Official information on property purchases and Condominium ownership in Bulgaria

property information websiteYesterday the Registry Agency announced their official property information webstie. We know very well that foreigners have concerns trusting information over the Internet, as there are many contradictory sources. People often ask in forums and receive 'advice' from other fellow forumers. This is neither professional advice nor a trusted source information.

The goal of the official information property website

As the press release announcement stated, the goal of this property information source is:

..to provide general information and guidance to foreign nationals on the process of acquisition and management of real estate in the Republic of Bulgaria.

The website is created by the Bulgarian government after requests and discussions with few foreign embassies in Bulgaria. I personally have attended a reception organised by the embassies of UK, USA, Ireland and the Consular of Australia in Romania (there is no Australian Embassy in Bulgaria). The consulars have expressed their concern for the lack of official information on the property ownership/acquisition process. It appears that not long after the reception, this website has come true.

'Buying and selling property', 'Property management and 'Тaxes, fees, accounts'

These are the main categories of the property legislation that the website provides information about. The 'Buying ans Selling property' category contains general information about the process of buying and selling of real estate property e.g. necessary documents, needed for the conveyancing, the amount of the fees, the parties should expect, what are the steps after one purchases a property in Bulgaria etc.

The second category is 'Property management'. Here you'll be able to find general information about condominium management regime (don't expect to find any details there), the repair and renovation regulations and the some basic guidelines on how the actual repair and renovation work and what permissions and documents you are expected to obtain before starting with the renovation and repair works.

The last category оn the government property information website is the 'Taxes, fees, accounts'. This sections contains basic information what taxes and fees are likely to incur upon sale, purchase or renovation of your property in Bulgaria. Again, the information provided is just guidelines and there are no details, interpretation or advice for specific cases.

Social impact of the property information website

I sincerely admire the efforts of the Bulgarian government to create something like www.gov.uk (former BusinessLink). Although providing only general property information, it is a good start. The website itself advices:

..the site should not be regarded as a universal tool to provide a solution to the whole range of options, resulting from the acquisition and management of property, or as an alternative to hiring a good lawyer in the process of management of real estate.

I personally see many DIY Brits trying to do complex procedures without any professional legal help and acting solely by reading general information over the Internet. They end up tying themselves in legal requirements, fines, taxes etc. Engaging a solicitor in Bulgaria is as much recommended as it is in the UK.

Official information on property purchases and Condominium ownership in Bulgaria

property information websiteYesterday the Registry Agency announced their official property information webstie. We know very well that foreigners have concerns trusting information over the Internet, as there are many contradictory sources. People often ask in forums and receive 'advice' from other fellow forumers. This is neither professional advice nor a trusted source information.

The goal of the official information property website

As the press release announcement stated, the goal of this property information source is:

..to provide general information and guidance to foreign nationals on the process of acquisition and management of real estate in the Republic of Bulgaria.

The website is created by the Bulgarian government after requests and discussions with few foreign embassies in Bulgaria. I personally have attended a reception organised by the embassies of UK, USA, Ireland and the Consular of Australia in Romania (there is no Australian Embassy in Bulgaria). The consulars have expressed their concern for the lack of official information on the property ownership/acquisition process. It appears that not long after the reception, this website has come true.

'Buying and selling property', 'Property management and 'Тaxes, fees, accounts'

These are the main categories of the property legislation that the website provides information about. The 'Buying ans Selling property' category contains general information about the process of buying and selling of real estate property e.g. necessary documents, needed for the conveyancing, the amount of the fees, the parties should expect, what are the steps after one purchases a property in Bulgaria etc.

The second category is 'Property management'. Here you'll be able to find general information about condominium management regime (don't expect to find any details there), the repair and renovation regulations and the some basic guidelines on how the actual repair and renovation work and what permissions and documents you are expected to obtain before starting with the renovation and repair works.

The last category оn the government property information website is the 'Taxes, fees, accounts'. This sections contains basic information what taxes and fees are likely to incur upon sale, purchase or renovation of your property in Bulgaria. Again, the information provided is just guidelines and there are no details, interpretation or advice for specific cases.

Social impact of the property information website

I sincerely admire the efforts of the Bulgarian government to create something like www.gov.uk (former BusinessLink). Although providing only general property information, it is a good start. The website itself advices:

..the site should not be regarded as a universal tool to provide a solution to the whole range of options, resulting from the acquisition and management of property, or as an alternative to hiring a good lawyer in the process of management of real estate.

