Transfer taxes
The transfer 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, specified in a special chart. In addition, 2% of the market value of the property is paid to the municipality where the real property is located.

 

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%. The buyer/lessee is entitled to a VAT refund, provided that it is registered for VAT purposes.

Normally developers will declare the build price to be 30% or less, of the purchase price. Entirely up to buyer to ‘’come clean’’ and pay the extra VAT on the full amount. 99.99% of clients never do this. Some developers will say that VAT is included in the price. Be aware that a person can own up to two properties in Bulgaria and, as long as you keep them for longer than 5 years, there is no Capital Gains Tax to pay.

 

Local taxes and rates
The owner of a building or a plot 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. Arable land is exempt from local taxes.

 

Rental income
The basis of the taxable income of a company, investing in Bulgarian property is the gross income derived from the property less tax-deductible, property-related expenses and depreciation. Such expenses include repairs, maintenance, renovation and similar costs and interest on loans used for the acquisition of the property. A Municipal Tax at a rate of 10% of profits is due. This is then deductible in calculating taxable profits which are subject to a flat corporate tax rate of 25%.