War is never a good thing. Ukraine had many thriving business which are suffering right now. One of the solutions is to move business and employees (as much as it can be done) to a close friendly country.

Why Bulgaria is good place to move your Ukrainian business

Bulgaria is relatively close, but far enough to be safe from the conflict. It's part of EU and NATO. Black sea coastal cities such as Varna and Burgas offer great opportunities with fair price accomodation and business. Bulgaria uses cyrillic alphabet, so Ukrainians would be able to adapt easy.

Moving your Ukrainian business

As with every new business, you will need to register a local company. A limited liability company (EOOD) is the most straightforward choice. It is easy to setup and can be up and running as quick as in 3 business days. Depending on your desired company structure, it can take a bit longer e.g. if you wish to open a subsidiary of another foreign holding company. In such case it won't be more than 2 weeks.

We'll be honest. Banks allover EU are overwhelmed by the Anti Money Laundering regulations. This complicates the process for opening business bank accounts. However, many FinTech companies such as Revolut, Wise, iCard etc. are happy to get new business customers and they open bank accounts for startup businesses without too much hassle. Sometimes, if your Ukrainian business had good business relations with a bank and if that bank has a branch in Bulgaria, it will be easy to get new bank account in Bulgaria for the same business. Such banks are Raiffeisenbank, ProCreditbank etc.

Moving your Ukrainian employees to Bulgaria

Despite Bulgaria's has a legal requirement that not more than 10% of the company employees can be non-permanent-residents, you can still move 100% of your employees and basically keep your existing company team.

The above restriction can be overriden by applying the rules of EU Directive 2001/55. The Directive grants rights to access to the labour market to all Ukrainians who apply for temporary protection status. If this procedure is followed, your Ukrainian employees can be 100% employed by your new Bulgarian business without any restrictions.

Who can benefit of the above procedures

Any business owner of Ukrainian business can benefit of the above procedures. Especially beneficial this would be to coastal businesses of Odessa, as Varna and Burgas are also located on Black Sea Coast, so their marine related work can continue without major interruptions.

Software companies may also benefit of the very good connectivity infrastructure in Bulgaria.

Beneficial tax regieme

Bulgarian corporation tax is flat 10%. Being part of EU, any business owner can take advantage of unrestricted EU trade (excise goods have their own regime in the internal EU trade).

If you need more information or a specific advice for your case, please contact us, using the form below.

If you have bought a property in Bulgaria as an investment in the past decade or so , you should be aware of the recent practices of the local councils to put unattended properties on actions. Find below the most common THREE WAYS you could lose your property if you are neglecting your investment in Bulgaria.

Unpaid council taxes

Many people think that once they have invested in Bulgarian property, there are no further obligations, besides the conveyancing costs. That is not correct. Each year, the owner of the property has to pay council tax and waste collection fee. If the property is uninhabited, the owner can apply to the local council and ask for waste collection fee relief. By doing so, you will benefit a significant reduction of the waste collection fee. This application has to be submitted every year, effective for the following year.

Council taxes are due every year and their amount depends on the location of the property and the tax valuation of the property (determined by the local council). Annual property council tax is different from the stamp duty, which the owner would have paid upon acquiring the ownership.

If you have not paid council tax, it's likely the latter to put your property on action and sell it in order to recover the outstanding property council tax and waste collection fees.

Missing final deadline for company re-registration

People who have bought their holiday home or rural property in Bulgaria before 01st January 2008 are likely to have used a limited company to buy their property. That was the period before Bulgaria entered the EU.

After the said date, Bulgaria introduced a centralised electronic Companies Register and all company owners should have re-registered their companies. This would have filtered all abandoned companies, as they would have been stricken out automatically.

However if the company was holding a property, such strike out can't happen. Therefore, the government extended the deadline for compulsory liquidation of all companies which hold properties and which have missed the deadline for re-registration. This new deadline is 31st December 2021. If you have a non-registered company which holds a property you need to put it into compulsory liquidation and either move the property to a new dormant company or sell the property. If you don't act now, you will lose the property after 31st December 2021.

