Taxes, Costs, and Regulations: What a Foreigner Needs to Know When Buying Property in Bulgaria

As of November 15, 2025, Bulgaria continues to captivate foreign property buyers with its EU membership, diverse landscapes, and affordable real estate. The National Statistical Institute (NSI) reports a 12% year-on-year increase in foreign transactions in the first three quarters of 2025, with non-EU buyers from Poland, the UK, the US, and Germany leading the surge. Average apartment prices hover at €1,200–€2,500 per square meter in prime areas like Sofia, Varna, and Sunny Beach, while rural houses with land can be acquired for €50,000–€150,000. Rental yields average 5–8%, bolstered by tourism recovery and remote work trends.

1. Regulatory Framework: Key Restrictions and Pathways

1.1 Ownership Restrictions

Bulgaria’s Constitution Art. 22 prohibits non-EU/EEA foreigners from directly owning land. This includes standalone houses, villas, agricultural plots, or any property where land is not held in proportional co-ownership (e.g., apartments in multi-unit buildings).

• EU/EEA Citizens: Full rights, equivalent to Bulgarians, under EU free movement of capital (TFEU Art. 63).
• Non-EU Citizens:
  • Direct Ownership Allowed: Apartments, commercial units in condominiums (COA Art. 3—land as “ideal parts”).
  • Restricted: Land or houses with plots—requires establishing a Bulgarian limited liability company (OOD) as owner.
• Exceptions: Inheritance (must sell within 3 years unless residency obtained), long-term leases (up to 99 years), or residency via investment (€511,292 in bonds or business creating 10 jobs—Investment Promotion Act 2024).

1.2 Anti-Money Laundering (MAMLA) and Due Diligence

• MAMLA (SG 27/2024 amendment): Transactions over BGN 30,000 (~€15,340) require source-of-funds declaration. Notaries and banks report to the State Agency for National Security (SANS).
• Beneficial Owner Register: Foreigners must disclose ultimate beneficial owners (UBO) for company purchases.
• Regulatory Bodies:
  • Registry Agency: Oversees Commercial and Property Registers.
  • Cadastre Agency: Manages land surveys and sketches.
• 2025 Update: Digital Cadastre 2.0 mandates QR-coded certificates for all properties, reducing fraud.

1.3 Zoning and Building Regulations

• Spatial Development Act (SDA): Properties must comply with zoning plans. Coastal areas restrict high-rises; mountains require environmental impact assessments.
• Energy Performance Certificate (EPC): Mandatory for all sales (Energy Efficiency Act). Class A/B properties qualify for 50% property tax rebates from 2026.
• Illegal Constructions: Common in rural areas (20% of stock per 2024 audits). Obtain Certificate of Tolerance (CPRA Art. 66) or demolish.

2. Acquisition Costs: Breaking Down the Transaction

Total closing costs average 3–6% of purchase price, lower than Western Europe (7–12%).

2.1 Core Fees and Taxes

• Tax Assessment Value: 50–70% of market price, set by municipality—reduces fees.
• Off-Plan Purchases: Additional bank guarantee fee (1% of price).

2.2 Professional Services

• Real Estate Agent: 3% commission (split buyer/seller; NREA-regulated).
• Lawyer: €800–€1,500 (due diligence, contracts).
• Translator/Interpreter: €150–€300 (certified for non-Bulgarian speakers).
• Technical Inspection: €200–€500 (structural survey).
• Bank Fees: €25–€50 for transfers; escrow €200–€400.

2.3 Company Setup for Non-EU Land Purchases

• OOD Registration: €500–€1,000 (lawyer + fees).
  • Minimum capital: BGN 2 (€1).
  • Timeline: 5–10 days (digital).
• Annual Maintenance: €300–€500 (accounting, filings).

2.4 Financing Costs

• Mortgages: Available to EU residents (70% LTV) or non-EU via OOD (60% LTV).
  • Interest: 3.5–4.8% (fixed 5-year).
  • Arrangement Fee: 1–1.5% of loan.
  • Valuation: €300–€500.
• Non-Resident Challenges: Higher rates (+0.5–1%); proof of income required.

Total Example for €200,000 House with Land (Non-EU via OOD): €8,000–€12,000 (4–6%).

3. Ownership Taxes: Annual and Operational Burdens

Ownership costs are minimal, enhancing appeal.

3.1 Annual Property Tax (LTFA)

• Rate: 0.01–0.45% of tax assessment value (municipal; e.g., Sofia 0.25%).
• Payment: By June 30 (5% discount if before March 31).
• Exemptions: Primary residences (partial); green buildings (50% rebate from 2026).
• Example: €150,000 apartment (tax value €90,000) → €225/year.

3.2 Garbage Fee

• Rate: 0.15–0.8% of tax value (municipal).
• Example: €135/year for above.

3.3 Utilities and HOA

• Utilities: Electricity €0.12/kWh, water €1.50/m³, heating €50–€100/month (district).
• HOA Fees: €5–€15/m²/year (condominiums; covers maintenance).
• Insurance: €150–€400/year (recommended, not mandatory).

3.4 Company-Specific (Non-EU)

• Corporate Income Tax (CITA): 10% on profits (nil if dormant).
• Annual Filings: €40–€100.

