Your exposure to capital gains, rental income, transfer and local taxes.

Investing in Bulgaria

An investment in Bulgaria is an excellent opportunity, however before any investment is undertaken, the proper legal and tax advice should be undertaken by each investor, especially as the Bulgarian economic situation is undergoing rapid change.

There is currently a Double Taxation Agreement between Ireland and Bulgaria, and between the UK and Bulgaria. This means that when tax is deducted by the Bulgarian authorities it will be allowed as a tax credit when completing the relevant tax returns in Ireland / UK. Investors in other jurisdictions should seek advice in their own tax district as to whether or not there is a DTA in place with Bulgaria and the terms of the agreement.

An investor in Bulgaria would normally have the following exposure to the following taxes in Bulgaria:

Capital gains

Capital gains realized by non-resident taxpayers from the sale of real estate situated in Bulgaria are subject to withholding tax of 15%.

Rental income

For non-residents of Bulgaria, if you purchase property as an investment, and you rent it out then the rental income on the property will also be subject to withholding tax of 15%.

Transfer taxes

The transfer of real property is subject to notary and municipal fees. The notary fees are paid on the higher of the market price or the book value of the property at varying rates, with the maximum being BGN 3, 500. In addition, 2% of the market value of the property is paid to the municipality in which the real property is situated.

Local taxes and rates

The owner of a property is obliged to pay a real property tax. Where a building is built on a State or municipal plot, the value of the plot will also be included in the tax base. The tax is equal to 0.15% of the book value of the property. In addition to the real property tax, owners also pay waste-collection fees.

Value Added Tax

Transactions with land and lease of property for residential purposes are exempt from Value Added Tax (VAT).

All other real estate transactions are subject to VAT at the uniform rate of 20%.

Bulgaria and the European Union

In 2004, Bulgaria continued to implement the Europe Agreement Act and the Road Map for accession adopted in 2002, and the negotiations with the EU have been brought to a successful conclusion. In April 2005, the Accession Agreement was signed by Bulgaria and the EU, which confirms Bulgaria's succession into the EU, and this is scheduled for 1 January 2007.

Disclaimer

Important please note: receipt of these particulars do not form part of any contract and are for guidance only. Drawings and maps are for illustration purposes and are not drawn to scale. Intending purchasers must satisfy themselves as to the accuracy of the details given to them. Offers are subject to contract/contract denied.

No person in the employment of Bulgarian Developments has any authority to make or give representation or warranty whatever in relation to any development. Any queries regarding the above please contact Bulgarian Developments.