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Changed construction plans for already sold offplan property

I don’t know what the builders are thinking when they change the construction plans and don’t update all off-plan purchase agreements?

Imagine the following situation. You have bought a relatively cheap apartment in an off-plan development.The estate agent have shown you some fancy 3D graphics of how the building would look like. Nice gardening around, happy people walking on nice alleys.

The reality is slightly different. Builder didn’t have any experience, hasn’t done any legal/technical research but have started selling off-plan. He had applied for construction permission, but the chief architect required changes to be made to the initial construction plans. The builder needed to change building plans. Some real examples: cutting off whole floor, changing roof shapes by creating sloping ceiling on top floor apartments, cutting off each apartment’s area, so they can fit within the architect’s requirements.

So far so good. But what about the off-plan buyers? They are completely ignored. Of course, they still need to pay the outstanding 50%+ of the apartment price. If they knew the truth they wouldn’t continue with the purchase or would require deduction because of non compliance with the preliminary agreement clauses. Even worse – they could sue!

The builder decides to remain silent to the end. No preliminary agreements are amended, no buyer is aware of the changes…until it’s time to sign the title deed. Now the truth is obvious. How the buyer feels? Bad! How the builder feels? Happy! He has got the cash already, so why should he care?

A true story…

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Farmland: the new trap set by the government

New amendments were introduced to the Ownership and Use of Agricultural Land Act on 27 March 2012. All agricultural land owners or lessees are now obliged by 31 July each year to submit declarations to the local offices of the Agriculture Municipal Service. The declarations need to point out how the farmland they own or use will be used.

Art 37b. (1) Each owner shall submit a declaration form in the local Agricultural Municipality Service, where the land is located. The Form shall state the possession type and the type of long term usage of the land…

Normally that is not a problem, but it’s yet another administrative burden. The real problem may occur to owners who don’t use their farmland or foreigners who have bought farmland though a limited company and haven’t leased it to a local farmer.

The arguable text of Art. 37c para 3 says:

When there is no consent between the users in terms of the agreement pursuant para 1 as well as for all land that is out of the scope of the agreement, the Commission drafts a plan for distribution of usage of the land, by plots by 15 September each year, in the following way:…

Note that “all land that is out of the scope of the agreement” refers to the farm land that no declaration is submitted for. This means that if you miss to declare the type of usage of your farmland, the government considers it as abandoned and may grant its usage to a third party without your consent or approval. Legally speaking this is private property interference and creates a huge corruption base as well as a base for legal disputes.

The government idea is to make use of all farmland, which is not used right now. The amount of such land is huge since after privatisation in 1990 each farmland plot was returned to 10+ heirs. Some of them live abroad, others because of legal disputes can’t cultivate their land. There are also simply non-interested parties so the farm land is not cultivated.

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Forging distribution of common areas in apartment complexes

We have been warning apartment owners that developers use incorrect calculation of common parts, in order to gain majority in the condominium General Meetings. Thus they set their own decisions about which will be the maintenance company and how much that maintenance company will be paid. It’s out of question that they form their own maintenance companies and get the maintenance fees.

For the past year we have been fighting such developer in Bansko. He had built three apartment blocks and have used only the initial common areas calculations for selling the apartments and consequently defining how big is the voting right of each apartment owner. The problem was that the plans of the building were changed 2 times during the construction. This inevitably changes the distribution of the common areas percentage and the subsequent voting rights. However that was never written in the table of common areas. This enabled the developer to “blackmail” the rest of the owners and outvote all General Meeting decision which were not in his own favour.

Hopefully the owners were wise enough to challenge the GM decision in the court. The court expert found the incorrect data and all GM votes counting. The court ruled that the GM decisions were illegal due to incorrect voting rights calculations.

If you are owner in a complex, whether it is in Sea or Mountain resort, be sure to check whether the same scheme is not applied to your property. If you are a victim of the same rip-off, be sure to challenge the GM resolutions in the court. Remember that the challenge need to happen within 7 days, as from the moment the GM has been attended or 1 month if the GM was attended by the apartment owner.

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Speeding tickets for less than 50 levs

If you drive across Bulgaria and you are stopped by the Traffic Police for speeding, you’ll probably get a ticket for BGN 50 or less. There’s a chance that the police office will tell you that “you cannot appeal the fine, because its a minor offence and minor offences couldn’t be appealed before court.” Well…not any more. Art. 189, para 13 from the Road Traffic Act has been declared as unconstitutional by the Constitution Court with Decision #1 on case # 10/2011. Traffic offence fines above BGN 10 can now be appealed.

