 5% and it is applicable for incomes received in the form of shared profit by all Bulgarian or foreign physical persons when the source of income is Bulgaria. This means that if a person owns (or has a share in) a company in Bulgaria and this company trades in the country and shares profit, the physical person owner (or shareholder) of the company is taxed with 5% dividend tax, which is collected and paid to the state by the Bulgarian company, which shares the profit.
II. Corporate incomes taxation in Bulgaria
Corporate incomes taxation is applicable to the net profits of Bulgarian companies from their trading activities. This means that if you are a foreign person and you have established a company in Bulgaria in order to buy a house or land, when renting or selling the property on behalf of the company, you are entitled to pay corporate tax.
The tax rate is 10% and is calculated on the difference between the total incomes of the company for the year less the total expenditures. All Bulgarian companies submit tax declarations and pay their annual corporate taxes by March 31st each year.
There are no tax free corporate incomes and no matter how long the property is owned by the company, the company always pays taxes in case of property sale or rent.
IMPORTANT: All Bulgarian companies must submit tax declarations by March 31st no matter if they have traded or not – this is compulsory and all companies should have an accountant to take care of this. If you need help in finding an accountant, please let us know.
Read more about taxation in Bulgaria
Copyright: 2008 Bulgarian Properties Ltd. All rights reserved. For further information or advice please contact us on tel.: +359 2 9 11 50 or e-mail: firstname.lastname@example.org. The use of this article by third parties is allowed only with proper quotations of the source www.BulgarianProperties.com and the Author of the article. The data in this material has been collected by the Author and Bulgarian Properties Ltd. and is presented for information purposes only. We have made every effort to ensure the accuracy of the data. However, Bulgarian Properties Ltd. cannot be held responsible for loss or damage as a result of decisions made based on the information presented in this article.
© Bulgarian Properties Ltd. 2008.
read more articles
Plovdiv has a growing number of expats and digital nomads, and for good reason!
Originally I am from Plovdiv, Bulgaria and have never seen the city as a place for working remotely until recent years. I have been living abroad for a while and every time I come back I have always been surprised that there are new things to do.
I have... read more
Bulgaria’s capital Sofia has a very well developed network of public transport. It includes 97 bus, 12 tram, 9 trolleybus and 2 metro lines. Several months ago the Sofia Municipality launched night bus service as well.
Meanwhile, the quality of the transport services in Bulgaria’s capital improved as well. The city municipality invested a lot of money in the recent years in new eco-... read more
Material: Bnr.bg, Source: golfscape.com
Bulgaria features quite well on the golf destination map of the planet! It may be surprising to some but is in fact the result of many years of efforts and dedication. Earlier this month the blog golfscape carried a ranking of the 18 most impress... read more
All photos, texts, video clips, charts and banners on our website are property of our company or of our partners and are protected by the Copyright Act of the Republic of Bulgaria. Any unauthorized use of photos, texts, videos and other materials from our website by third parties will be subject to immediate claim on the part of the copyright owners. The information on our website is with information and advertising purposes. Alhtough we have made all efforts to provide accurate information, there may be some mistakes. For full and correct information is considered only the information received at the offices of Bulgarian Properties Ltd.