Many of our clients seek advice on the relevant taxes that investors purchasing
property in Bulgaria will be liable for.
For treatment of taxes on rental income, capital gains and local authority taxes, please
refer to the following:
• Transfer taxes
Apart from corporate tax, no other direct taxes are levied in Bulgaria on the transfer of
real estate. 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 with the maximum being about 1,750 Euro. In addition, 2% of the market
value of the property is paid to the municipality in which the real property is situated
upon completion.
• 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.
The property taxes for your own property in Bulgaria are very low. 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 Euro.
• Capital Gains Tax
There is no Capital Gains Tax on the profit when your company sells the property but
the standard rate of corporate tax (15% in 2005).
• Value Added Tax
Transactions with land and lease of property for residential purposes are exempt from
VAT (Value Added Tax), all other real estate transactions are subject to VAT at the
uniform rate of 20%. However the buyer/lessee is entitled to a VAT refund, as soon
as it is registered for VAT purposes.
• Annual Costs
Annual costs for running a house or an apartment in Bulgaria are considerably lower
than in UK app. 900-1200 EUR. Costs vary according to the size and location of the
property and how much is it in use. This includes:
a: Estimated charges for electricity, water and telephone.
b: Maintenance fees if the property is located in a complex area.
