How can be established an enterprise with foreign investment in Bulgaria?

Foreign investment typically assumes one of the following forms: establishing a joint venture with existing companies; acquiring a company through privatization; setting up a new (green field) venture or making a portfolio investment.

Which are the preferred types of business organizations with foreign investment?

The most common form of organization for foreign investors is a limited liability company. Other types are general partnership, limited partnership, joint stock company, sole proprietorship, joint venture, branch, holding, cooperatives, representative office. Limited liability companies, unlimited partnerships, public limited companies, limited partnerships, holdings and cooperatives are legal entities. Branches and representations are not independent legal entities: branches may engage in economic activities, they have their own property and compile a separate balance sheet; representations may not engage in economic activities. There Is no extent or amount of foreign participation in companies limited.

What are the guarantees for foreign investment in Bulgaria?

National Treatment • Most Favored Nation Status • Priority of International Treaties • Legal Guarantees against Adverse Changes in the Law - the provisions of the Law that have been effective at the moment of making the investment, should be applied for any foreign investment executed before the changes of the legislation setting up legal normative restrictions for the foreign investment. • Protection Against Expropriation - real estate property owned by a foreign person can be expropriated only on lawful grounds, for especially important purposes of the State that can not be satisfied otherwise.

Who and how may obtain property rights over real estate in Bulgaria?

Foreign nationals and foreign legal entities may acquire ownership title over buildings and limited ownership rights over property in the Republic of Bulgaria.

Can foreigners acquire ownership rights over land in Bulgaria?

Foreign individuals can not own land (this is a Constitutional prohibition). However, the Foreign Investment Law removed the restrictions on acquisition of land by locally-registered companies with foreign participation. By setting up or joining a company incorporated under the Bulgarian legislation foreign persons can acquire full land ownership rights including ownership rights on agricultural land.

What are the regulations for the import and export of currency by foreigners ?

In general case, resident and nonresident physical persons shall fill in and file with the customs authorities a foreign exchange customs declaration in accordance with the sample form approved by the Minister of Finance, when the sum of exported or imported by them Leva (BGN) and foreign exchange cash, including traveler's checks, exceed BGN 5,000 in total. Non-resident physical persons may import unlimited amount of Leva (BGL) and foreign exchange cash declaring the sum of the imported money and the type of currency before the customs authorities, provided that the total amount exceeds 5 000 BGL. Non-resident physical persons may export BGL and foreign exchange, as follows: Up to 5 000 BGL or their foreign exchange equivalent - without declaring them, and from 5 001 to 20 000 BGL, including traveler's checks, - after declaring their total amount and the grounds of their acquisition with the customs authorities; Over 20 000 BGL or the equivalent in foreign exchange - free export after declaration before the customs authorities, in case the amount of the exported BGL or foreign exchange does not exceed the amount of the imported and declared funds; Beyond the cases under items 1 and 2 - after obtaining a permit by the Bulgarian National Bank (BNB). For more information, we recommend you to visit the Web site of the Bulgarian National Bank [www.bnb.bg], where you can find a full text of the Foreign Exchange Law and of the Regulation No. 30 of 9 December 1999 on the Export and Import of Leva and Foreign Exchange Cash, Precious Metals and Precious Stones.

Other legal issues

Setting up commercial companies in Bulgaria

The most common types of commercial companies preferred by foreigners are the limited liability company (OOD) and the joint-stock companies (AD). In either type there can be a single shareholder or several shareholders, either natural persons or legal entities. The procedure requires registration with the respective District court in Bulgaria. Lawyers shall prepare and obtain the necessary documents:

-          Certificate for reservation of the company name

-          Articles of Incorporation

-          Minutes from the Founders meeting

-          Specimen of the signatures of the Managing body

-          List of the members of the Managing body

-          Application for court registration

-          Power of Attorney to the Lawyers

In case founders are legal entities, additional documents need to be presented, such as:

-          Certificate for current company status / Excerpts from the local Italian company register

-          Decisions of the managing bodies for the setting up of company in Bulgaria

-          Power of attorney for the representing the company in the procedures

The above documents, since from foreign origin, need to be legalized and translated.

STEPS TO BE ACCOMPLISHED FOR SETTING UP A COMPANY IN BULGARIA

1.       Reservation of a company name – this procedure includes obtaining a certificate from the “Delphi” Information System that there is not another company bearing the same name.