I personally see many DIY Brits trying to do complex procedures without any professional legal help and acting solely by reading general information over the Internet. They end up tying themselves in legal requirements, fines, taxes etc. Engaging a solicitor in Bulgaria is as much recommended as it is in the UK.

Rural house in Bulgaria: what to be careful about when you buy one

bulgarian rural village houseRural houses in Bulgaria are tempting both for investment purchase and for retirement life. People consider them so cheap that its not worth the hassle to instruct a solicitor to check whether the property documents are in order or not. Ignorance, however, often can cause troubles when you least expect.

We had few cases where retirement couples have bought such rural village properties and have renovated them. They've spent few years enjoying relaxing life at the country side. But in reality not everything is as they saw it on "A Place in the Sun". When you buy a property overseas, you need to get familiar with the local legislation, concerning renovation, building etc.

A bad example for missing a planning permission

In the above case, the couple listened to neighbour's advise that they don't need any building or planning permissions when they built within the same spot where the old ruined barn was. Basically they have demolished the old barn and 'have built' it from scratch within the borders of the old one. No matter how right this may sound, it is in fact wrong. You will need to obtain a planning permission for any constructions works. Renovation in many cases may also require planning permission.

How does this affect the buyer of a rural house

The first thing to check when you buy rural house is to ask the seller whether there have been any new construction works in the plot or in the house. If there are any, ask for the planning permission documents. If the seller unable provide such, this probably means that the construction works are illegal.

Implications of illegal construction are as bad as you probably think. The construction has to be demolished either by the owner at their own expense or will be enforced by the Directorate of National Construction Control and the expenses for the demolition will be accounted on the owner.

Rural plot problems

Obviously the rural house is located in a plot within the borders of a village. Because of the 1945 nationalisation of all private properties in Bulgaria many rural plots were split, joined and then again split for the purpose of the collective agricultural unions (TKZS). After 1989 the land was returned to the heirs of the initial land owners. This caused many problems with the land plot borders as they have peculiar shapes and curves. When a foreigner buys a rural house, one of the things that also has to be check is the land plot. Make sure your solicitor checks if the seller is the only current owner of the plot and whether there is no some reserved property right left over the property (e.g. agreement for personal care and financial support). If there is some encumbrance on the plot, you either have to solve this issue or just give up buying this village house.

Rural house in Bulgaria: what to be careful about when you buy one

bulgarian rural village houseRural houses in Bulgaria are tempting both for investment purchase and for retirement life. People consider them so cheap that its not worth the hassle to instruct a solicitor to check whether the property documents are in order or not. Ignorance, however, often can cause troubles when you least expect.

We had few cases where retirement couples have bought such rural village properties and have renovated them. They've spent few years enjoying relaxing life at the country side. But in reality not everything is as they saw it on "A Place in the Sun". When you buy a property overseas, you need to get familiar with the local legislation, concerning renovation, building etc.

A bad example for missing a planning permission

In the above case, the couple listened to neighbour's advise that they don't need any building or planning permissions when they built within the same spot where the old ruined barn was. Basically they have demolished the old barn and 'have built' it from scratch within the borders of the old one. No matter how right this may sound, it is in fact wrong. You will need to obtain a planning permission for any constructions works. Renovation in many cases may also require planning permission.

How does this affect the buyer of a rural house

The first thing to check when you buy rural house is to ask the seller whether there have been any new construction works in the plot or in the house. If there are any, ask for the planning permission documents. If the seller unable provide such, this probably means that the construction works are illegal.

Implications of illegal construction are as bad as you probably think. The construction has to be demolished either by the owner at their own expense or will be enforced by the Directorate of National Construction Control and the expenses for the demolition will be accounted on the owner.

Rural plot problems

Obviously the rural house is located in a plot within the borders of a village. Because of the 1945 nationalisation of all private properties in Bulgaria many rural plots were split, joined and then again split for the purpose of the collective agricultural unions (TKZS). After 1989 the land was returned to the heirs of the initial land owners. This caused many problems with the land plot borders as they have peculiar shapes and curves. When a foreigner buys a rural house, one of the things that also has to be check is the land plot. Make sure your solicitor checks if the seller is the only current owner of the plot and whether there is no some reserved property right left over the property (e.g. agreement for personal care and financial support). If there is some encumbrance on the plot, you either have to solve this issue or just give up buying this village house.

Roadworthiness test recognition in another EU member state

MOT, roadworthiness can be done abroadAs solicitors, practising in the road transport sector, we are keen to find out if EU fleet owners can get their roadworthiness test done in a country, different from the country of vehicle registration. This topic is highly discussed among haulage business owners, as they want to minimise time spend on vehicle way back to the home country.