Yes, you have only 6 months to take your Bulgarian property out of the stiken-off company or you could lose your investment for good!

Property scam

This case is not common but sometimes happens. If you have invested in property in Bulgaria but rarely visit it and you don't have someone to overlook it, you might become a victim of a perfectly legal way to lose your ownership. According to the Bulgarian Ownership Act:

Art. 79. The right of ownership of immovable property through prescription shall be acquired through continuous possession for 10 years.

In plain words, if someone uses or takes care of your property in Bulgaria for 10 continuous years, they have the legal right to claim the ownership. Usually scammers use this legal loophole and obtain legal ownership of properties, owned by Brits, who haven't visited their investment for years.

In order to avoid this happening, you need to undertake legal actions and interrupt any continued possession of the scammer. This would prevent the latter from using the said legal loophole.

If you have bought a rural property in Bulgaria back in mid 2000s, you know it's not too easy to maintain it if you are not living permanently in the country. Because of Covid-19 restrictions, many Britons now feel they can't use their rural houses and are willing to sell them on loss, especially in Dobrich region, North of Varna.

If your case is similar, be careful not to fall into the trap of the still unregulated profession of the "property agent". Besides charging extortionate commissions of 3% (excl.VAT), they usually insist on receiving their commission in cash and in hand, without issuing any receipts or invoices, thus leaving no trace that you have actually paid them. You may think it doesn't affect you but you might be wrong as it's tax evasion.

Remember that the agent is not protecting your interests, only their own. Property agent's profession is not regulated in Bulgaria and it's not bound to any professional standards. Property agents in Bulgaria don't have any mandatory indemnity insurances and you can't complain to any professional supervising body in case you are scammed. The only work an agent does, is connecting the buyer and the seller.

No matter what they tell you (e.g. assist with the transaction documents etc), remember that they usually have no legal background, no accounting background and are working only with blank form documents. Your particular case may require special legal attention and if you trust the property agent to do the legal work, it might get you in trouble.

The property agents usually try not to pay taxes on their commission, hence they will tell you anything to convince you to pay them in cash. Don't do it! Especially if you your property is owned by a limited company. Any money paid out of the conveyancing proceeds has to be recorded in your company books thus any cash payment without a proper receipt or invoice will bring you tax problems.

Even if you are a buyer, don't pay property agent's commission in cash or if you do, require an invoice (and cash register receipt, which is mandatory for all traders in Bulgaria). This will be a proof of payment, should something with the deal go wrong and the agent doesn't refund you.

We've been noticing such property agents' malpractices, especially in the area North of Varna (Dobrich, Balchik, Kavarna) where agents ill-advise their clients on legal and accounting issues. Usually property agents also "act" on both parties' behalf which, as you can imagine, cannot ensure independent advice to either of the represented parties. We have extensive litigation experience with such property agents in the infamous "Bulgarian Dreams" case, which was also broadcasted on BBC Watchdog.

Need a solicitor to help you sell or buy property North of Varna? Contact us!

All companies in Bulgaria which are not re-registed by the end 2020 will lose their real estate properties.

Do you own a property through a limited company in Bulgaria? Please read below, as you might be affected by a major law change concerning your property.

History of the process

If you have bought a property in Bulgaria before 2010, most probably you have set up a limited company in Bulgaria as well. Having a limited company as a holding company for the property was a requirement back then. This is not the case any more. Any EU citizen can own regulated property (e.g. regulated land, apartment, house etc.) directly on their personal name.

Company owners who failed to re-register their companies

As we have wrote here and here , all active companies have been moved to a centralised Companies Register. The government couldn't (more likely didn't want) do it automatically, so it set deadlines for companies' owners to do it themselves. If anyone had failed to do it,  the company had to proceed with a compulsory liquidation.