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Buying regulated land in Bulgaria 2012

  • 14.03.2012
    • , by 
  • by Milen Hristov
  •   1 Comments

Because of the speculations, I decided to write this small post. I will try to clear out whether an EU citizen can buy regulated land directly in Bulgaria as from January 2012.

A common misunderstanding is that foreigners cannot buy regulated land directly if they own primary home in their native country. This was valid until 2012, but not any more. The legal grounds are Art. 29a of the Ownership Act:

Entities in Art. 29 para 2, who do not reside permanently in Republic of Bulgaria, can acquire land for secondary home property after expiration of the term, set forth by the conditions of the Treaty for Accession of Bulgaria to the European Union

The above articles was introduced in 2007, the year when Bulgaria joined EU. As I have written last year the prohibition term was 5 years since Bulgaria’s accession. As from January 2012, the prohibition term has expired, so pursuant Art. 29a Ownership Act, foreigners can buy regulated land directly, no matter if it is primary or secondary home property.

The speculation still exists, but I think this is supported by property agents who lose business. Just imagine how many companies will be liquidated and how many annual accounts and tax declaration will not have to be submitted. Property agents need to move on and stop spreading disinformation.

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Full text of the Condominium Management Act

Many people wanted to see the full text of the Condominium Management Act 2011 in English. This is particularly useful for all foreigners who have bought holiday apartments in Bansko, Pamporovo, Borovetz and the Black Sea resorts. The Act can be downloaded from here [PDF 178kb].

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Cutting costs of Road Haulage business

  • 20.02.2012
    • , by 
  • by Milen Hristov
  •   1 Comments

Did you know that you can benefit of lower administration costs for your Road Haulage business? You can do this by outsourcing your EU international road transport operator’s license (Community authorisation) to another EU member state, where the state fees, insurances, accountancy and driver salaries will cost less than what you are paying in the UK. The biggest benefit is the corporation flat rate tax of 10%.

We are offering full one-stop-shop service for outsourcing you EU haulage business to Bulgaria (an EU member state) for a single fee of 3000 euros, namely:

  • registration of Bulgarian subsidiary limited company
  • obtaining EU road transport operator license (Community authorisation haulage permit) from Bulgaria
  • dedicated haulage accountancy
  • Bulgarian transport manager with CPC
  • registration of trucks with Bulgarian plates and vehicle certificates
  • vehicle insurances with competitive rates
  • full legal services to your company

I. Costs for moving your business under EU international road transport operator’s license issued in Bulgaria

One Time Costs
License state fee1037.91 euros
Our fee for conducting the procedure3000 euro
*costs include figures for 3 trucks with trailers. Additional charges will apply if more than 3 trucks are operating under the license.
Monthly Costs for one truck and a driver
TypeCost in EUR
Accounting200*
Compulsory Insurance104.43**
Salaries and national Insurance (minimum threshold)312
MOT16.66***
Vehicle tax96.80 ****
Road tax6.39 *****
Salary and NI of the Transport manager328.76
Total: 1065.04 euros
* for base accounting package of 3 trucks

** may vary depending on the insurance company

*** annual costs of ~200 euros per truck+trailer

**** for one vehicle with revenue wieght 33-38 tons

***** for two weekly vignettes, as the truck will be required to come to Bulgaria every six months.

Below you can find the figures of what would be your single costs and monthly costs if you operate under EU road transport operator license issued from Bulgaria.

II. Obtaining EU international road transport license from Bulgaria

Bulgarian limited company

As a start first you need to register a Bulgarian limited company. EU international road transport license from Bulgaria is issued only to Bulgarian companies, so this step is needed.

Financial stability requirement

The company needs to prove that it is financially stable. The easiest way to do this is to obtain an insurance policy from Bulgarian insurance company.  We provide assistance in buying such policies.

Transport manager – Certificate for professional competence

As a preliminary requirement, each haulage company needs to employ a person possessing Certificate for professional competence. Our law office can provide such persons – Bulgarian citizens who have obtained valid certificates from the Bulgarian Ministry of Transport and Communication. The person will be employed at 2h employment contract in your company for a monthly salary of 250 euro.

Alternatively if you have already employed such person in your UK company, you can use his Certificate for professional competence issued by a valid UK Transport Manager CPC Awarding Organisation . The EU Council Directive 96/26/EC of 29 April 1996 allows complete recognition of such certificates after legalisation by the Foreign and Commonwealth Office.

