According to the Bulgarian Constitution, foreign nationals and foreign legal entities may not directly acquire land ownership rights and will not be able to do so until 2014. However, foreigners are permitted to acquire the ownership of buildings and premises within buildings, as well as some limited property rights. Under such limited property rights, the Bulgarian law recognises the right of use and the right to undertake construction.
The above restrictions, however, do not apply to Bulgarian companies, irrespective of the percentage of foreign participation in such companies. Thus, foreign persons can acquire full land ownership rights by setting up or joining a company incorporated under the Bulgarian legislation (this is inclusive of agricultural land).
This little bit of bureaucracy means that you need to use a local lawyer to set up the company, do the deal for you and you will have to retain their services on a permanent basis to maintain the company for you. You will also need to use an accountancy company to submit annual tax returns, since the land is considered an investment. The good news is that although you have to pay the initial capital (5,000 (2600 euro) leva or 75% thereof) into a bank account, you can subsequently withdraw it once the registration process is over. If you are buying an apartment and there is no land included in the deal then you can buy it outright as an individual.
The legal fees are usually quoted as a total for the court fees and the lawyer's fee for handling you. They can range from 500 to 1000 Euro.

If you would like to contact our lawyer for more information, please contact us at:

legal@storkproperties.co.uk


Setting up a company


The two most popular legal forms for carrying out business in Bulgaria are a joint stock company (AD) and a limited liability company (OOD), though the law also provides for: sole trader operations (ET), joint ventures, branches, holdings, cooperatives, and representative offices. They all have to be registered with the district court, which is a process that usually takes 2 or 3 weeks, though courts do tend to have some very long holidays!


The first two restrict the liability of the shareholders to the amount of their share in the capital of the company, which means that the AD and OOD are the most preferred forms for doing business by both locals and foreigners.


Whilst in an OOD the shares are attributed to individuals and can only be transferred with a court decision and by entering in the Commercial Register, the shares of an AD are not individually named and can be sold or transferred without informing the court. An AD may issue registered, bearer's and preference shares. Both paper-backed and book-entry shares may be issued. The AD company ensures the anonymity of shareholders and allows for raising funds through issuance of bonds or shares on the stock exchange. An AD is managed by the general meeting of shareholders, and the board of directors or supervisory board and management board.


An OOD's annual financial statements need not be audited by a CPA unless the company happens to meets certain requirements under the Bulgarian Accountancy Act, whereas all ADs have to have their annual financial statements audited by a CPA.


Individuals can also establish both types of companies. In these cases the one-man limited liability company is called an EOOD and the one-man joint stock company is called an EAD. EOODs and EADs are regarded as local legal entities even when the sole owner of the capital is a foreign physical or legal person. These forms are widely used by foreigners to acquire ownership over land in Bulgaria, since foreign individuals are not allowed to own land at present.


In any of these cases you should use a reputable law firm to handle the whole process for you, from choosing the company name to registering the company with the court and all the subsequent compulsory registrations with tax authorities, National Insurance Institute, etc., all of which have to be done within strict deadlines and carry hefty fines if they are not adhered to!


There are many legal firms with excellent reputations and most now speak the major European languages so finding one should not be a problem.


In short the process for setting up a company is as follows:

• Check the company name is free and reserve it;
• Produce Articles of Association;
• Pay in to the bank at least 70% of the obligatory company capital for an OOD (the total capital being 5000 levs); or 25% for an AD (the total capital being 50,000 levs);
• Submit the application to form the company together with the proof you have paid the capital to the district court;
• The company becomes active when it is published in the State Gazette (2 or 3 weeks later);
• Registration with the National Statistical Institute to receive a BULSTAT identification number must be done within 14 days;
• Registration with the National Insurance Institute (NOI) within 7 days;
• Registration with the local tax authority must be done within 14 days;
• Any bank accounts that are opened in the company name must also be registered with the tax authority within 14 days.

