Many
outsiders who wish to buy property in Bulgaria should intimate a
limited firm to buy land to enable them to be subjected to
corporation tax. Buying a property in Bulgaria should be done through
a limited company and you should pay corporation tax.
Corporation
taxesin Bulgaria
have been being deducted many times by Bulgarian government to
increase the internal investment which presently lies at 15%. It
means while selling a property to extent of profit made will be
counted as profit for your limited company and you will be liable for
15% tax deduction. The profits made from the rental income are taxed
15%, however you may report for specific deduction such as
depreciation, expenses that include repairs, maintenance, renovation
and loan interests that are utilized for property acquirement.
For
even having no business activity in any year, you should file zero
tax return. An accountant will file your return in your
unavailability if you assign a power of attorney to him, additionally
several real estate agents also provide tax return service.
In
Bulgaria 20% VAT is applied which is payable on whole products and
services and imports. Each business with annual income above 25,000
euros is liable to VAT. Buying a personal property, you can relieve
from VAT but if you purchase it by a limited company, VAT will be
added to the cost. If you are buying for the first time, you may not
be interested to file for VAT because your company definitely will
have lower annual income, so can avoid VAT registration in the first
year only if selling price is less than 50,000 lev.
When
you file for selling second property, you should add 20% VAT to your
selling price and then add VAT to rental cost as well. You also open
a special bank account for VAT payment.
The
property taxes are usually of two types: 0.15 % tax on given buying
cost and small levy for garbage management however in some villages,
this is service is not available hence no liability for tax. You have
to pay these taxes at the municipal council office. The agents and
accountants provide property tax payment service.
In
Bulgaria there is negligible or no capital gain tax however in
specific conditions, it is applied by 15%. You should carefully deal
with the sales price of an understating property mentioned in a
contract because it may show small vendor’s tax bill and reduce
your fees but when you file for property sale, it will show as you
have earned a considerable capital gain than made in reality so you
will be liable for tax consequently. Your tax cost may vary on the
base of factors and as per the property such as if you are a resident
or non-resident.
If
you are not a resident of Bulgaria and buy a second property, then
you need to pay 15% on the sale price. So read the sale, buy and tax
instructions carefully on your contract before sign-up to avoid
unnecessary expenses.