European Court says you can't get MOT done outside your country of licence

Earlier this year, I've wrote about the inconsistency of the EU regulations, where the European Court doesn't recognise as valid MOTs done in another member state. The legal grounds of the court are that the MOTs are derivatives of the operator's licence right. Since the licence is issued from a specific EU member state, the MOTs should be done in the same state. While this is true, looking only at the European legislation, we as solicitors, practising in the area of transportation law, have found a workaround for this contradictory EU regulations.

Roadworthiness test in another country based on UN agreement

Yes, you can get your MOT in another country, but there are limitations. The main and obvious limitation is the vehicle country of registration. There is an international agreement, signed between few countries, which agree on mutual recognition of roadworthiness tests, done in another signatory state - Agreement concerning the Adoption of Uniform Technical Prescriptions for Wheeled Vehicles, Equipment and Parts which can be fitted and /or be used on Wheeled Vehicles and the Conditions for Reciprocal Recognition of Approvals Granted on the Basis of these Prescriptions, of 20 March 1958

Currently 47 countries have signed the aforesaid agreement. However only few have ratified it, meaning that only these countries actually recognise MOTs done in another signatory state. Some of the ratified countries, have made some reservation too. The status of each country can be examined on the UN treaty collection website, 1997 Vienna Treaty reservations and signatory status.

As we can see the European Union itself, has also signed the treaty and has made it's own reservations. I would consider this as the most important one:

  The technical requirements of the UN/ECE regulations [as listed] shall become alternatives to the technical annexes to the relevant separate EC Directives where the latter possess the same scope and where for the regulations separate EC Directives do exist. However, the additional directive provisions, such as those concerning fitting requirements or the approval procedure, remain in force. Where it is clear that UN/ECE regulations differ from the relevant directives, the Community may decide to extricate itself from its reciprocal-recognition obligation in this area by withdrawing from the UN/ECE regulation(s) concerned, in line with article 1 (6) of the Revised Agreement.

This means that the treaty regulations can 'upgrade' EU Directives, where the latter doesn't provide rules in the areas of roadworthiness recognition and specifications. This can be interpreted in different ways, but the topic is highly arguable. On EU level, MOT done in another member state will not be recognised by the member state of vehicle registration, however on international level, the agreement signatories, have to recognise MOTs done in another signatory state.

Roadworthiness test recognition in another EU member state

MOT, roadworthiness can be done abroadAs solicitors, practising in the road transport sector, we are keen to find out if EU fleet owners can get their roadworthiness test done in a country, different from the country of vehicle registration. This topic is highly discussed among haulage business owners, as they want to minimise time spend on vehicle way back to the home country.

European Court says you can't get MOT done outside your country of licence

Earlier this year, I've wrote about the inconsistency of the EU regulations, where the European Court doesn't recognise as valid MOTs done in another member state. The legal grounds of the court are that the MOTs are derivatives of the operator's licence right. Since the licence is issued from a specific EU member state, the MOTs should be done in the same state. While this is true, looking only at the European legislation, we as solicitors, practising in the area of transportation law, have found a workaround for this contradictory EU regulations.

Roadworthiness test in another country based on UN agreement

Yes, you can get your MOT in another country, but there are limitations. The main and obvious limitation is the vehicle country of registration. There is an international agreement, signed between few countries, which agree on mutual recognition of roadworthiness tests, done in another signatory state - Agreement concerning the Adoption of Uniform Technical Prescriptions for Wheeled Vehicles, Equipment and Parts which can be fitted and /or be used on Wheeled Vehicles and the Conditions for Reciprocal Recognition of Approvals Granted on the Basis of these Prescriptions, of 20 March 1958

Currently 47 countries have signed the aforesaid agreement. However only few have ratified it, meaning that only these countries actually recognise MOTs done in another signatory state. Some of the ratified countries, have made some reservation too. The status of each country can be examined on the UN treaty collection website, 1997 Vienna Treaty reservations and signatory status.

As we can see the European Union itself, has also signed the treaty and has made it's own reservations. I would consider this as the most important one:

  The technical requirements of the UN/ECE regulations [as listed] shall become alternatives to the technical annexes to the relevant separate EC Directives where the latter possess the same scope and where for the regulations separate EC Directives do exist. However, the additional directive provisions, such as those concerning fitting requirements or the approval procedure, remain in force. Where it is clear that UN/ECE regulations differ from the relevant directives, the Community may decide to extricate itself from its reciprocal-recognition obligation in this area by withdrawing from the UN/ECE regulation(s) concerned, in line with article 1 (6) of the Revised Agreement.