2.       Drafting the Articles of Incorporation (including the reserved company name).

3.       Opening a collection account for the registered capital of the company (5 000 BGN is the minimum for OOD and 50,000 BGN for AD; registered capital is higher for specialized financial institutions – banks, insurance companies).

4.       Obtaining a notary verified specimen of signature of the Managing body of the company.

5.       The members of Managing body sign declarations as per the Trade Act.

6.       The members of Managing body sign the application for court registration.

7.       The members of Managing body give a power of attorney to the lawyer who will deal with the registration.

8.       Payment of the court fee for the registration procedure (see table below)

9.       Submitting the application for court registration within 7 days from the date the Articles of Incorporation was undersigned by the founders.

10.   Obtaining the Court decision for registration of the company.

11.   BULSTAT registration (within 3 days from obtaining the court decision)

12.   National Social Security Institute registration (within 7 days from obtaining the court decision)

13.   TAX registration (within 14 days from obtaining the court decision).

Statutory Fees and Expenses

*BGN to EUR exchange rate is 1,95583 : 1

Legal Fees

Attorney’s fees for the whole company registration procedure:

OOD - 550 EUR

AD – 650 EUR

Buying real property in Bulgaria

Foreign persons (natural or legal entities) may own buildings (including right of construction) and limited property rights, but cannot own land. However, land can be purchased by a local legal entity, which is owned by foreigners.

FEES AND SERVICES

Services provided by City Guide Real Estate Agency are:  searching and locating the best properties of the whole market; help in buying the flat as we make the necessary checks regarding the ownership; help in renovating and furnishing the place if necessary; renting the property for different periods of time - short or long term; maintenance of the rented property and payment the bills and taxes.
 

       1. We are able to refurbish and furnish your property with all needed.

We have 8 years experience in renovating and furnishing apartments and houses. Profound knowledge of a local market, good connections with many retail shops, team of proven craftsmen and technicians guarantee quality and quick results. Our clients can benefit from the most reasonable prices on the market and enjoy higher rental levels. Our fee for the organization and supervising of the renovation and furnishing is 5% of the total invested amount.

       2. We will provide the following services against 50 Euro monthly for each property charge:
- Assistance in the management and maintenance of the documents circulation. Preparing and signing of Lease Agreements. 
- Organization of the apartment maintenance.
- Regular communication with owner in case of any important circumstance and to produce at request payment documents to prove the expenses made for the property.
- Organization and complete assistance with regard to the payment of any and all expenses related to the property to third-party suppliers, including the expenses for power and water supply, cable TV, Internet, cleaning and maintenance of the real estate, cleaning and maintenance of the common parts of the building, repairs and reconditioning, etc.
- Organization and complete assistance in respect of the issue of any categorization papers, licenses and similar for the short-term or long-term rent of the property.
- Organization and full assistance in the payment of the annual property tax and waste collection fee.
- Organization and full assistance with regard to the filing and submission to the tax office of the annual tax statement and payment of the tax due by the apartment owner for the income from renting the property.
- Actions aimed to find, establish contacts, and offer the property to tour operators and travel agencies etc. with the purpose of renting the property to their tourists.
- Reception desk services and dispatch, handing over and back acceptance of keys, full assistance to the tenants, dwelling in the real estate, property of owner.
- Registration of the tenants, foreign citizens at the Local Police Station as required by the law.
- Taking into charge funds, property of apartment owner, to be used for all payments of expenditure, related to the real estate.
- Organization of the book-keeping and storage of the received invoices, payment receipts and other documents from third-party service providers, agents, local authorities, tax administration bodies, etc.
- Representation of apartment owner, protection of his rights and execution of his will before any and all third-party service providers, agents, local authorities, tax administration bodies, tenants etc.

       3. Brokerage fee for finding tenants are:

           0 - 3 months: 10% from the total rental income,

           3 - 6 months: 50 % from the first month rent,

           6 - 12 months: 75 % from the first month rent,

           More than 12 months: 100% of the first month rent.

       4. Brokerage fee for property purchase:

           3% of the sale price payable at the preliminary contract.

Notary ProcedureS

Notary procedures regarding real estate matters cannot be carried out outside Bulgaria by law – the Notary Deed has to be signed before a local Notary in which area the property is situated. Therefore a PoA has to be issued to a local attorney to complete the sale-purchase transaction of real estate; only via an explicit PoA can foreigners acquire a property, without the need to go to Bulgaria.  This shall require a) drafting of Notary Deed and/or preliminary contract, b) obtaining a Certificate for lack of various encumbrances on the property, c) signing the transaction with at the Notary’s Office.