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Bulgaria property purchase process | Total transaction costs
By property | November 21, 2008
Bulgaria property purchase process | Total transaction costs
Acquiring property in Bulgaria is a simple and straightforward process. Foreign non-residents can only purchase a structure (apartment, a condo unit, etc.) on a plot of land and cannot acquire freehold land directly. However on November 2, 2006, the Bulgarian cabinet decided that foreigners in Bulgaria will be able to buy and inherit landed property. The changes will take place seven years after membership into the EU in January 2007, i.e. in 2014.
Citizens of the EU States are exempted from the 7-year suspension period and are entitled to acquire land, provided that they fall into any of the following two categories: if they reside continuously in Bulgaria, or if they are self-employed persons having permanent residence in Bulgaria and carry out agricultural activity in the country.
At present, there is an alternative option – to form a Bulgarian registered company, with the buyer as sole owner and director (the buyer could choose to add other directors, e.g., his spouse).
The Corporate Route
To set up a company to acquire property is not unusual, and there are realtors who offer this as part of the package.
The steps are as follows:
When you have found a property you like, make a preliminary enquiry to get answers to your questions and address initial issues. When you’re sure you want the property, negotiate.
Upon reaching an agreement, a preliminary contract is drawn up and signed by the vendor or a representative, and at the same time you are expected to place a 10% deposit to secure the property.
The title search then begins as your realtor begins to set up a company for you.
When the company has been setup and the title is “cleared”, a “contract of purchase” (notary act) is signed by both parties, while you pay the existing balance from the purchase price and the ‘keys’ handed over to you. You are now a proud owner.
To register a Private Limited Company (OOD) you must:
Come up with a unique company name, and reserve it.
Draft the articles of association, or memorandum of association.
Appoint a managing director (or board of directors).
Deposit at least 70% of the authorized capital, and obtain a bank deed confirming the deposit. The minimum foundation capital is BGN 5,000 (€2,605.38).
Register at the commercial register, acquire any needed permits, and then wait for publication in the State Gazette. The company registration is technically complete at this. There are however a few more steps to take:
Within three days of the registration, register the company at the National Statistical Institute and obtain a BULSTAT number.
Register at the National Social Security Institute and the local tax office.
You now have a legal company.
Note: In Bulgaria there is a Tax Estimation Price similar to UK’s “ratable value”. This value is usually several times lower than the sale price. For various reasons most vendors prefer that this lower price should appear on title deeds rather than the real sale price. Because of this, there might be discrepancies between the price you are paying and the price written on title deeds.
The round trip transaction costs include all costs of buying and then re-selling a property – lawyers’ fees, notaries’ fees, registration fees, taxes, agents’ fees, etc.
http://www.globalpropertyguide.com
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