Guide to Property Taxes in Bulgaria
Tax Rate on Rental Income |
|||
| Monthly Income | €1,500 | €6,000 | €12,000 |
| Tax Rate | 9% | 9% | 9% |
Nonresidents are generally subject to Bulgarian income tax on income arising from Bulgarian sources, including income derived from real estate situated in Bulgaria. Individuals are taxed separately, and Bulgaria does not provide joint taxation for married couples.
Income Tax
Bulgaria generally applies a flat personal income tax rate of 10%. Nonresidents are subject to Bulgarian taxation on specified Bulgarian-source income.
Rental Income Tax
Rental income from Bulgarian real estate earned by a nonresident individual is generally taxable in Bulgaria at 10%.
For individuals subject to the ordinary rental-income rules, taxable rental income is generally calculated after a 10% statutory expense deduction. This means that the taxable base is generally 90% of gross rental income, resulting in an effective income tax burden of approximately 9% of gross rent.
The method of declaring and paying the tax can depend on whether the rent is paid by a Bulgarian enterprise or self-employed person, which may have withholding and reporting obligations, or by another individual.
An applicable double-tax treaty may affect the final taxation or provide relief from double taxation in the taxpayer's country of residence.
Capital Gains Tax
Capital gains realized by a nonresident individual from the disposal of Bulgarian real estate are generally subject to Bulgarian income tax at 10%, unless an exemption applies.
The taxable gain is generally determined as the positive difference between the property's sale price and its acquisition price, reduced by a 10% statutory expense allowance.
Exemptions
- Disposal of one residential property, provided that the property was held for more than three years before it was sold.
- Disposal of a maximum of two real estate properties, provided that the property was held for more than five years before it was sold.
Capital gains derived from the sale of properties acquired by inheritance are not subject to tax. Capital gains derived from the sale of properties received as gifts are taxed on the gross receipts because the acquisition price of the donation is deemed to be zero.
Value Added Tax (VAT)
The VAT treatment of Bulgarian real estate depends on the type of property and transaction.
The sale of certain land and older buildings may generally be VAT-exempt, while sales of building land and new buildings can be subject to VAT. Long-term residential letting to individuals for residential purposes is generally VAT-exempt.
Short-term accommodation and other commercial uses may be subject to different VAT rules.
Corporate Tax
Income and capital gains by corporations are taxed at a flat rate of 10%. Income-generating expenses are deductible in computing taxable income. Corporate income tax must be remitted on or before 31 March of the succeeding year.
Property Buying Costs and Taxes in Bulgaria
| Transaction Costs | ||
| Who Pays? | ||
| Property Transfer Tax | 0.10% - 3.00% | buyer |
| Legal Fees | 0.50% - 1.00% | buyer |
| Notary Fees | 0.10% - 1.50% | buyer |
| Real Estate Agent's Fee | 1.50% - 2.50% 1.50% - 2.50% |
buyer seller |
| Costs Paid By Buyer | 2.20% - 8.00% | |
| Costs Paid By Seller | 1.50% - 2.50% | |
| ROUNDTRIP TRANSACTION COSTS | 3.70% - 10.50% | |
| Source: Global Property Guide, PWC | ||
Property Holding Tax
Real Estate Tax
Owners are liable to pay real estate tax on their Bulgarian property. The tax base is the assessed value of the property as calculated by the local tax authorities. The tax rates are set by the municipalities where the property is located and may vary between 0.1% and 0.45%.