What if I own a property and have failed to liquidate my company?

Luckily, you still can keep ownership of your property, at least if you can sort things out by the end year 2022. If you fail to do it, you can lose your property and you can't challenge this in the future. You need to appoint  liquidator who would prepare all the paperwork and initiate the process in the Companies Register.

After the process is initiated, the company will be automatically de-registered and the liquidator will have to transfer the title of the property to the company owner or to a third party (appointed by the owner) . This also can be a part of your estate planning process, so you could coordinate the process with your UK/Irish estate planning agent.

Owning agricultural land or forest

If you own a agricultural land or a forest, your situation is a bit trickier. Bulgarian government passed a law, where they impose restrictions on who can own agricultural land. The basic rule is that only a resident of the country can own such land or if it is a company, the company has to be owned by a resident OR if not owned by a resident, it has to be at least 5 years old.

As you can see the above restriction doesn't get along too well with the compulsory company liquidation, as you most likely are not Bulgarian resident and don't have another Bulgarian company, matching the criteria.

We, at MH Legal, can help you with the process at a very reasonable fee. You can contact us through our contact form below and we'll get back to you.

All airlines and AOC holders, registered in Bulgaria benefit of the country's EU membership and all connected Single Sky and Open Skies agreements. Country's location is quite beneficial as it is almost in the middle on the route between the large airport hubs of the Middle East (Dubai, Doha etc.) and Western Europe's largest airports (Frankfurt, Paris, London).

Status of Bulgaria in the aviation industry

Bulgaria is EASA member and for all AOC holders and airlines, registered in Bulgaria, the EASA rules apply in full. The regulator, which is responsible for the supervision and registration of the aircrafts and granting the AOCs is the Bulgarian Civil Aviation Authority.  This authority is also responsible for keeping the Bulgarian aircraft register, which as of this date is still not open to public, despite the latest court ruling of Sofia Administrative Court.

Bulgaria doesn't have many registered airlines. The latest publicly available information shows that there are 16 operating airlines as of date. The list is not exhaustive, as we can confirm we have client airlines which are not listed there, but they are fully operational. Buying an airline or setting up one from scratch in Bulgaria

Probably the most often asked question is the one about the speed of the process. If you start from scratch, the legal term for granting an AOC and airline licence is 3 months. In reality, if there are faults in the documentation, it could take long. However, the CAA will appoint a supervising representative who will guide the applicant through the process so that the wasted time is minimal.

Bulgarian CAA follows the local legislation as well as the rules set in Regulation (EC) 1008/2008 when deciding on granting AOCs and airline licences. There are no explicit local rules for small operators, so the rules set in the EC regulation shall apply (relaxed financial standing requirements, less post holders etc.)

Buying a ready airline (AOC holder) can be your second choice. However, it might be difficult to find a company for sale, as there are too few operating Bulgarian aoc holders/airlines. Therefore, the first option might be easier choice for you.

Type of aircrafts under your Bulgarian AOC

Every aircraft which complies with the requirements of EASA for airworthiness and other EU requirements (noise, pollution etc)  can be registered in Bulgaria. In practice, if the applicant can demonstrate that their aircraft type with similar characteristics/instruments/equipment has been registered in another EU country, the Bulgarian CAA is willing to accept the aircraft without excessive bureaucracy requirements. Legal help with your AOC/airline application

We at MH Legal are experienced at international and EU aviation law and can provide comprehensive legal help to your company both for buying an operating Bulgarian airline and starting up from scratch (i.e. setting up effective company and financial structure, legal procedure compliance, ongoing legal and accounting advice etc.).

Bulgarian Civil Aviation Authority is responsible for keeping the aircraft register of Bulgaria i.e. records of all aircraft registrations, aircraft ownership rights, dry or wet lease contracts records. Bulgarian aircraft register is not very big, but has a potential to grow as Bulgaria is part of the EU and any registered aircraft in Bulgaria will benefit the Single European Sky.