This means that the treaty regulations can 'upgrade' EU Directives, where the latter doesn't provide rules in the areas of roadworthiness recognition and specifications. This can be interpreted in different ways, but the topic is highly arguable. On EU level, MOT done in another member state will not be recognised by the member state of vehicle registration, however on international level, the agreement signatories, have to recognise MOTs done in another signatory state.

Flagging out to Bulgaria: The successful business model

Flagging Out truck fleets to BulgariaFew years ago, there was a trend in UK to flag out their lorry fleets to the Netherlands. The reasons were different - big vehicle insurance costs and high road taxes, even problems with VOSA itself.

Why Holland is not attractive for lorry fleet owners any more?

The simple reason is that the transport regulations of UK and The Netherlands getting closer and the costs for supporting a Dutch transport company gets quite closer to a UK one. There have been also some bad examples of how haulage flagging out shouldn't be done. I'm giving a link to the Google cache version of the article since Commercial Motor magazine website is currently down. Bad examples from the Dutch practice and the benefits of the Bulgarian legislation (or to be more precise - the lack of it) made us create the perfect truck fleet flagging out business model.

The Bulgarian business model: Flagging out truck fleets

Said in plain words, you can keep your drivers, lorries and business partners and business and just move the administration out to Bulgaria. What does this mean? Here are some practice tips:

  • You can get yearly vehicle insurance for about €1800;
  • No need to pay road tax in Bulgaria, as you will be operating mainly outside the country
  • MOT is done once a year for all vehicles which are less than 10 years old! How does this sound? MOT is as cheap as €140.
  • Easy adjusting to companies with self-employed drivers.
  • Corporation tax of only 10% flat. Dividend tax of 5%.
  • Full and dedicated legal and accounting services to your company
  • You can use your current CPC transport manager. Even more -  you or a person appointed by you can obtain a CPC from Bulgaria.

If you are interested in boosting your profits in the road transport business, do not hesitate and contact us. We can meet you in the UK and discuss how flagging out business model can fit your company best. You can email solicitor Milen Hristov on the following email: milen@mhlegal.eu

Flagging out to Bulgaria: The successful business model

Flagging Out truck fleets to BulgariaFew years ago, there was a trend in UK to flag out their lorry fleets to the Netherlands. The reasons were different - big vehicle insurance costs and high road taxes, even problems with VOSA itself.

Why Holland is not attractive for lorry fleet owners any more?

The simple reason is that the transport regulations of UK and The Netherlands getting closer and the costs for supporting a Dutch transport company gets quite closer to a UK one. There have been also some bad examples of how haulage flagging out shouldn't be done. I'm giving a link to the Google cache version of the article since Commercial Motor magazine website is currently down. Bad examples from the Dutch practice and the benefits of the Bulgarian legislation (or to be more precise - the lack of it) made us create the perfect truck fleet flagging out business model.

The Bulgarian business model: Flagging out truck fleets

Said in plain words, you can keep your drivers, lorries and business partners and business and just move the administration out to Bulgaria. What does this mean? Here are some practice tips:

  • You can get yearly vehicle insurance for about €1800;
  • No need to pay road tax in Bulgaria, as you will be operating mainly outside the country
  • MOT is done once a year for all vehicles which are less than 10 years old! How does this sound? MOT is as cheap as €140.
  • Easy adjusting to companies with self-employed drivers.
  • Corporation tax of only 10% flat. Dividend tax of 5%.
  • Full and dedicated legal and accounting services to your company
  • You can use your current CPC transport manager. Even more -  you or a person appointed by you can obtain a CPC from Bulgaria.

If you are interested in boosting your profits in the road transport business, do not hesitate and contact us. We can meet you in the UK and discuss how flagging out business model can fit your company best. You can email solicitor Milen Hristov on the following email: milen@mhlegal.eu

Running your Bulgarian business remotely

outsourcing to Eastern EuropeDespite the recent bad image of Bulgaria, the country still got its business benefits. It's has the lowest corporation tax in EU, along with Cyprus, but also has the advantage of lowest labour costs. If you consider the EU principle of free movement capitals this makes Bulgaria highly valuable place for outsourcing of company services.

Create and run my business remotely over Internet and using Bulgarian solicitor

Almost anything in  Bulgaria can be done remotely, by using certified Power of attorney.

You can register a limited company remotely, by authorising Bulgarian solicitor, who will deposit the company capital in a local Bank for you and open for your company business current account in any currency you want.

