Essential Forms - top
Complete an English translated version of the Registration Act Form G1 
Do you own a Bulgarian company? If you do then you need to know about some important changes in Bulgarian legislation. At the beginning of 2008, the Bulgarian government - in line with other European nations – introduced a central company registration system. This means that anyone who registered a limited liability company in Bulgaria to hold property with land will have to re-register the company or risk having all their assets forfeited. As you may be aware, at present only Bulgarian nationals or companies can buy real estate where land is involved. Some apartments include a share of the freehold and will have been registered in the name of company; also some agents advise using a company to hold apartments ‘for tax purposes’. Hopefully you have an agent [the person that files your annual returns each year], and they have already contacted you.
How to re-register: company registration forms G1 and A4 must be completed in the Bulgarian language and lodged with the court/central registry. This may be done in person if you are in Bulgaria. However it can be done from the UK using the services of a Notary Public. We can arrange this for your from anywhere within the UK. Contact us to for full details or put your Agent in touch with us. Your agent may download and complete on-line an English language version of the necessary forms from this web site. These may be faxed to us at Notary Bulgaria. The forms need to be notarised in a very specific way so contact us for full details of procedure and costs.
If you have your Bulgarian company documentation we can prepare the forms in Bulgarian for you. If you do not have an agent or your company papers we can still help; we can arrange for a representative to obtain your company information from the public records office in Bulgaria
Independent advice - top
Would you buy a property in the UK without using a qualified lawyer?
It is common in Bulgaria for real estate agents to offer a ‘full service’: that is as well as handing the sales from the seller’s point of view, their ‘legal department’ acts for you. Generally this is fine, but buyers need to make sure that all the loose ends are tied up. For example in Bulgaria a property needs to be officially ‘signed off’ with what is called Permit Utilization Permission, Act 16…… this ‘loose end’ sometimes gets overlooked.
And first time-in-Bulgaria buyers may not be aware of the common practice of under declaring property values on Notarial (title) Deeds. You may be told this is to save taxes…. Or not told at all!
Before signing the preliminary contract you may wish to consider whether or not to place the property in a limited liability company, whether to register for VAT and reclaim the VAT (20%) included in the price of the property. Some agents suggest that each property is bought in the name of a separate company – the reason given is that you can then sell the company with the property as an asset. Not always a good idea…
If you are buying, or have bought, more than one property we definitely recommend that you seek independent advice in order to structure your affairs to your best advantage.
Owning a Bulgarian company - top
Under Bulgarian Law, the only way a foreigner can purchase land is to buy it in the name of a limited liability company. Forming a company is relatively straight forward. But; purchasers do need to remember that certain obligations are attached to owning a company in Bulgaria - as indeed they are anywhere else in the world. Formalities include having a registered address in Bulgaria, filling annual returns and paying property taxes on time. Quite often the selling agent will arrange this for you; however we do recommend that you check that your agent is willing and able to offer this service. Expect to pay approximately 300 Euros a year for this service. We can, of course, assist.
Managing the Legal formalities from the UK - top
It is possible to complete most of the legal formalities relating to your property purchase from the UK using a Power of Attorney (PoA). The PoA needs to be legalised – this is the process of attaching an Apostille issued by the British Government’s Foreign and Commonwealth Office to the document. Before this can be done the documents have to be signed by the person named in the deed in the presence of a Notary Public (notary). Notary Bulgaria can arrange this via the www.MyNotary.co.uk network
Official registration and tax valuation - top
It is a common practice in Bulgaria for the sellers to under declare the value of real estate. This is technically illegal; however no cases have come before the courts as it is always done with (technically) the consent of both the buyer and seller. Often the buyer is totally unaware that they have consented to their land or apartment being entered in to one of Bulgaria’s 280 land registries at a value of much, much less than they have paid. Often reasons given for this practice is to “save property taxes...” This is true, but mostly it is the seller that saves income or corporation tax! There is much speculation as to whether, when and how this common practice will be stopped.
Property is given a ‘tax valuation’ by the state; property cannot be deemed to be sold for less than this official valuation. The ‘tax valuation’ is often much lower than the market value or sale price. Sometimes this lower price is the price declared in the Notarial Deed. The Bulgarian equivalent of UK stamp duty is reduced, and annual property taxes are less. The sting comes if you want to re-sell the property and the buyer will not accept a lower tax evaluation. The seller will ‘show’ a much higher capital gain* than was actually earned. .
In the case of land, often the buyer would wish to have the land ‘under declared’ as VAT, currently at 20%, becomes payable on the ‘value’ of the land when it is regulated.
*Capital Gains Tax; there is an off-set agreement in place between Bulgaria and the UK – contact us for specific information.
Title validation after purchase - top
We can check that your property has been fully and correctly registered and whether there are any mortgages registered against it. Contact us
For Wills and inheritance tax planning - top
The inheritance procedure in Bulgaria is pretty straightforward when the deceased is a Bulgarian. However when it comes to inheritance between foreigners the procedure is more complicated. Owners may choose to make a Bulgarian Will and have it registered in Bulgaria. Alternatively Bulgarian property may be specifically included in a UK Will. We can assist with either option – please enquire or see fees.
Company formation -Contact us for an information sheet - top
