A Better Choice Ltd specializes on investment in off-plan developments in the Bulgarian property market. The whole South East Europe currently offers some of the best returns in continental Europe. We believe that these potential returns, together with structural and legal reform programs currently in place as a result of EU entry ambitions should lead to asset price inflation as a result of risk reduction.

This is how we choose the investment opportunities:

• Prime strategic locations
• Infrastructure
• Quality of built
• Reputable builders

Compared to other European destinations the properties in Bulgaria are cheap so regardless of your income you will find something to suit your needs and provide you with a nice return.

Most of the people buying in Bulgaria belong to one of the two categories: investors or retiree. The investors are simply buying property with a view to making a capital gain in the short or long term. The people who retire are search for a second home (often with a view to retirement in later years). This increasing interest, along with other factors such as the rise in tourist numbers, better awareness and EU accession for 2007 is pushing prices higher.

Before buying a property in Bulgaria here are few things to consider. Although the purchasing process is not very different than buying a property in your own country, it is advisable to have a good understanding of some of the details involved in purchasing a property in Bulgaria.

1. Property Selection

Once you chose the apartment you want and confirmed its availability

• Complete the Reservation Form.
• Pay the reservation fee (€500 or €1000 depending on each building). This should be done through a money transfer to the account indicated on the Reservation Form. The reservation form can be downloaded from our web page


Note: Your reservation fee is non-refundable. It will however be deducted from the purchase price of your property upon receipt of the first installment

2. Use a Company or Not?

Purchasing and apartment does not require setting up a company (registering a company is only for ownership of land).

3. Sale & Purchase Contracts

• Once you have selected your apartment and paid the reservation, you will receive a preliminary sale and purchase contract.
• Check all the details are correct before signing 2 copies; we recommend the use of an independent lawyer to review the contract before you sign;
• Return the documents to our Sofia office along with your initial installment as detailed in the contracts within 14 days.
• Should you wish to arrange an inspection trip, we would be more than happy to assist you.

4. Construction & Final Completion

• Usually there are one or more short-term installment payments to be made prior to the full completion of the property. We will notify you of the estimated payment dates.
• Upon completion of the property and payment of the final installment, the transfer of title may occur. In Bulgaria, the property registry system works in conjunction with local Notaries.
• In order to take delivery of your property, you will need to sign the ‘Notary Act’. This is a standard form document transferring ownership of the property into your name.
• You will receive title deeds within 7-10 days of the Notary Act from the local council.


Note: If you are unable to attend the Notary Act in person, your legal representative may attend in your place. This individual will need to be a qualified Bulgarian solicitor in possession of a ‘Power of Attorney’ agreement. We are able to liaise with you to arrange this.

5. Additional Acquisition Costs

Local tax
According to the Local Taxes and Fees Act, the tax payable upon the sale-and-purchase of an apartment is 2% (local tax).

Calculating the tax is based on:

• The apartment’s price as specified in the notary deed, and
• The tax evaluation of the apartment.

Such tax is payable by the purchaser.

Notary fees
The notary fees are determined in accordance with the tariff for the Notary Fees. There are various charges but you should allow €1,500-€2,000.

Legal fee
Each lawyer or law firm is free to determine its fees, subject to certain constraints. There are also different schemes of determining the fees (e.g. on an hourly basis, a fixed fee etc.). The rates of the lawyers vary from €60 to €150 per hour. Total legal fees are estimated at €450-€600.

6. Other Expenses

• Annual property taxes amount to 0.15% of the tax value of the property (usually significantly below the acquisition price);
• Maintenance of your property is covered by the Management Contract and is charged at a fixed rate in euros per square meter per year; and
• Waste-collection fees are determined when you register ownership with the local municipality; rates vary from region to region.

Remember to register your new property ownership with the local authorities after completion for rating purposes. This should be done within 60 days after completion.

It is important to understand the VAT implications on any property purchase in Bulgaria, because of the potential mortgage and tax implications.

The Bulgarian property market has poorly clarified regulatory and tax policy. These factors can result in inconsistent implementation and varying valuations (both market related and tax based). If the law is understood wrong it can result in potential tax liabilities in future periods combined with lower debt/equity borrowing facilities been available to the acquirer. In our further points we will try to clarify the situation.

Notary System

The Bulgarian property system uses Notaries and a Notary Act in order to transfer the ownership of buildings. Upon completion of the property and prior to signing the Notary Act, the local municipal council conducts a tax evaluation of each property. This valuation represents the minimum value that must be reflected on the Notary Act. It is this value that at a minimum must appear on the Notary Deed in property transactions in Bulgaria.

Tax evaluation rates vary by region across Bulgaria but in general range from 25-50% of the full market value.

Payment Structures

In general developers require settlement to be made in one of two ways:

1. Part “on-shore” and part off-shore; the tax valuation of the property is paid on-shore and the remainder of the balance is paid off-shore;
2. Full payment on-shore (meaning 100% of the payment comes into Bulgaria).

The payment structure has few implications as you can see below:

• The on-shore payment is the amount reflected on the Notary Deed;
• Notary fees are based on the amount reflected on the Notary Deed;
• Local municipal fees are based on the amount reflected on the Notary Deed; and
• Local Mortgage facilities are based on the Notary valuation and not on the sale and purchase contract.

Suppose the property to be acquired costs €100,000. Then the payment is 50% on-shore (tax valuation) and 50% off-shore. €50,000 is paid into a Bulgarian bank account. The Notary deed discloses the final purchase price as €50,000.

Financing through a mortgage you will have to have in mind that the mortgage rates vary but the most common allows for 70% of the notary deed to be borrowed – hence in effect the property is 35% mortgaged (50% of the 70% allowed). When the property is to be sold after a period for say €120,000 the owner would be subject to a €70,000 capital gain (€120,000 less €50,000) resulting in a tax liability of €10,500 rather than €3,000. That can be avoided in of course if the property is sold for a part on-shore part off-shore payment again.

€50,000 is paid off-shore. From a developers perspective this payment structure avoids a VAT payment of €10,000 (€50,000 x 20%) as well as corporate taxes on the profits. In general, if a purchaser wishes to reflect a value higher than the tax evaluation on the Notary Deed, extra costs incurred as a result of this action are paid by the purchaser. These costs can include extra notary fees, municipal taxes and VAT.

For new build properties, a higher Notary Act price can increase the purchase price by up to 14% alone.

A Better Choice Ltd. accepts no liability for the following:

1. Content of the tax evaluation;
2. Ability to obtain mortgage facilities;
3. Future capital gains on sale of property holdings

Under the Bulgarian law we are not allowed to provide taxation advice. Please see the two links bellow were you will find the information for foreign nationals purchasing property in Bulgaria.
- Tax Guide
- Price Waterhouse Coopers

We will not be liable to any customer or member of the public for any information supplied in this document or on our web-site. Our website is provided on an "as is" basis and we do not make any representations or warranties if such information subsequently proves to be inaccurate or out of date. We cannot be held liable for any consequential loss resulting from the information we provide. Any decision made in relation to purchasing goods and/or services as a result of information obtained from this document or our site is your sole responsibility.

For further information please contact us.