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[null,"Prepared By:","Contributors:"]
[null,"Penkov, Markov & Partners","Vladimir Penkov"]
[null,null,"Roman Stoyanov"]
[]
[]
["Lex Mundi Global Foreign Investment Restrictions Guide"]
[]
["Report Generated: 5/1/2025"]
[]
["View your report results on next tab"]

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["Question","Bulgaria"]
["Lex Mundi Global Foreign Investment Restrictions Guide"]
["Please provide a short summary of the Foreign Investment Restrictions adopted by your jurisdiction."," Bulgarian investment legislation introduces the principle of equality between Bulgarian and foreign citizens and entities – investors are treated equally regardless of their nationality. \n It should be noted that corporate tax on the annual tax returns in Bulgaria is set at 10%. The income tax on profits of individuals is also 10%. The withholding tax on dividends and liquidation quotas is 5%. \n In addition, the legislation introduces tax reliefs for foreign investments, which meet certain criteria. Bulgaria does not require any mandatory registration/permit, etc., with regard to foreign investments. \n Licensing regimes are introduced with regard to specific activities, e.g. banking / financial activities, employment intermediaries, gas and electricity supply, wholesale of medicinal products, etc. New licensing regimes may be established only by virtue of law. \n However, the said regimes are applicable to all investors, regardless of their nationality. \n Moreover, foreign entities or individuals may freely establish Bulgarian companies: limited liability, joint-stock, including publically listed joint-stock companies, general partnership, limited partnership, variable capital company and partnership limited by shares. Foreign entities may also establish branches and representative offices in Bulgaria. \n In general, the company incorporation includes execution of incorporation documents, opening a bank account for remittance of registered capital, and registration with the Bulgarian Commercial Register (possibility for online filing). However, due to the recent strict AML/CFT regulations that the local banks apply, the opening of a bank account may be burdensome for some foreign investors and local companies owned by foreign investors. \n Investment projects are promoted under the Investment Promotion Act (\" IPA \" and the Regulations for Application of the Investment Promotion Act (\" RIPA \") and investors can obtain certificates for their investment. Depending on the size of the investment and employment created, four types of certificates are issued: \n \n Certificate for the investment project - class \"A\" \n Certificate for the investment project - class \"B\" \n Certificate for the investment project - class \"C\" – for municipal projects \n Certificate for \"Priority Investment Project\", \n \n Investment certificates are issued by the Minister of Innovation and Growth at the proposal of the Executive Director of the Bulgarian Investment Agency – is a specific governmental organization, established to attract investment to Bulgaria. \n The different types of certificates allow an investor to benefit from the various incentive measures and incentives: \n For Class A and Class B investments: \n \n Shortened deadlines for administrative services (for Class A and Class B); \n Individual administrative services (for class A); \n Acquisition of ownership or limited real rights over properties without auction or competition (for class A and class B); \n Financial support for the construction of elements of the technical infrastructure (for class A or for 2 class B projects in an industrial area); \n Financial support for training for acquiring professional qualification, for those who have taken the new jobs (only for investments in high-tech activities or in municipalities with high unemployment - for class A and class B). \n Financial support for partial reimbursement of the mandatory social security contributions made by the investor at his expense, as an employer, for the additional mandatory pension insurance and for the compulsory health insurance for the newly appointed workers and employees for the implementation of the investment project (for class A and class B). \n \n For class C investments: \n \n Shortened terms for administrative services provided by the municipality on whose territory the investment is carried out; \n Individual administrative services provided by the municipality on whose territory the investment is carried out; \n Acquisition of ownership or limited real rights over properties – private municipal property, without auction or competition (the measure applies if it is not requested by an investor when issuing a certificate for investment class A, class B or for a priority investment project for the same property). \n \n 3.3. Priority investment projects are promoted with the first four incentive measures for Class A and B and with the following 4-5 additional incentives: \n \n Institutional support through the establishment of the interdepartmental working group for administrative assistance, in a composition determined by a decision of the Council of Ministers; \n A public-private partnership with districts and municipalities, with organizations from the academic community, etc.; \n The granting of the right of use or ownership of real estate for priority projects may be at prices lower than the market (but not lower than the tax assessment) and with exemption from state fees upon change of land use. \n Opportunity to provide grants for investments in the manufacturing industry and in education and research. \n \n Financial assistance for specific periods of time can be granted for jobs created for unemployed persons, persons with disabilities, single parents, as well as with the aim to maintain and upgrade the skills of employees, etc. \n Bulgarian legislation provides a broad scope of options for private participation in carrying out activities in the public interest. \n One of the traditional forms of public-private partnership in Bulgaria is the concession. The following types of concessions are regulated by the law: work concession, service concession, and mining concession/for extraction of natural resources/mineral water. \n In addition, the legislation regulates three types of public procurement - supply of goods, provision of services and carrying out of public works. Bulgarian legislation is compliant with the general principles of EU law: transparency, equality, avoidance of discrimination and free and loyal competition. Public procurement procedures above certain value thresholds are published on the Tenders Electronic Daily (\" TED \") database. \n Foreigners and foreign entities are generally able to acquire ownership of buildings and limited property rights over real estate in the country. Where provided for in an international treaty, foreign citizens and foreign legal entities may acquire ownership of land, including agricultural and forest land. In general, foreigners may also inherit real estate. However, except when otherwise specified in the relevant international treaty, they are required within three years to transfer the title overland to a Bulgarian citizen / legal