As Bulgarian qualified solicitors, we were among the first ones in 2008 to alarm the foreign property owners of the compulsory liquidations that would follow if they had fail to re-register their holding limited companies. Now the liquidation process has been initiated and there are still property owners that have no idea of the legal process going on in Bulgaria. Therefore this blog article is to alarm all those property owners, who has limited companies and haven’t re-registered them by the end of 2012.
I hear many ‘legal advice’ on expat forums such as that you can sell the property and just abandon the company; or you can make a fictional sale of the property to yourself and then liquidate the company. Such options may seem tempting, but they are totally wrong and let me explain why.
Transfer of property from the liquidated company to own name by fictive sale
This is in fact what 99.9% of the solicitors in Bulgaria offer to their customers. As a company owner, you would probably hear that this is the only way to get all the liquidation mess sorted, but you are wrong. This is just an expensive workaround and may create even bigger accounting mess than you have thought – not only in Bulgaria but with regard to your UK matters too.
Most of the solicitors will offer a fictive sale which will be certified at the tax value of your property. Indeed, this reduces the transfer costs to the bare minimum, but what happens to your company accounting? A total mess. Let’s say you have bought your rural house for £25,000 (or for £4000, but have put an extra £10,000 for renovation). Your solicitors offers you a fictive sale for £1500, which your liquidated company will receive as purchase price. First of all cheating of the tax office is not a good idea. False declaration of facts, besides being a criminal offence, is also a tax evasion, so if you are caught our NRA will notify probably HMRC too. While you think you can escape Bulgarian authorities (especially foreigners who live in Bulgaria have this illusion), HMRC are far more persistant and sneaky.
Abandoning the company after property sale without initiating liquidation
This is one totally wrong idea! Even if you plan to leave Bulgaria for good, the EU legal enforcement rules can follow you in any EU member state and enforce the due taxes, fines etc. Moreover if you are among the people with un-reregistered companies, you can’t sell you property, as the Commercial register Act explicitly bans property deal with un-reregistered companies. Such deals are considered void and null by the statutory rules.
The right approach to liquidate a Bulgarian company
First of all, you should appoint a solicitor who knows what he is doing. Not all solicitors are specialising in company liquidation, so be careful whom you instruct. The property transfer to your own name, can be done as part of the assets distribution to the company shareholders. It is not a sale and it is part of the specifics of the company liquidation procedure. We are specialising in company registrations and liquidations and if you want to liquidate your Bulgarian company, give us a call at 00359 52 605997 or email me to firstname.lastname@example.org. We will review your company, subject to liquidation, and will provide a quote for the total expense for closing the company and transferring the property to shareholders’ names.