If you require using some foreign banks you can open business current account in the Austrian Raiffeisen Bank or in the Italian UniCredit Bank. Of course you can chose one of the local banks too. Ask your solicitor which one he can recommend, as there are differences in the bureaucracy, each bank applies to its customers.

All banks in Bulgaria provide Internet banking. Some of them offer TAN Codes others - Token devices. However every bank offers the most common way of Internet banking in Bulgaria - the electronic signature verification method.

The electronic signature is device (normally USB), which holds a SIM card with your personal encrypted data. It's encrypted according to the regulations of the Electronic Document and Electronic Signature Act. The electronic signature providers are companies monitored and licensed by the government.

The electronic signature can be obtained for you by your solicitor, using certified Power of Attorney. The signature has to be renewed each year.

Communicating with local and state authorities

If your company trades, it will need to communicate with the local and state authorities such as the National Revenue Agency, National Social Security Institute, the Customs Agency etc.

As indicated above, you don't need to be physically in Bulgaria. All communication with the authorities can be done with a single certified power of attorney, given to your solicitor and accountant.

Your solicitor will take care of your administrative business matters in Bulgaria, whereas your accountant will communicate with NRA, provide the monthly VAT declarations, prepare the annual financial reports, cooperate NRA if there are tax inspections etc.

Your solicitor can organise the customs matters if you are importing goods from outside EU. Varna port is one of the biggest on the Black Sea coast and most of the import trade in Bulgaria goes through this particular port. As  solicitors based in Varna, we are able to provide such legal and administrative services to EU companies who wish to import goods to EU through Bulgaria.

Provision of virtual office and forwarding correspondence

If you will be trading outside Bulgaria and just want to benefit of the favourable tax regime and low administrative costs for supporting a limited company, we can provide a virtual office for you. We offer also correspondence forwarding if you are to receive letters on your business address.

Having your company's solicitor, accountant and business address in one place, you will get a full and instant company service.

Running your Bulgarian business remotely

outsourcing to Eastern EuropeDespite the recent bad image of Bulgaria, the country still got its business benefits. It's has the lowest corporation tax in EU, along with Cyprus, but also has the advantage of lowest labour costs. If you consider the EU principle of free movement capitals this makes Bulgaria highly valuable place for outsourcing of company services.

Create and run my business remotely over Internet and using Bulgarian solicitor

Almost anything in  Bulgaria can be done remotely, by using certified Power of attorney.

You can register a limited company remotely, by authorising Bulgarian solicitor, who will deposit the company capital in a local Bank for you and open for your company business current account in any currency you want.

If you require using some foreign banks you can open business current account in the Austrian Raiffeisen Bank or in the Italian UniCredit Bank. Of course you can chose one of the local banks too. Ask your solicitor which one he can recommend, as there are differences in the bureaucracy, each bank applies to its customers.

All banks in Bulgaria provide Internet banking. Some of them offer TAN Codes others - Token devices. However every bank offers the most common way of Internet banking in Bulgaria - the electronic signature verification method.

The electronic signature is device (normally USB), which holds a SIM card with your personal encrypted data. It's encrypted according to the regulations of the Electronic Document and Electronic Signature Act. The electronic signature providers are companies monitored and licensed by the government.

The electronic signature can be obtained for you by your solicitor, using certified Power of Attorney. The signature has to be renewed each year.

Communicating with local and state authorities

If your company trades, it will need to communicate with the local and state authorities such as the National Revenue Agency, National Social Security Institute, the Customs Agency etc.

As indicated above, you don't need to be physically in Bulgaria. All communication with the authorities can be done with a single certified power of attorney, given to your solicitor and accountant.

Your solicitor will take care of your administrative business matters in Bulgaria, whereas your accountant will communicate with NRA, provide the monthly VAT declarations, prepare the annual financial reports, cooperate NRA if there are tax inspections etc.

Your solicitor can organise the customs matters if you are importing goods from outside EU. Varna port is one of the biggest on the Black Sea coast and most of the import trade in Bulgaria goes through this particular port. As  solicitors based in Varna, we are able to provide such legal and administrative services to EU companies who wish to import goods to EU through Bulgaria.

Provision of virtual office and forwarding correspondence

If you will be trading outside Bulgaria and just want to benefit of the favourable tax regime and low administrative costs for supporting a limited company, we can provide a virtual office for you. We offer also correspondence forwarding if you are to receive letters on your business address.

Having your company's solicitor, accountant and business address in one place, you will get a full and instant company service.