Frequently asked questions
Q.
Are there any restrictions for foreigners purchasing in Bulgaria?A.
In general, foreign individuals can purchase and own real estate (land or buildings) in Bulgaria only if they buy through the medium of a Bulgarian limited company. A person buying an apartment does not need to do this. This is because you only own your apartment, not the land it is built upon. You need not be too worried about this. Your rights over it continue forever. Even if the property burns down you are allowed to rebuild. It is just that it is not, officially, classified as the ownership of land.Some apartments are sold with a share in the land upon which they are built. In this case you will need to own, at least the land, via a Bulgarian company. You can always, as a foreign individual, register a company in Bulgaria and buy the property through that company. A company owned by a foreign person in Bulgaria is considered to be a Bulgarian legal entity and, as such, may acquire real estate ownership rights without any restriction – whether the real estate is acquired for business or for some other purpose. This applies even if the company is 100% foreign owned. All the necessary procedures for establishing the company can be completed within approximately one month. Both ways of buying property in Bulgaria have advantages and disadvantages. The trouble is, it is not obvious which is the right choice! You need, in every case, to take advice. That is where we can help by referring you to a solicitor who we know to be reputable and cost effective.
Q.
Will the property be freehold?A.
Yes – all properties we sell in Bulgaria are what we would refer to as ‘freehold’.Q.
On a new development, what is the average deposit required and can I pay in stage payments?A.
Once the lawyers have carried out all the necessary checks they produce a written report setting out their findings. Provided their checks are satisfactory you then sign the main Preliminary Contract and, usually, pay over a deposit of 10% (around £2,000 to £3,500) of the price on a resale property or a down payment of, perhaps, 30% on a new or ‘off plan’ property. In the case of a new property, bought ‘off plan’, there then usually follow a series of stage payments as construction progresses.Q.
What is the general buying process in Bulgaria?A.
Once the reservation contract has been signed there is usually a period of four weeks for your lawyers to carry out checks on the property before you sign the main Preliminary Contract. Once your lawyers have carried out all the necessary checks they will produce a written report setting out their findings. Provided the checks are satisfactory you then sign the Preliminary Contract and, usually, pay over a deposit of 10% of the price on a resale property or a down payment of, approximately 30% on a new or ‘off plan’ property.At this point, if you require permission to buy your lawyer can seek it. In the case of a new property, bought ‘off plan’, there then usually follow a series of stage payments while construction continues. Once the property has been finished (or, in the case of a resale property, as soon as everyone is ready to proceed) the Final Contract/Deed of Sale is signed. This is the document transferring the right to ownership to you. You then pay your various fees and taxes and this is then registered at the Land Registry.
Q.
After I have received the necessary permission to purchase, what happens next?A.
The seller and the people buying the house are usually required to attend in person to sign the documentation. However, if this is inconvenient, arrangements can be made for a Power of Attorney to be granted enabling another person to attend on their behalf. This must be in Bulgarian form and signed in front of a Notary. Your lawyer can prepare this and it can almost always be signed in the UK/ROI. Your lawyer may also be able to appoint an associate in the area to act for you and sign on your behalf.Q.
What additional costs are there in relation to the purchase?A.
As a rough guide, in the case of a new property, the total cost paid to a solicitor (charges for their normal service, land registry fees, notary’s fees, taxes, associates’ fees, bank charges and so on) normally come to about 26% of the price of the property. In the case of a resale property the total cost is likely to be about 5%. In both cases, if the property is less than about £50,000 the percentage will be higher. If the property is over about £500,000, the cost will usually be a little lower. These, of course, can at this stage be only the most general of estimates. There will be additional legal charges, fees and taxes if you are taking out a Bulgarian mortgage or if you choose to buy in the name of a company. Your lawyer will give you an estimate of these costs when they know more about your plans. They will, in any case, give you a more detailed estimate of the likely overall cost once they know more about your particular purchase.Q.
Are there many English speaking lawyers in Bulgaria?A.
Yes, especially in the capital and the big cities on the coast. However, there are two significant advantages when using a Bulgarian lawyer based in the UK and working for UK solicitors. Firstly, the lawyer will be familiar with the expectations of the British buyer and will be able to explain to them in easily understandable terms the whole process of buying a property in Bulgaria. The Bulgarian lawyers working for John Howell & Co for instance, have lived in the UK for years, have been trained in the British conveyancing system and have knowledge of both the British and Bulgarian legal systems and how they interact on matters of tax and inheritance and so on. They speak fluent English and have integrated into the English culture. As a result, they are multilingual, multicultural and multiethnic and would be able to explain to the British client how the purchase process works – something a lawyer in Bulgaria would not necessarily be able to do. Secondly, English solicitors have indemnity insurance and, in the event that they did not carry our their work properly, under the rules of the Law Society, they would have to pay compensation.Q.
