Unpaid council and state tax and the consequences

council and state tax bulgariaWe had few clients who have bought houses in the villages around Varna.  They purchased a house as an impulsive buy and never really had the intention to live in it. After they left for UK, the house was left and never maintained. Often the holiday home buyers don't think about the tax consequences of owning a property abroad. It's not just having a place in the sun.

Obligations of the property owner in Bulgaria

Whether you buy your property in Bulgaria on personal name or through a company, you have to submit a declaration to the local town council. The deadline for submission is two months from the date of the title deed signing. The reason for this declaration is to notify your local town council that you own the property and all taxes and tax notices should be send to you for payment. The address for correspondence in the tax declaration should be a Bulgarian one. Town councils don't send mail abroad.

After the tax declaration is submitted, the council will review it and depending on what type of property you have bought and what details you have declared, they will calculate the annual tax and garbage fee for you.

This is the place to mention the incompetence of some council administrators. We had a recent case where the property in question was named by the builder "building for seasonal use". The building had to be sold as a holiday apartments building and therefore was named 'for seasonal use'. You can't really do much things in Sunny Beach in the winter, can you? However, the the town council asked for double council property tax because according to them the apartment was used for commercial purposes. Despite the explanation that the apartment is not used for rental, the administrator set the tax as double. In this case, a legal appeal of the council tax notice had to be made by a solicitor.

The garbage annual fee is the other financial burden you should be aware of. The amount of the garbage fee depends on what you have declared but also on the area and the type of the property. If it is a commercial property (e.g. warehouse) it's likely your garbage fee to be bigger.

The above two financial obligations of the real estate owner in Bulgaria are the major ones, so bear in mind their payment early each year (normally by the end of March).

A non-financial requirement for people who own property on personal name is to register for Bulsat number in the Bulstat Register. The registration has to be done in 7 days after the property is bought. If you fail to do that, you will be fined.

What happens when you don't pay council tax in Bulgaria

If you don't pay your council financial obligations (council property tax and garbage fee) you will be sued by the town council. Collection of public financial obligations has been made quite easy by the Tax and Insurance Proceedings Code and the Local Tax and Fees Act. There are simplified procedures to get court orders and enforcing the court order can be done either by a public or private bailiff (enforcement agent). Naturally the bailiff will come for your assets in Bulgaria - the property. You will be send notices to your Bulgarian address and if there's no one to receive them, the procedures will progress until the property or inventory of your house is put on public auction.

How you can prevent your property to be put on public auction? Simple, just point in your tax declaration the address of your solicitor as correspondence address with the municipality. This will make sure you get all notices before it's not too late and your solicitor will respond to the notice on time.

How about state tax and other financial obligations?

If you own a property through a company you have to file nil tax declaration (unless your company is trading) and annual return every year.  Missing the deadlines for those two, will bring fines to your company and the following legal consequences for collection of these fines. The money collection will be done in the same manner as described above, so again, make sure you have a solicitor overlooking your company matters in Bulgaria. This is recommended even if your company is not trading.

If your company is trading, you have to mind also the VAT returns obligation (for annual turnover of 50,000 and above) . VAT returns are made monthly in Bulgaria, so missing a return can bring taxman in your company office and you could need again a solicitor to appeal the fines.

We at MH Legal offer solicitor services for overlooking your personal and company matters in Bulgaria. You will never miss a notice or deadline. If you receive one we'll make sure it is responded on time and in a professional manner. Contact us on 00359 52 605997 or email me to milen@mhlegal.eu to get a quote for such services.

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