entity. Yet, foreigners or foreign entities may acquire any real estate, including land, by registering a Bulgarian company (indirect acquisition), where such a company may have 100 percent foreign participation. Foreigners can also acquire share participation in existing Bulgarian company which has title to real estate, as well as to acquire real estate property through the Bulgarian company. However, those eligible to acquire the right of ownership over agricultural lands are persons who have resided in Bulgaria for more than 5 years, respectively legal entities established in the country for more than 5 years. Legal entities with registrations under Bulgarian law of fewer than 5 years may acquire the right of ownership over agricultural lands if the partners/members in the company reside in the country for more than 5 years. \n EU citizens do not need a visa to stay in Bulgaria. Third-country nationals may reside in Bulgaria for short-term periods (90 days from the date of entry), continuous stay (1 year), long-term (with an initial authorized period of 5 years and renewable) and permanently – for an indefinite period. Third-country nationals who have received a certificate for class investment/priority investment projects are entitled to obtain permanent resident status. "]
["Is your regime focused on economic protectionism, national security, or a combination?","The Bulgarian regime aims at investment promotion. The \nInvestment Promotion Act in effect applies the principle of protection of investments. Moreover, the country aims to enhance the competitiveness of the Bulgarian economy through the increase of investments in scientific research, innovations and technological development in high value-added products and services respecting the principles of sustainable development; to improve the investment climate and to tackle regional disparities in social and economic development; as well as to create new and highly productive jobs.\nThe only restriction with regard to foreigners is related to the acquisition of rights \nin rem, as noted above, which could be overcome when the acquisition is made through a company, registered in Bulgaria under the control of the respective foreign national.\n"]
["Who is considered a \"foreign investor\" and are only investments from particular countries covered?","Bulgaria does not differentiate investors on the basis of their nationality.\nHowever, some of the activities focused on investment promotion apply only to investments, that were categorized as Class A, Class B, Class C, or Priority Project (thresholds apply), regardless of the investor’s nationality.\n"]
["What sectors are subject to Foreign Investment Restrictions screening?","Currently, Bulgaria is in the process of implementing the provisions of \nRegulation (EU) 2019/452 establishing a framework for the screening of foreign direct investments into the Union. The draft bill, which is adopted on the first hearing envisages several categories of business activities, which fall into the scope of \nArticle 4, item 1 of the said Regulation, the performance of which requires a prior permit by a new authority - Interagency Screening Board. Such activities could be connected with critical infrastructure, whether physical or virtual, including energy, transport, water, health, communications, media, data processing or storage, aerospace, defense, electoral or financial infrastructure, and sensitive facilities, as well as land and real estate crucial for the use of such infrastructure. \n"]
["What are the relevant thresholds?","The threshold, envisaged in the draft bill is EUR 1,000,000, or the equivalent in BGN. \n"]
["Is notification under Foreign Investment Restriction rules mandatory?","The draft bill envisages that а foreign direct investment is performed after the issuance of a permit from the Interagency Screening Board. Any investor who wishes to perform foreign direct investment has to file an application with the Investment Agency which administrates that application for the Interagency Screening Board.\n"]
["Is the relevant authority's approval required prior to closing?","Yes. \n"]
["What was the impact of COVID-19 on your foreign investment regime?","The impact of COVID-19 and the restrictive measures of the local authorities in this regard did not have any substantial effect on the foreign investment regime.\n"]
["How active has your agency been in reviewing, delaying, modifying or blocking foreign investments?","In light of the above specifics of the legal regime, the authorities are not entitled to undertake any actions related to the delaying, modifying or blocking of foreign investments.\nWith respect to the reviewing of documentation related, for instance, to the obtainment of different investment certificates, the Investment Agency (to our knowledge) has been relatively active in the past years, considering the large number of certified investments (in 2022, 31 projects received a certificate, total valued at BGN 1.220 billion).\nHowever, it is yet to be seen how the Interagency Screening Board will act as regards the FDI screening in the country.\n"]
["On what grounds can enforcers review and block a foreign investment? How active have they been in the past 6 months?","The legislation currently in force does not foresee grounds (legal provisions) entitling the authorities to block foreign investments.\n"]
["Do you expect any regulatory developments over the next 6 months?","In the next months, we expect the adoption of respective supplements to the \nInvestment Promotion Act for introducing the requirements of the \nRegulation (EU) 2019/452 establishing a framework for the screening of foreign direct investments into the Union.\nRecently, the Bulgarian government announced plans to introduce a 15% profit tax for large multinational companies that operate on the territory of the country, expected to happen from the beginning of 2024, according to the medium-term budget forecast of the Ministry of Finance. The additional levy is in line with the initiative of the OECD and the European Union for a minimum corporate tax on multinationals.\nSubjected to this rate of tax will be companies with revenues over 800 million Euro in Bulgaria for the respective year, which are “multinational according to certain criteria”, most probably the big retailers and from the banking sector.\nAdditionally, the Bulgarian Parliament put an end to the so-called “golden passports”, after changes to the \nBulgarian Citizenship Act entered into force in 2022, which repealed the possibility of acquiring citizenship against an investment. Thus, the option of obtaining a Bulgarian passport for purchased government securities over BGN 1 million or a deposit above this amount is no longer available.\nAmong the changes, it is planned that the National Security State Agency will perform checks for the existence of grounds for the cancellation of naturalization in all files for acquiring Bulgarian citizenship. Information about the results from the inspection has to be presented to the Minister of Justice, who in turn will have to make the final decision for revoking the “golden passports”, where grounds for this are at hand. So far, there is information about more than 20 “golden passports” invalidated.\n"]