Lyubov Jones from The International Law Partnership comments:
Russian buyers of property in Bulgaria need to take as much care as any other “foreigner” buying in the country.
The process for a Russian buyer is exactly the same as any other foreigner buying in Bulgaria. A reservation contract may be signed along with a small reservation deposit. Before any contract is signed or a deposit paid the buyers lawyer needs to carry out some checks on the property and advise on the suitability of the contract. Is there planning permission? Does the seller own the land? Is there any safety for any sums paid to the seller before completion? Is there any charges on the property?
Prior to completion the lawyer will check the property again, immediately before title is transferred into the Buyer’s name to make sure that the property still belongs to the Seller and that it is free of debts and charges. These will need to be undertaken before the signing of the Notary Deed.
The total cost of buying a property in Bulgaria (including fees and taxes) is likely to be between 4 and 6 per cent of the property price. This will depend on where the property is situated. Generally, the payment of these taxes are at the buyer’s expense.
Foreigners with business activity in Bulgaria who make investments and receive incomes on the territory of the country are subject to taxation in accordance with the general tax treatment applicable to local persons. Certain legislative acts contain special provisions regarding foreigners but ultimately they do not lead to the establishment of a special tax treatment differing materially from the treatment of the local persons.
Therefore, if you bought property as an individual and you receive income from rent or from the transaction of a property you will be taxable under Persons Income Tax Law (PITL). There is a progressive scale for tax over income, as a combination of the statutory payment plus a certain percentage. It will be approximately 25 per cent for the amount of income.
If the property is bought through a local Limited Company, and the Company performs business activity on the territory of Bulgaria, it will be subject to taxation with corporate tax of 10 percent for its profits derived form all sources in the country and abroad under Corporate Income Tax Law (CITL).
However, if your local Company does not undertake business activity in the country, any income derived from source in the Republic of Bulgaria will be taxed with tax at the source of 10 percent. This is one-off paid tax.
Bulgaria and Russia have signed an Agreement for avoidance of double taxation. The agreement is applied in relation to persons who are considered local person by one of the contracting states or by both states(please ask your lawyer who can be considered as local person). Each of the two contracting states indicates in the agreement the criteria according to which it defines a given person as a local person in relation to itself. The agreements are applied only in relation to such taxes which are explicitly included therein.
There is a visa regime between Bulgaria and Russia. Ordinarily, you may reside for up to 30 or 90 consecutive days within any 6 month period, considered from the date of the first entry.
All foreigners entering the Republic of Bulgaria residing at a private address are obliged to, within 48 hours of entry into the country, register their address at the local police station. Any changes in accommodation (private address) will require re-registering. There is no requirement to register when staying at a hotel as this is carried out by the hotel.
If you bought the property in Bulgaria you will prefer to have the long-term permit. For obtaining the long-term stay the provisions of the law have to be strictly performed.
This Long-term visa will usually be granted for a period of 6 months initially. Subsequent applications for this type of long-term visa require further evidence of a requirement to stay. You will be refused an extension of a long-term stay in the country or revoke the right of a long-term stay if it is established that you have not stayed on the territory of Bulgaria for at least 6 months and one day during the preceding calendar year.
If you wish to change your type of visa or obtain a permit for a continuous stay you should ask your lawyer to assist you in this matter.
As many people will be aware “foreigners” can buy property in Bulgaria but at the moment if they buy land they have to do so through a Bulgarian company. If they are buying an apartment then they have greater choice as to which entity can buy the property. Assuming that the purchaser has a choice then the decision as to the best form of ownership is not only absolutely crucial but also very individual.
The procedure for companies buying property in Bulgaria is similar but different to that of an individual buying. Similarly the taxes involved are different. It is therefore essential that a Russian buyer takes advice on this before committing themselves to the purchase.
If you would like more information, please contact:
The International Law Partnership LLP
Solicitors & International Lawyers
Holborn Hall
193-197 High Holborn
London
WC1V 7BD
Tel: 020 7420 0400
Fax: 020 7836 3626
Email: info@LawOverseas.com
Internet: www.LawOverseas.com
© The International Law Partnership
|