State fees for the EU international road transport license

The actual state fee for obtaining the permit is 1022.58 euros (BGN 2000). Depending on how many trucks your company possess a copy of the license needs to be held in each truck. Each copy costs 5.11 euros (BGN 10).

Accountancy / Bookkeeping

Your company will be VAT registered in the Bulgarian National Revenue Agency. You will receive a Bulgarian EU VAT number. Depending on the workload of your company, the accountancy fee can vary.

Our accountancy department offers accountancy services to haulage operators. Normally we charge 200 euros a month for VAT registered company which operates up to 3 trucks. Each additional truck is charged 100 euros/month on the top of the base accounting package. The accounting services include also bookkeeping services.

III. Registration of trucks and trailers in Bulgaria

You will have several options in order to get your truck registered under the Bulgarian community licence:

  1. Transfer some of your existing UK registered trucks to your Bulgarian company
  2. Buy new trucks and register them in Bulgaria
  3. Buy second hand trucks from a Bulgarian company
  4. Get new leased trucks from a Bulgarian leasing company

Transfer some of your existing UK registered trucks to your Bulgarian company

The trucks need to have a Bulgarian registration plate in order to operate under the EU international road transport license issued from Bulgaria. Therefore the easiest way is to “sell” your UK trucks to the Bulgarian company. This will enable you to get Bulgarian plates from the Bulgarian authorities.

Тachographs

If your trucks already have tachographs, their registration in Bulgaria will cost about 80 euros per tachograph. Buying new digital tachograph along with installation fee is usually it is about 500-800 euros.

Annual Vehicle Tax

The annual vehicle tax depends on the municipality where the trucks are registered. We work in Varna municipality. The thresholds depend on how many axis the truck has (2 or 3 axis) and the total revenue weight of the truck and the trailer. Below are the full specifications for year 2012 of Varna municipality vehicle tax.

Varna Annual Vehicle tax 2012 (trucks and composition of truck and trailer)
1 BGN = 0.511296409 EUR
Number of axles of the truck unitThe maximum allowed total weight of the truck
(or composition of truck and trailer) listed in the registration certificate (in tons)		Vehicle annual tax (in BGN)
 equal or more thanless thanwith pneumatic suspension or
similar to pneumatic suspension		other axles types of suspension systems
a. Two axles-182070
182070160
2022160367
2225475855
25268551500
26288551500
2829827997
29319971637
313316372272
333822723452
38-25173422
b. Three or more axles363816002220
384022203070
40-30704542

If the trucks are “Euro 2″, “Euro 3″, “Euro 4″ и “Euro 5″, the vehicle tax is reduced to 50% of the above figures.

The tax shall be paid in two instalments in the year which is due for:

  1. due between 1st March and 30th June and
  2. due between 30th June and 30th October

If the vehicle tax is prepaid in full between 30th March and 30th April a further 5% reduction will be made.

Road Tax

Road tax in Bulgaria is paid by buying a vignette. The vignettes are stickers that are valid for a year, month, week and a day. Each haulier can decide what type of vignette to buy for his trucks. Normally if your trucks will be working across Europe and hardly coming back to Bulgaria, drivers can buy short term vignettes (weekly or monthly vignette). For example only for the purpose of MOTs done in Bulgaria. The prices of the vignettes for 2012 are as follows:

Vignette taxes 2012 - K1 vehicle category (Euro III, IV,V, EEV and higher) in Euros
DailyWeeklyMonthlyAnnual
6.6529.6584.36511.29

IV. Compulsory Truck Insurances

Below you can find some competitive insurance rates for tractor units and trailers of one of the major  Bulgarian insurers – BulIns PLC. The insurer offers also payment in 2, 3 or 4 instalments, but for the sake of simplicity I’ve just provided the total annual premium if paid in single instalment.

Compulsory insurance
TypeAnnual premium in Euros
Tractor unit1198.98
Trailer54.19

V. Driver salaries, Bulgarian National Insurance (NI) contributions and health insurance

If you want to benefit of the low minimum thresholds for driver salaries and NI, you can re-employ your drivers in the Bulgarian company. EU nationals can work without work permits and have equal rights with the Bulgarians on the labour market. For 2012 the figures are as follows:

  • minimum driver monthly salary of 208 EUR per month.
  • minimum monthly NI and health insurance contributions of 104 EUR per month per driver.

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