Implications of selling a Bulgarian house

@grumpyoldbird

I cannot say iv ever thought about it to be honest.. I thought I'd just pop my clogs in Bulgaria and the missus would inherit everything lol

But certainly sounds complicated that's for sure..  strange thing for someone you though

Goodness me!

Not something I'd thought off, but it sounds believable. The company asset is a house, the house has had improvements made, if sold it would hopefully sell for more than it was purchased for. I know my company is permitted to trade but seems to be listed on the companies register as a not-for-profit. Not something I asked for or knew about, but when I checked the company paperwork recently I noticed it. No idea how that would affect things.

Good thing for me that I don't intend to sell my main house that's having money spent on it, and if I do sell the old house, it would be at a loss, or certainly no more than the listed tax value. Has me wondering if someone intending to do up a property to sell (not something I think is a good investment strategy in Bg!) should be doing something with our annual company accounts to reflect the spend and the increased value of the company asset.

It does seem something you'd want to look into and get advice from someone who knows Bulgarian tax law. I'm assuming if you buy the dog rescue, the company is actually set up and a charity, which might affect things, too. If you and your friend are buying together and one might want to buy the other out, I wonder if the simple answer would be transferring shares in the company rather than selling the house? That could also have tax implications but I suspect less complicated.

This could be something affecting the current owners of the property as I'm guessing they sank a lot of money into it so will be selling for quite a bit more than the property originally cost them. If they're selling it as a company asset rather than as their personal property, it sounds like they need to get reliable and trustworthy legal and or accountant advice. And hopefully they won't try to pass the cost of any taxes etc on to you! 

It sounds about right, although a bit alarmist. I don't think many are affected by it.

Your company can trade if you want, but having it as a non-trading holding company (of house / properties / cars) leads to simpler/quicker/cheaper annual accounts.

From what I read permanent residence exempts you from company requirement. My attorney agrees, as does the Razlog notary I asked. But my local Stara Zagora one said no. But I would suggest looking into transferring into your personal name once you have PR.

@gwynj

I new you would be the one to shed some light on this subject.  Thanks gwynj.. 

Happy new year

Hello,

Few  notes:

RE: VAT registration:

Selling a house will not necessary involve VAT registration. Under VAT registration are the sales of buildings/houses/apartments that are “new” – less than 5 years from Act 16 or so-called “permission for use”. However the land under the building is under VAT registration regime (no matter how old is the house). In that case my practice is to divide the cost of the land and the building, as the land is lower than the VAT threshold. It is allowed by law.

The VAT registration threshold is 100,000 (since 1st Jan 2023) and 166,000 BGN (from 1st Jan 2025)

RE: selling the house to the shareholder (British citizen).

Since UK left EU that is not possible any more. The is the opinion of the soclititor I work with (I am accountant).

RE: selling property as individual with no tax.

If your permanent address was the same as the property for sale and the property is house/apartment (used for living purposes) the property can be sold after owning it for 3 years. If it was not the resident address – 5 years.

RE: dormant companies used for property purchase.

The companies that has no incomes and expenses (or less that 500 BGN per year) do not need to submitted the same documents as the trading companies. There is one time submission of declaration for none-activity in the Commercial Register and the National Statistical Institute (submitted till 30th June for the activity/none activity in the previous year). The following year – nothing is submitted. Until the company starts activity, sale/buy an asset (property or other). So after the first year there are practically no expenses to maintain such company (accept the document in the first year) as they will not require accounting or legal services.

Assuming a company acquires a property, the process looks like this:

1/ First year – Declaration in the National Revenue Agency (till 30th June for the previous financial year); Declaration in the National Statistical Institute (till 30th June for the previous financial year); Balance sheets in the Commercial register.

2/ Second year - Declaration for none-activity in the Commercial Register (till 30th June for the previous financial year); Declaration for none-activity in the National Statistical Institute (till 30th June for the previous financial year)

3/ Third and following years – NOTHING.

@Hristo Marinov

Thank you Hristo, that's very helpful.....and reassuring 🙂

@Hristo Marinov

Thanks so much! That is super helpful! Also explains why when I bought the house the agent (who owned the property) divided the sale price into land value and house value.

@Hristo Marinov  thank you.  This backs up what I have been reading.  Many thanks,  James.