Is there a good range of banks and are they English speaking?A.
Yes, all banks have English-speaking employees. Indeed, this is a requirement for certain positions in the banks. In addition, many banks now give mortgages to overseas buyers, but the terms and conditions will be different for each individual application.Q.
Are double taxation treaties in place?A.
Compared with other international financial centres, Bulgaria offers a distinct benefit in the form of double taxation treaties. Agreements with an increasing number of countries eliminate the double taxation of income earned in any one of these countries. In practice, the tax levied by one country is credited against the tax levied in the taxpayer’s country of residence. Where different tax rates apply, the taxpayer will ultimately not pay more than the higher of the two rates of the respective countries.Q.
What should I expect to pay in community fees?A.
In a building with a number of apartments, a manager is normally appointed and a general assembly of all owners is formed. This general assembly will then vote on the budget for the communal expenses and make decisions in relation to the communal property. More recently, management companies have been appointed by the owners of apartments to do all this for them and to maintain the property, for which a fee is agreed and paid. In addition, along with the preliminary contract for sale of the apartment, buyers are offered a Management and Maintenance contract for their individual apartment and the communal parts of the building.Q.
Are there any ongoing taxes?A.
The tax year in Bulgaria is the calendar year. Residents of Bulgaria are subject to taxes in Bulgaria on their worldwide income and gains. Non-Bulgarian residents are taxed on income and gains derived from Bulgarian sources only. You are treated as resident in Bulgaria if either: you are permanently domiciled in Bulgaria; or you spend more than 183 days in Bulgaria within any 365 day period ending in the tax year in question.Foreign expats are taxed on their Bulgarian source income alone regardless of the amount of the number of days they spend in Bulgaria. For residents of Bulgaria, withholding taxes of 15% are levied on dividends, and 20% on taxable interest.
Income from dividends, interest, royalties, rents, capital gains etc paid to foreign residents is subject to a 15% withholding tax. A flat 20% deduction is available against the rental income received. The income is then subject to income tax scale rates ranging from 0 to 29%. If the rental income is paid to a non-Bulgarian resident, 15% tax is withheld at source.
Residents of Bulgaria are liable to inheritance tax on property situated in both Bulgaria and overseas. Non-residents of Bulgaria are liable to inheritance tax on property situated in Bulgaria. It is the recipient who pays the tax. Since 2005, inheritances received by the surviving spouse and direct relatives will be exempt.
Q.
What about paying for energy and water supplies if my main home is not in Bulgaria?A.
It is highly advisable for any person who has a property in Bulgaria but does not live there all the time to nominate a ‘fiscal representative’. This is a person to whom the tax authorities can send all correspondence relating to your affairs in Bulgaria, secure in the knowledge that it will arrive. The fiscal representative must be resident in Bulgaria, but it is for you to choose whom to appoint. It can either be a friend, a neighbour, a lawyer, or your tax adviser. If you wish to know more about this, please ask.We can also assit you in insuring your property and its contents, to have the electricity, water and rubbish collection charges transferred to your name, you will need to notify the Town Hall that you own the property. You will also need to register for local rates, open bank accounts and register with the Bulgarian authorities for tax and other purposes. You should register as the owner with the Community of Owners if you live in an apartment block or an estate with shared facilities. If you do not speak Bulgarian, we would recommend that you use the services of a local person to do these things for you, or If you prefer we can arrange this for you.
Q.
Can I rent out my property?A.
Yes. The main season along the Black Sea coast is from April to October but you will still be able to rent it out over the winter at lower rates. At the height of the summer, you can expect a more than reasonable return. The ski resorts operate over the winter but are likely to offer you a low return during the summer months.Q.
Is it necessary to learn the language?A.
No, but as with anywhere in the world, knowing some of the language, even just a few words, will always help in your day-to-day dealings with the locals. Bulgarian is the official language and the Cyrillic alphabet is used. Turkish and Macedonian are amongst the minority languages while English, German, French and Russian are spoken in major tourist resorts and hotels.Q.
How do the locals treat foreigners who purchase there?A.
You will find Bulgarians extremely friendly and welcoming, and keen to help you in any way they can.Q.
Are families/children welcome?A.
