Bulgarian Tax Pocket Book 2007 by PriceWaterhouseCoopers Bulgaria. Please click here to download the file

I. Property Costs & Taxes Applicable When Buying an Off-Plan Property

Several fees and taxes are payable when buying property. Budget to pay 4–5 per cent of the purchase price. Costs may include:

  

 

Please appoint an English-speaking Bulgarian tax consultant to deal with all tax matters to avoid pitfalls.

A. Personal Taxation: Non-Residents

The UK have a double taxation agreement with Bulgaria. Under Bulgarian tax regulations, a foreign national who is resident in a state with which Bulgaria has signed such an agreement, and who has earnings in Bulgaria, is subject to taxation in Bulgaria. After the tax has been paid, the foreign national may apply for a refund of the difference between the amount paid and the amount due under the relevant double taxation agreement. Be sure to check the rules once Bulgaria joins the EU.

1. Non-residents, therefore, are subject to Tax on Rental Income earned from property in Bulgaria. Tax is currently levied at 10 per cent, after deduction of allowable expenses.

2. Capital Gains Tax (also at 10 per cent) may apply in certain circumstances, for instance if a property is sold at a profit.

3. There is no wealth tax in Bulgaria, and inheritance tax was abolished in 2005.

B. Annual Local Taxes

Annual property taxes are low in comparison with those paid in the UK – in the region of 0.15 per cent of the declared value of the property (i.e. £7.50 on a property valued at £50,000). The figure may vary, depending on the region and level of services provided.

Should the property be in a residential complex (for example, an apartment block), an owner can expect to pay a contribution to the Housing Association (maintenance fee) as agreed with the developer in their Maintenance Contract which usually provides for 24-hour security, cleaning , lighting and gardening.