Bulgarian Aircraft register regulation

The aircraft register is regulated by the Chicago Convention, Annex 7, the Bulgarian Civil Aviation Act and the ordinance about the rules for keeping the register. As the local aviation sector is not huge, there is no case law or legal acts, concerning the status of the register and access procedures for third parties. Milen Hristov of MH Legal applied for information on certain aircraft registrations at the Bulgarian CAA. However, the Director of CAA rejected the request, grounding his decision on the basis that the register was "non-public, it contained private business matters" and the records were "personal data".  The justification of CAA's decision was illegal and was based on misinterpretation of the Access To Public Information Act.

Administrative Court rules about the access to the Aircraft Register

We have filed a complaint (judicial review) in Sofia Administrative Court and after 8 months of legal proceedings the court came up with the decision to turn down CAA's decision. The judge has ordered the Director of CAA to grant MH Legal access to the requested information.

The judge has accepted in full our legal arguments, derived from the scarce Bulgarian legislation on keeping the Aircraft Register. CAA's argument that the information is "personal data" was not accepted as valid, because only data of physical persons could be personal data. As you can imagine, most of the records for aircraft ownership are about companies and not physical persons.

Second argument about "concerning private business relations" is also not valid, as the this is contrary to the purpose of the law and the regulations in Access To Public Information Act i.e. data, processed or created by any government or municipal authority, unless classified, should be accessed upon request by citizens or organisations. Moreover, the fact that changes in aircraft ownership rights are binding to third parties only if duly recorded in the Aircraft Register, is a legal argument about the status of that register i.e. public (Article 23 para 2 of the Civil Aviation Act).

As a result of our pro bono legal actions, Bulgarian Aircraft REgister is now open. It's still hidden within CAA's website and only in Bulgarian language, however, we've got regularly updated English translation of the Bulgarian Aircraft Register on our website.

Starting in 2012, political interest has increasingly focussed on the opportunities provided by automatic exchange of information. Automatic exchange of information involves the systematic and periodic transmission of “bulk” taxpayer information by the source country to the residence country concerning various categories of income (e.g. dividends, interest, etc.).

On February 2014, upon an initiative of the Organization for Economic Cooperation and Development (OECD) the G20 Finance Ministers endorsed the Common Reporting Standard for automatic exchange of tax information, shortly known as Common Reporting Standard or “CRS”. The Standard calls on governments to obtain detailed account information from their financial institutions and exchange that information automatically with other jurisdictions on an annual basis.

On May 2014, OECD Declaration on Automatic Exchange of Information in Tax Matters was endorsed by all 34 member countries along with several non-member countries. More than 65 jurisdictions publicly committed to implementation, with more than 40 having committed to a specific and ambitious timetable leading to the first automatic information exchanges in 2017. Between these so called “early adopters” was Bulgaria.

On 29 October 2014, 51 jurisdictions, 39 of which were represented at ministerial level, signed a multilateral competent authority agreement to automatically exchange information based on Article 6 of the Multilateral Convention. Subsequent signatures of the agreement, including a signing ceremony in the margins of the OECD Ministerial meeting (June 2015), brings the total number of jurisdictions to 61.

Despite Bulgaria was among those countries, that committed to implement CRS starting from January 2016, latter have never signed the multilateral competent authority agreement. Thus, the time-frame for implementation of CRS in Bulgaria remains unclear. One thing is for sure – even with all political effort in hand, to adopt the reporting standard in the internal legislation, following the constitutional procedure it will take at least two to tree years for Bulgaria to implement CRS. Such political will however is more than questionable, having in mind the fragmentation of the Bulgarian parliament. The incapability of the Bulgarian Revenue Agency to adopt and implement such complex administrative procedure, makes the unlimited delay for CRS implementation in Bulgaria the most likely scenario.

