If you are going to be buying an apartment, do not bother reading this section. If you intend to buy land – with or without a house or other building on it – then read on.
Under current legislation which will last until 2012, only Bulgarians can own land in Bulgaria in person. This will NOT be affected by Bulgaria’s accession to the EU whether or not this happens before then. Because so many foreign people wanted to buy property in Bulgaria, a law was passed enabling foreigners to buy land provided that they did so through the medium of a limited company formed in Bulgaria and subject to Bulgarian Law - effectively a Bulgarian “legal entity”.
Until the autumn of 2006, when a new procedure comes into effect, all companies are formed by a process which involves an formal application to the relevant District Court. It is relatively time consuming although not outrageously expensive – you should not be paying more than a total of £435 which includes translations of all documentation and the preparation of the necessary Powers of Attorney.
After September 2006, all existing companies must re-rgister under the new system but no government fees will be charged for this procedure.
When the company is formed, the law demands that the owners of the company prove that it is solvent and that the initial capital has been fully paid up. This is done by producing the company's bank statements showing that a minimum of 5,000 Leva has deposited in an account in the name of the Company. Yes, you can open such an account before the Company is formed as long as the relevant documentation is produced to the bank.
This money need not stay in the company's account and, immediately after formation of the company, the money can be withdrawn and applied towards the payment of the balance of the purchase price.
The procedure will after September 2006 will be much simplified and, hopefully, cheaper. Although still under the control of the Ministry of Justice, the registration process will become administrative rather than judicial – very much more akin to the UK system – and registration will be electronically done. The “solvency” deposit will still be required.
All companies in Bulgaria have to file “annual returns” at the Tax Office. This is done by your Managing Agent in conjunction with an accountant. This involves a great deal of paperwork (Bulgarians are true bureaucrats!) and accountants charge about 200 Euros each time for doing the work.
Once the company is established it must be registered with the Tax Office and some other Government Departments. It will be given a variety of official numbers which are quoted on all subsequent official documents. There are fees but these are included in the figure we gave above.
While you can enter into a preliminary contract as the “owner of a company in course of formation”, the purchase cannot be completed until the company formation process has been concluded.
VisitPoint Bulgaria Ltd is very experienced in the formation of limited companies and their subsequent “annual maintenance”. If you are going to Bulgaria to buy a property and give us some basic details before you come, we can have all the necessary documents ready for printing and signing all ready go even before you land at the Airport!
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