Property Registration For Foreigners
The owners should register within 7 days after the purchase

The purchase of real estate by foreign citizens in Bulgaria raises a new obligation for those who buy directly without registering a Bulgarian company. They should make a BULSTAT registration within 7-days after the deal in the Registry Agency (RA). This obligation proceeds from the new BULSTAT Register Act that comes into force in the autumn of 2005.

To whom it may concern

BULSTAT registration should be required for property owners who are:

• Foreign legal entities that do not have such a registration – they are not registered according to the Commercial Act or Bulgarian Chamber of Commerce and Industry;
• Foreign individuals who are not permanent residents of the country.

The registration will be taking place in the Registration Agency (RA) to the Ministry of Justice. The entry into the BULSTAT list should happen within 7 days after the property purchase. The term starts form the day in which the owner receives his/her deed. Registration Agency advises buyers to require from the notary to give them the deed and not to delay it without a reason. The registration fee is BGN 15. The legislator’s presumption to require such a BULSTAT registration is that the foreign entities that are not permanent residents could not be identified. According to the law, they are obliged to declare to the tax office that they own a property on the territory of the country. The availability of a BULSTAT code will allow the country to determine more easily the entities liable to taxation, explain from RA. Foreign entities that already possess properties in the country do not have the obligation to register. It will be done by the respective institutions. RA will be obliged to find the foreign owners in the Property Register and register them formally. After that, the foreign property owners will be invited to receive their registration card and to pay the due fee for the service. The announcement will take place with official letters to the addressees, pointed in the registers. The individuals with double citizenship – Bulgarian and foreign – who are owners of real estate property, are not obliged to make a BULSTAT registration. It is recommended the intermediary real estate companies and the notaries to inform their overseas clients for their new obligation.

If the registration is not performed in the required term, the law foresees a penalty up to BGN 700 for individuals and up to BGN 1000 for the legal entities.


Market Reaction:

Most of the real estate agency owners are still not informed about these legislation changes. According to the general opinion, the aim of this innovation is to establish what percentage and what type of property the foreigners in Bulgaria acquire. Even though, those who register Bulgarian company and acquire a property through it will not be included in the statistics. This method is used in all cases of land acquiring (which still cannot be a foreign property, according to the Constitution) and for tax purposes in eventual property sale. It is not expected the new requirement to give a reflection on the property market and the prices.



Residency Permit

EU citizens or members of their family can stay in Bulgaria with a current passport or ID card for up to 90 days without any need for registration. Beyond this you have to have a Resident's Permit which has to be applied for at the local immigration office. This now a very simple procedure if your documents are in order and you satid\fy the conditions for your stray here. With this, your Residency Permit is issued the same day and gives you up to 5 years in Bulgaria. This replaces the former visa 'D' application form and the issue of the Lichna Carte and the complications that came along with it!

For non EU citizens there are different conditions required for entry and these should be available on the Bulgarian Embassy Website for your respective country.

If you are a EU citizen you will need the following documents for application:

• Applicaton form
• ID card or passport
• For family members - marriage, birth certificate or document that prove co-habitation with the person (EU citizen)
• A confirmation letter from the education institution for Students
• A receipt for paid governmental fees.

For up to 5 years the flat rate cost is 7 leva plus a nominal fee charged by the banks for their administrative charges.

To qualify for a Residency Permit one or more of the conditions listed have to be apparent:

• The person is a citizen of the EU and employed or self-employed
• Have health insurance and financial assests to cover their expenses as well as those for members of their family
• A student

If you do apply for 5 years the immigration office will take account the time you have already been in Bulgaria by taking the start date of the permit from the last stamp of entry in your passport. So in effect if you have been here for a year and apply for a 5 year Residency Passport this will now run for a further 4 years.

After five continuous years of residency in Bulgaria you can apply for Permanent Residency Certificate. this period may be shortened under some curcumstances such as marrying a Bulgaria.