If an aircraft engine fails, the airline can make a temporary engine replacement until the rightful owner (lessor) allows permanent engine replacement. Sometimes in case of financial problems the aircraft is seized by creditor or the airline goes bankrupt. In such cases the owner of the airframe might acquire title over the engine if the engine owner doesn't legally protect its asset. Such protection of assets effectively can be done by an aviation lawyer, experienced in the local jurisdiction.

How an aircraft engine owners can protect their assets?

The ultimate protection can be incorporated in the text of the engine lease agreement, signed with the aircraft operator (the airline). The agreement needs to clearly identify a jurisdiction, favourable to the engine owner, and issuing a mandatory letter of recognition of title by the airframe owner. Ultimately, on a more global level, the interest in the aircraft engine can be registered pursuant to the Cape Town Convention and it's Aircraft Protocol in the International registry of mobile assets. If the engine title dispute arises in a country where the Convention is in force, the aircraft engine owner can easily enforce a repossession (revendication).

Applicable law on installing aircraft engine on airframe in Bulgaria

Bulgaria is not signatory of the Cape Town convention but is a party through its accession to the EU. So far there is no case law on application of the Cape Town convention and Bulgarian courts are likely to apply lex situs i.e. the law of the place where the property is situated (Bulgarian laws). This, however, doesn't mean that the court will not apply the Convention. Below I will be looking at the current Bulgarian case law on the proprietary rights in case of joining two objects into one, where one is the main object and the other is subordinate i.e. the case where aircraft engine is installed on an airframe, owned by another entity.

Bulgarian Supreme Court case law on protecting title of aircraft engines

Due to the small aviation industry in Bulgaria, there are no particular disputes concerning aircraft engines. However there are some milestone court decisions, which can be applied directly to the topic of discussion.

The main legislation is Article 97 of the Ownership Act:

[blockquote]

When another’s property has been incorporated as a part of a main property in such a way that it may not be separated without causing significant damage to the main property the owner of the latter property shall acquire the ownership over the adjoined part as well.

[/blockquote]

The text of the articles faces few concerns one of which is what does  "significant damage to the main property" means? The Supreme court in its Decision 180/18.10.2013 in the civil case 2317/2013 has decided that:

[blockquote]

In the legal theory and in legal practice it is accepted that permanent incorporation means not only when the removal of the subordinate property would lead to physical damage of the main property but also if it would lead to disrupting the functions of the main property.

[/blockquote]

The second concern of the aircraft engine owner would be  "is the engine subordinate part to the airframe"? There is a slightly older Supreme court Decision 479/02.10.1986 on criminal case 476/1986, where the judges have held that:

[blockquote]

Replacing of one part of a mechanism with another one is not incorporation pursuant Article 97 of the Ownership Act, which is accepted as means to acquire ownership"

[/blockquote]

No doubt the above court decision is 100% in favour of the aircraft engine owner because temporary replacement of an engine is in fact replacement of a damaged aircraft part with another good one. The quoted court decision concerns automobile parts, so it is more relevant than the majority of the other case law, which relate mainly to real estate properties.

The third main Supreme court decision is Decision 353/22.05.2009 on civil case 585/2008, where the judges held that:

[blockquote]

It is correct and legally grounded on Article 97, that even if there are parts, provided by the defendant, these parts are incorporated in the main property and they belong to its owner i.e. to the claimant.

[/blockquote]

Hire an aviation lawyer in Bulgaria

As you can see above, you will need a qualified aviation lawyer to make the claim successful, despite the contradictory Supreme court case law. The specifics of the aviation industry requires not only local law and litigation knowledge but also the qualifications of an international aviation law specialist. Should you need an aviation lawyer, we will be please to offer qualified legal advice and services. Milen Hristov is qualified aviation lawyer, registered in Sofia Bar. He is also member of European Air Law Association and certified by IATA in international aviation law.

If you have problems with DVSA or have lost your Operator's licence in UK or Ireland we can bring you back in business under Bulgarian O-licence. This route is successful only if you are not breaching the EU cabotage rules (e.g. 3 local jobs within 7 days, following international journey).

