Foreign Investment in Bulgaria

These are the highlights if you want to know more about Foreign Investment in Bulgaria. This entry was drafted by BAZLYANKOV, STANOEV & TASHEV LAW OFFICES, Link to E-Iure Network.

This collaboration is a brief step-by-step guidance. In no case it can be considered as legal advice. If you want -or need – legal advice, ask for a lawyer or a law firm. In that case  BAZLYANKOV, STANOEV & TASHEV LAW OFFICES is an excellent option in Bulgaria.

Introduction

The complete freedom of foreign investments in Bulgaria is an established general rule in the Bulgarian legislation. Going back to the past two decades and further, Bulgarian authorities have encouraged the foreign direct investments by government incentives and maintaining low corporate tax, which has held the flat rate of 10% for the last 10 years. The cheap labour has also been a vital factor that has attracted plenty of companies in the business outsourcing sector, and combined with the wide variety of natural resources, it makes Bulgaria a chosen destination for many investors in environmental, agriculture and other areas. Least, but not last, the acceptance of Bulgaria in the European Union in 2007 not only lead to some legal and administrative alleviation for the investors that came from the implementation of the EU’s legal achievements in the area, but foreign investor can also rely of the fact that REGULATION (EU) No 651/2014 for declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty, is in full force in Bulgaria.

• Provided incentives for the investors and required certifications

Investment Encouragement Act provides regulations about the investing in Bulgaria. The law does not restrict the foreign investment process, although the activities are subject to prior certification. The regulation of the foreign investment projects provides serious encouragement and alleviation for the investing, such as: administrative servicing in shortened terms and individual administrative services; sale of private state or municipal property, as well as sale of public property, without auction or competition at market or lower prices; financial support for construction of elements of the technical infrastructure; financial support for partial reimbursement of the obligatory social security contributions, tax reliefs and others.

Investments must meet different criteria in order to obtain a certificate and to benefit from the encouragements, granted by the state. Those criteria are related to the minimal amount of investments, made by the company, and the work places that shall be opened by it. For municipalities with high unemployment rates the requirements can drop down to opening 10 new work places. The highest requirements are set for the so – called Priority investment projects, which in the general case involve investments of 100 milion BGN (approximately 50 milion euro) and 200 work places.

It is worth highlighting that the Investment Encouragement Act explicitly states that amendments to the legislation that set statutory restrictions on foreign investment do not apply to investment, which were made prior to the amendments, and therefore in that case the legal provisions that were in place at the time of the investment shall continue to be applied.

• Transfer of dividends, interests and royalties abroad

According to the Bulgarian legislation there are no restriction for the transfer of dividends, interest and royalties abroad.

Bilateral tax treaties and double avoidance tax agreements provide withholding of taxes.

• Repatriation procedures and restrictions.

Bulgarian legislation does not apply any repatriation procedures or restrictions.

• Foreign personnel /permits, etc./

EU citizens can be employed in Bulgaria without the need of prior authorization. On the other hand, hiring any other foreign personnel requires residency permits, which can be issued if the employee satisfies exhaustive number of criterias. Bulgarian law does not encourage hiring foreign non – EU citizens in areas with sufficient Bulgarian work staff.