Relevant Taxes and Fees When Buying a Property in Bulgaria

Buying and owning a property in Bulgaria is associated with paying relevant taxes. When buying a property in Bulgaria, buyers needs to be aware that they are obliged to pay taxes in relation to both the acquisition of the property (property transfer tax) and the continual ownership of the property (annual property tax, rubbish tax) as well as tax on any income derived from this property (income tax).

I. Upon signing the Notary deed the buyer is obliged to pay property transfer tax to the amount of 2 % to 4% of the value of the property to be purchased, depending on the policy of each municipality (usually the tax rate is 2,5 %). For example, if the purchase price of the property is EUR 100 000 EUR and the tax rate is 2,5 % of EUR 100 000, the property transfer tax will amount to EUR 2500.

Upon signing the Notary deed the buyer is also obliged to pay Notary fee according to the prescriptions of the Notary and the Notary Activity Act (NNAA). The exact amount of the notary taxes is defined in Notary Taxes Tariff  according to the certified material interest in BGN.

Upon signing the Notary deed the buyer shall pay a Land registry fee on the amount of 0.1% of the price of the property.

Thus the total transfer expenses related to the purchase of a property are approximately 3% of the price of the property and include the property transfer tax, the Notary fee and the Land registry fee.

All above stated fees could be divided between the seller and the buyer if it is stipulated in the Preliminary contract or in an appendix, which shall be non-separated part of the preliminary contract.

In relation to their ownership of property in Bulgaria, foreign nationals and foreign legal entities who acquire real estate in Bulgaria are obliged to register at the Registry Agency under the registration system BULSTAT for issuance of an identification number within seven days as of acquiring of the property.

II. After the buyer is already the owner of the property by signing of the Notary deed for the title, every year the owner is obliged to pay an annual property tax, including rubbish fee. The size of these annual taxes is determined by the tax experts each year and depends on the size and the location of the property as well as on other factors. If the owner fails to keep this obligation, the respective municipality is starting an executive procedure against the owners and imposing a burden over the property for collection of the debt. Finally, the amount due increased several times including the bailiff and attorney fees.

III. If an owner is renting their property and deriving income from it, they are obliged to pay income tax in Bulgaria which will be different depending for instance on how the property is owned – whether by a physical person or by a company. If the buyer rents the property as physical person, he will be paying a tax fee calculated on a scale as per the new Law on the Income of the Physical persons, after a legal allowance of 20% of the profit is deducted. Thus the owner is paying tax according to the mentioned formula on 80% of the profit. If the property is owned trough a company, a corporate tax of 10% will be paid. If a buyer decides to sell their property, provided they sell one property in one tax year, they will pay no capital gains tax.

This article was created by Valova&Angelova law firm.