Transportation on own account

However if you are not working for hire and reward, Regulation EC/1072/2008 provides some specific rules for you. Before we move to the rules, we need to specify who qualifies for "own-account operator". The test is in Article 1, paragraph 5, point (d) of the said regulation. In general you need:

[list1]

• to own the goods you are carrying
• the purpose of the journey need to be to move the goods out of your premises (owned or rented)
• the drivers need to be employed by you
• to own/have rented (without drivers) the trucks
• such type of journey need to be supplementary to your main business

[/list1]

Unrestricted cabotage in UK

As we said above, if you work for hire and reward, you can't do more than 3 local jobs in 7 days. After you do that, you need to physically bring the truck out of UK/Ireland. This restriction doesn't apply to own account operators. The piece of legislation which allows you to work freely as own account Bulgarian O licence holder in UK is Article 8, paragraph 6 of Regulation EC/1072/2008, namely:

[blockquote]

"6.   Permission to carry out cabotage operations, within the framework of the types of carriage referred to in Article 1(5)(d) and (e), shall be unrestricted.”

[/blockquote]

As you can see, if you are moving goods on own account, you can safely use the Bulgarian O licence option, we are providing. We will help you register your UK trucks in Bulgaria and we will obtain a Bulgarian O-licence for your Bulgarian company.

We are specialised transport law firm (road/air/sea) and unlike other accounting or consultancy companies, our services are based on detailed legal research- both legislation and EU and domestic case law.

Email us  on [email protected] or call us on 00359 5260 5997 now to get your own Operator's licence!

Many airlines are fined by the Bulgarian Border Police because they are not aware of the liability to check if their passengers have a valid visa to enter Bulgaria. In most of the cases, the passenger has a valid visa to enter another EU country, but the flight to Bulgaria is just one of the legs of the journey.

Fines to Airlines are between €3000 and €5000

Because of the relatively recent accession into EU, Bulgarian Border Police are still not fully trained in the EU regulations. For example, if the passenger has a valid Schengen Visa for France, and flies to Bulgaria and then is transferred on another flight to Paris, the airline shouldn't be fined for letting the passenger on board. However, the Bulgarian Border police are following strictly the letter of the law of the Bulgarian Foreigners Act, namely:

[blockquote]

Article 20 Carrier, transporting foreigners by land, air or water to and / or from the Republic of Bulgaria, before performing the service must establish:

1.the validity of the travel document of the foreigner and the presence of Bulgarian visa , if required;

2. The availability of visa for the country / countries that the passenger wish to visit or through which they wish to pass, if needed, in the case of airport transit or transit through the territory of the Republic of Bulgaria.

(2) In cases where an foreigner is refused entry into the Republic of Bulgaria on the basis of default under par. 1, the carrier, transporting the foreigner is obliged at the request of the border control authorities at his own expense to return the passenger to the country from which he departed or to the country which has issued the travel document by which the foreigner has arrived, or in another country which he will be allowed to enter. In case the return can not be done immediately, the costs of stay the alien shall be borne by the carrier.

[/blockquote]

As seen from the quoted regulation, the airline will not only be fined, but will also incur extra costs on returning the passenger to either place of departure or to the place of issue of the visa/passport or to a third country.

Recovering paid fines or appealing the penalty notice by the Air carrier

According to the Bulgarian law, the penalty notice can be appealed in 14 days as of the day of delivery. Normally the delivery will be made to a representative of the airline. This could be also a ground handling company, acting on behalf of the air carrier.It is crucial that the air carrier appoints qualified aviation lawyer in Bulgaria to handle the litigation procedures in the local courts.

Furthermore, any extra costs made by the airline due to of unlawful acts of the Bulgarian Border police, can be recovered in case of successful court appeal.

Should you have an aviation claim in Bulgaria, call our legal team on 00359 52 605 997 or email Mr. Milen Hristov at [email protected]