Most definitely. There is a strong tradition of family in Bulgaria and children are welcome almost everywhere.Q.
How safe is the country?A.
Obviously, it’s impossible to foresee all hazards and risks which a tourist or resident could face in a foreign country. The Republic of Bulgaria is increasingly meeting the EU criteria for ensuring security and preventive guard to its citizens and guests. Nevertheless, you should observe the same commonsense guidelines and safeguards that you would when spending time in any foreign country.Q.
What about the healthcare in terms of the standard and costs?A.
While Bulgarian doctors are trained to a very high standard, most hospitals and clinics, especially in village areas, are generally not equipped and maintained to meet western European standards. Basic medical supplies and over-the-counter and prescription medications are widely available, but highly specialised treatment may not be obtainable.It is therefore advisable whenever travelling to Bulgaria or staying there for any length of time that you have adequate private medical insurance to cover all eventualities. In addition, all foreign citizens travelling to Bulgaria should be prepared to present valid evidence of health insurance to the Bulgarian border authorities in order to be admitted into the country. This insurance should be valid for the duration of your stay in Bulgaria.
Q.
What about schools and colleges?A.
Bulgaria’s education system consists of three types of schools: state, municipal and private including religious. The levels are primary (1st to 4th grade), basic (5th to 7th grade) and secondary (8th to 12th grade). All Bulgarian secondary schools follow the same curriculum, covering mathematics, literature (Bulgarian and foreign), foreign languages, history, geography, physics, biology, chemistry, computer sciences, psychology, ethics and law, philosophy, music, arts, vocational training and physical education.Bulgaria also has some language schools, which start with an extra year of intensive language training of around 20 classes a week, to enable students to study all major subjects in that language. Private and international schools are popular with expat families, many offering internationally recognised qualifications such as the International Baccalaureat.
Q.
How does the general cost of living compare?A.
The cost of living is very inexpensive when compared with western Europe and you will find that your money will go much further when buying in Bulgaria.Q.
What about eating out?A.
There are many good quality restaurants in Sofia and throughout Bulgaria, serving both local and international cuisine. Many restaurants have menus in English. Eating out is not expensive by western European standards. Bulgarian food does not particularly differ from the traditional European cuisine. Traditional Bulgarian cuisine is based around beans, sour and fresh milk, cheese, tomatoes, paprika, potatoes, onions, apples, watermelons, and grapes.Bulgarians consume all kinds of meat including animals and fowls, fresh-water and sea fish and occasionally wild game. Bread is invariantly present on a Bulgarian dinner table. The tradition of meeting visitors with bread and salt is very much alive. The Bulgarians’ cuisine is moderate, with meals seldom too salted, hot or sour. In recent years the country has been flooded with thousands of private catering establishments, which serve traditional Bulgarian cuisine.
Q.
If I move to Bulgaria, can I take my dog/cat with me?A.
Yes. You must first obtain a pet passport and vets documents. For more information, call:UK - The Pets Travel Scheme on 08702 411710
ROI - The Animal Health and Welfare Division on 01 607 2827.
Q.
Can I work there?A.
It’s important to remember that Bulgaria is not yet a member of the European Union and therefore anyone from another EU country or the UK, USA or Australia for instance, have to have a visa to remain in the country for longer than 30 days. These can be easily obtained before travel from your local Bulgarian embassy or on entry to the country. Those expatriates who wish to remain living in Bulgaria and take up employment can do so if they have a permanent resident’s permit or if they’ve been offered a specific job. In the latter case a temporary work permit is issued that bears the name of the employer and employee and states the duration for the permit’s validity.In addition, there are seasonal jobs in the summer resorts on the Black Sea coast and winter ski jobs in Bulgaria’s winter sports resorts. Opportunities range from ski instruction to chalet maid and from bar work to working as a holiday rep. In Sofia there is a steady flow of foreign businesses starting up and these companies seek international staff who have specific qualifications as well as fluency in English. There are also opportunities for teachers living in Sofia who can teach English as a foreign language or who are qualified to work in the international schools.
Q.
What is the government system in the country?A.
Bulgaria has been a democratic republic since 1990. Since 2002, the Head of State has been President Georgi Sedefchov Parvanov. Prime Minister Simeon Borisov Sakskoburggotski has led the Government since 2001.And finally, with the right people assisting you, investing in overseas property can be an enjoyable and rewarding experience … one, with our many years experience, we are extremely familiar with. If you still have any questions having read this section, please don’t hesitate to contact us.