Utilities in Bulgaria

Gas supply in Bulgaria

Bulgaria imports nearly all its gas from Russia. The network is limited but expanding, with the cost of piped gas lower than that of electricity. In rural areas some people still use gas bottles for heating and cooking purposes. Bottles can be purchased and refilled at petrol stations, or delivered directly from the suppliers.

As with electricity bills, you should ensure all existing bills are paid before completion of your property deal. To register a new name on the bills, the same general guidelines obtain as for electricity.

Bank accounts in Bulgaria

Most people buying property in Bulgaria use the services of the bank that the estate agent recommends. Agents obviously would prefer to work with a particular bank that might be located near their offices or with which they have a good working relationship. However,you might wish to shop around.There are many banks to choose from, and prices vary for each of the services offered. It is worth checking these charges to see which services you intend to use-Internet banking, foreign transactions and soon. If you plan on transferring a large sum of money during the purchase of a property, you may be able to reduce the related bank charges by opening an account with the same bank as the seller and executing an internal transfer.

Employment Income in Bulgaria

For an employee it is your employer’s responsibility to deduct and pay your income tax to the government each month (similar to the PAYE scheme in the UK).They are also responsible for paying the Bulgarian equivalent of your social security and National Insurance contributions.

Income tax is calculated according to what rate-band your income falls into, and then is subject to a percentage tax plus a fixed figure tax. Examples of the tax rates and fixed rate taxes for income tax payable on employment income in 2007 are shown in the tables below:

Other Taxes in Bulgaria

In Bulgaria the issue of taxation is made more complicated by the fact that many foreign owners of property can own it either as individuals or through a company. This means that it is necessary to examine the tax implications for both cases. The matter is further complicated if buying as an individual, because your tax base will be dependent on your tax residence. Therefore below we have divided the discussion concerning tax into three sections:

• Other taxes payable in Bulgaria by non-resident individuals.
• Other taxes payable in Bulgaria by resident individuals.
• Other taxes payable by companies.

Value Added Tax in Bulgaria

The current rate of VAT in Bulgaria is 20 per cent. If you buy a property as an individual or as a company from a VAT-registered company,you will have to pay 20 per cent VAT. The seller then passes on this VAT to the government.

VAT Registration
Companies are obliged to register for VAT if the value of their sales is equal to or exceeds 50,000 leva (around €25,500) in any period not exceeding 12 months. You can also choose to register for VAT even if you have no revenue at the time of registration.

Taxes Payable in Bulgaria

A lot of people who live in Bulgaria and who are legally obliged to pay tax there simply do not do so. A lot of people who do not live in Bulgaria but who are obliged to pay taxes to the Bulgarian government because they have, for example, let out their home in Bulgaria also do not pay tax to the government in Bulgaria. If they do not pay taxes in Bulgaria they usually also fail to pay the taxes they owe in Britain or wherever else they live.

Bulgarian Residency for Tax Purposes

The biggest single factor in determining how you will be treated by the tax authorities in any country is whether you are resident in the country for tax purposes. This concept of tax residence causes a great deal of confusion and can have different meanings in different countries.

Taxation in Bulgaria and Bulgarian properties taxation

All tax systems are complicated, and the Bulgarian system is no exception. Fortunately, most people will only have limited contact with the more intricate parts of it. Many owners of holiday homes in Bulgaria only have minimal contact with the system.

It is helpful to have some sort of understanding about the way in which the system works and the taxes that you might face. You also need to be particularly careful about words and concepts that seem familiar to you but which have a fundamentally different meaning in Bulgaria from in Britain.

Types of Bulgarian properties

When buying an old property – built more than about 50 years ago:
• Are you having a survey? Not to do so can be an expensive mistake.
• Are you clear about any restoration costs to be incurred? Do you have estimates for those costs?
• Are there any planning problems associated with any alterations or improvements you want to make to the property?

After the Purchase of your Bulgarian property

There are also a number of practical issues you will need to address, such as changing the water and electricity accounts from the previous owner’s name to your name. Changing the locks and securing the Bulgarian property if you are not going to live there, arranging for direct debits with the bank for the water and the electricity to be paid, insuring the property in Bulgaria and its contents, and so forth.