Source: https://www.ruskov-law.eu/bulgaria/article/purchase-real-estate-foreigners.html
Timestamp: 2019-04-19 09:15:44+00:00

Document:
The aim of this article is to clarify the specific aspects of the purchase of real estate in Bulgaria by foreigners, as well as those to be applied for the purchase of real estate and the subsequent obligations of legal entities regarding taxation.
presently, EU citizens, who are self-employed farmers and have been established or have been registered in Bulgaria may acquire ownership of agricultural and forestry land. However, there is a condition that these persons need to be registered as such under the Law on the BULSTAT register.
What type of immovable property could be acquired by a foreign citizen or entity?
Limitedproperty rights, such as the construction right, the right of use or easements etc.
We highly recommend the buyer to visit and inspect the actual condition of the real estate prior to the purchase, as well as to obtain personally the possession of the real estate after finalizing the deal. The careful property inspection can save lots of difficulties which may appear when in case the purchaser decides to buy solely the real estate just on the basis of an online advertisement, photos and/or email correspondence with the real estate agency.
Which are the most important steps when buying a property?
Depending on the case, further reviews may be required.
II. Signing of a preliminary contract - after the successful completion of the legal examination, the signing of a preliminary contract will take place in writing. This contract represents a promise for the signing of the final contract. The preliminary contract contains provisions on the essential terms of the final contract and concretizes the property or provides a deadline for the signing of the final contract. During the signing of the preliminary contract, the purchaser usually, but not always pays to the transferor the seller a down payment in the amount of 10% of the agreed price for the property. However, it could also be agreed a different down payment or no down payment. The preliminary contract provides sanctions in case of default. Especially noteworthy is the possibility in accordance with Bulgarian law the non-defaulting party to claim the preliminary contract to be declared a final by the court according to Art. 19, para. 3 of the Law on the Obligations and Contracts.
III. Final contract (a notary deed) - according to Art. 18 of the Law on Obligations and Contracts, a notarial deed is required for the transfer of ownership of the real estates. The notary procedures, provided by the Civil Procedural Code, shall be observed. Pursuant to Art. 570 § 1 of the Code of Civil Procedure "The notary acts for transfer of ownership or for the establishment of real rights over real estates and certification of ownership over such estates shall be executed by the notary public in whose region the estate is located". The procedure, in this case, begins upon written request before the relevant public notary. If one of the participants in the procedure does not speak and understand Bulgarian language, a translator is being appointed. The persons must prove their identity before the notary with their personal documents. When issuing the notarial deed, the public notary checks whether the transferor is the real owner of the property and whether the special requirements for carrying out the transaction has been met. As of the finalizing of the deal the parties present all the above described documents, together with an actual certificate for encumbrances. The notary deed is subject to entering within the Property Register, which turns it into opposed to any third parties.
IV. Payment of the purchase price - if the purchase price exceeds BGN 10, 000,- all the payments related with the purchase contract shall be transferred by bank transfer. Payments exceeding BGN 10,000 are made on a special bank account of the notary or on a bank account in a bank selected by the parties.
V. Transfer of the possession - the possession is usually transferred at the day of the concluding of the notarial deed. However, the parties may agree different conditions. It is important to be noted that the property is being transferred to the new owner with the signing of the notary, regardless of the fact whether the buyer is still in possession of the object. From a legal perspective, it is possible for the seller to retain the actual possession over the object for a longer period, in case the parties have agreed this condition before. It is recommended the handover to be executed through a handover protocol, where the current condition of the property and the defects are being described, as well as the transfer of the keys. The missing handover protocol assumes that the ownership is transferred in good condition and without instruction.
What are the costs for the ownership transfer?
Main responsibilities of the new owner?
Pursuant to Art. 10 of the Law on Municipal Taxes and Service Charges (LMTSC) "Tax on immovable properties shall be levied on the buildings and landed properties in the construction boundaries of the settlements and the settlement formations as well as the landed properties out of them, located on the territory of the country, which according to a detailed development plan are with the designation of art. 8, item 1 of the Spatial Development Act, provided that the land use designation is changed, where required pursuant to a special law".
Real estates with tax assessment amounting up to BGN 1680 inclusive.
The taxable persons according to the law are the property owners. They or their legal representatives are required to submit template tax declarations, which can also be submitted electronically. The tax shall be paid regardless of the fact whether the property is used or not.
Within a period of two months after the acquisition of the real estate, the real estate owner shall submit a tax declaration for the annual property taxation in the municipality where the real estate is located. In case of an ownership transfer, the transferee owes a tax as of the beginning of the month, following the transfer of the ownership or the possession, unless the tax has been already paid by the transferor. The municipality official inspects the submitted declarations. He may request additional information about the taxable property, to compare whether the data from the declaration applies with the information from the accounting books, plans, sketches and documents, based on which the property is owned or will be used and, if necessary, also by inspecting the property from the relevant technical authorities. The taxpayer shall provide a copy of the notarial deed, along with a sketch or scheme, depending on whether it is a piece of land, a building or a separate object within the building. The tax estimation gets determined based on the type, the location, the structure, the total area, the construction and the wear and this information is being served to the taxpayer.
The tax rate is being determined through an ordinance, issued by the municipality council and varies between 0.1 and 4.5 per thousand. For a property, where the person resides, a tax benefit of 50% is granted. Accoridng§1, it. 2 of the Additional provisions of the LLTF (Law on Local Taxes and Fees), “a basic home” is the property which serves to satisfy the home needs of the citizen and the members of his family during the predominant part of the year. For a property which is the basic home of a person with from 50% to 100% reduced working capacity, a tax benefit of 75% is provided.
The tax is payable in two equal instalments - until 30th June and until 30th October of the year for which it is due. Persons, who has prepaid the whole annual tax until 30th April, are granted a 5% tax reducing. In case of a transfer of ownership or real estate rights, the tax due, including for the month of sale, shall be paid by the transferor prior to the transfer. For real estates acquired within the current year, the tax shall be paid until the end of the year. In the case the real estate acquisition has taken place after these periods, the tax shall be paid within two months since the acquisition of real estate. The property tax is transferred to the municipality budget, where the real estate is located.
The tax is paid by the real estate buyer. In the event that it is agreed that the tax is payable by both parties, they are jointly and severally responsible. If the parties have agreed that the tax is owed by the transferor, the other party is the guarantor. If the real estate buyer is located abroad, then the sale is obliged with taxes.
The tax is determined on the basis of the property valuation in BGN at the time of transfer. Real estate is being assessed according to the agreed price or is being determined by a state or local authority, and if lower than the tax estimate, after the last one. On the other hand, the tax assessment is determined on the basis of the information and the characteristics, specified within the declaration. In the case of a monetary real estate acquisition, the tax is being determined by the municipal council and varies between 0.1 to 3% of the value of the transferred property. The tax is payable in the municipality, where the property is located.

References: Art. 19
 Art. 18
 Art. 570
 § 1

V. 
 Art. 10
 art. 8