4. Rental Income: Taxes and Regulations

Bulgaria’s tourism (2.5 million arrivals Q1–Q3 2025) drives rentals.

4.1 Licensing

• Short-Term (Airbnb): Register with municipality (€50); tourist tax €0.30–€1/person/night.
• Long-Term: No license; standard lease (OCA).

4.2 Taxation

• Individuals (Direct Owners):
  • Flat Tax: 10% on net income (expenses deductible: maintenance, depreciation 4%).
  • VAT: Exempt for residential < BGN 100,000 turnover.
• Via OOD: 10% CIT on profits; 5% dividend withholding (reduced by treaties, e.g., Poland-Bulgaria: 10%).
• Non-Resident Withholding: 10% on gross rent if no Bulgarian tax return filed.
• Declaration: Annual by April 30; e-filing via NRA portal.

4.3 Yields and Deductions

• Gross Yields: 5.2% Sofia, 7.8% Sunny Beach.
• Net After Tax: 4–6.5% (post-deductions).
• 2025 Incentive: 20% deduction for energy upgrades.

5. Resale: Capital Gains and Exit Costs

5.1 Capital Gains Tax (Individuals)

• Rate: 10% on profit (sale price – acquisition cost – improvements – inflation index).
• Exemptions: Primary residence held 3+ years; one property every 5 years.
• Non-Residents: Withheld by notary (10% on gross if no return).

5.2 OOD Resale

• CIT: 10% on gain.
• Share Sale Alternative: Sell OOD shares—0% CGT if held 3+ years (individuals).

5.3 Exit Fees

• Agent: 3%.
• Notary/Transfer: Same as acquisition (3–4%).
• Example Gain: Buy €150,000, sell €200,000 after 4 years → €5,000 tax (10% on €50,000).

6. Inheritance and Succession: Planning for the Future

6.1 Inheritance Rules (Inheritance Act)

• Forced Heirship: Spouses/children entitled to 50–66% (regardless of will).
• Non-EU: Can inherit land but must sell within 3 years (or via OOD).
• Tax: 0.4–0.8% for close relatives; 5–6.7% for others (on tax value).

6.2 Estate Planning

• Will: Notarized (€50); holographic accepted.
• OOD Advantage: Transfer shares via will or gift (5% gift tax for non-relatives).
• International: Brussels IV Regulation (EU) allows choice of law; non-EU use Hague Convention.

6.3 Probate

• Timeline: 6–12 months.
• Costs: 1–2% of estate.

7. Special Considerations for Polish Buyers (2025)

As a Polish citizen (EU), you enjoy unrestricted ownership. Key perks:

• Poland-Bulgaria Tax Treaty (1993): Credit Bulgarian taxes against Polish PIT; 10% withholding on dividends/rent.
• Cross-Border Financing: Polish banks (e.g., PKO BP) offer mortgages for Bulgarian properties.
• Proximity: 2-hour flights from Warsaw to Sofia; Hemus Motorway (2026) enhances access.
• Popular Areas: Sunny Beach (Polish buyers up 15% YoY); Bansko for skiing.
• Visa-Free: Unlimited stays; residency via property if needed.

8. Risk Mitigation and Best Practices

8.1 Common Pitfalls

• Overpaying Taxes: Use tax value, not market.
• Non-Compliance: Fines €500–€5,000 (MAMLA violations).
• Currency: Prices in EUR; pay in BGN to avoid losses (BNB rate).

8.2 Strategies

• Engage Professionals: NREA agent, Bar lawyer, NRA-registered accountant.
• Due Diligence Package: €500–€1,000 for full checks.
• Green Investments: EU subsidies (€10,000–€50,000) for retrofits.
• Diversification: Mix apartment (direct) + house (OOD) for portfolio.

8.3 2025 Legislative Updates

• Digital Tax Filing: Mandatory e-services from January 2026.
• Property Tax Hike: Proposed 0.05% increase in coastal municipalities (pending).
• VAT Threshold Raise: BGN 100,000 (from 50,000) for small rentals.

9. Case Studies: Real-World Applications

Case 1: Polish EU Buyer – Sofia Apartment (€180,000)

• Acquisition: €4,500 costs (2.5%).
• Annual: €300 tax + €200 garbage.
• Rental: 6% yield; 10% tax on €7,200 net → €720 paid.
• Resale (5 years, +30%): €5,400 CGT.

Case 2: Non-EU (e.g., UK) – Bansko Chalet with Land (€220,000 via OOD)

• Setup + Acquisition: €10,500 (4.8%).
• Annual: €400 property tax + €400 OOD maintenance.
• Sale (via shares): 0% CGT if held 3+ years.

Affordable, Transparent, and Investor-Friendly

Bulgaria’s tax and regulatory regime is low-burden, EU-aligned, and foreigner-accessible. Acquisition costs under 6%, annual taxes below 0.5%, and flat 10% income rates make it competitive. For non-EU buyers, the OOD adds minor overhead but unlocks full potential. Polish investors benefit from treaty protections and proximity.

Success hinges on preparation: Budget 4–7% extras, comply with MAMLA, and leverage digital tools. Whether a Varna sea-view flat or Rhodope eco-plot, Bulgaria offers value—consult professionals to minimize risks and maximize returns. In 2025’s converging Europe, your Bulgarian property is a smart fiscal play.