1. First of all, the buyer signs a preliminary contract for the purchase of the estate and pays the owner 10% of the total purchase price as a down payment. This gives the owner time and security to get the necessary documents needed to sign the Title Deed before a Notary Public.
2. After about a month the buyer pays the remaining 90% of the purchase price and obtains a Title Deed for the ownership over the estate.

All potential buyers should be aware that all dealings with real estates in Bulgaria MUST be done before a NOTARY PUBLIC.
In many cases apartments also come with some proportional ownership (co-ownership) over the land on which the building is erected, which has its own complications.

The expenses on the deal are: 2% State tax (something similar to a stamp duty, to be calculated on the purchase price), Notary fee (which is calculated in accordance with the price stated in the Title Deed, but usually for a one or two-bedroom apartment would be approx. 650 BGL or 325 Euros), fee for inscription in the Land Registry (0,1% of the value) and legal fees.

An example: if the property costs €50 000 all these fees (except legal fees) would come to nearly €1300, for a deal where the property costs €100 000 they are around €2400 and for a deal where the property costs €200 000 they would be around €4500. The usual practice is (at least when the deal is between two Bulgarians) that these expenses are covered 50/50 by both parties. Nowadays, it is a subject of an agreement between the vendor and the buyer.


Things to be aware of:
 
It is QUITE LIKELY that the owner will NOT want to declare the real price of the property on the Deed of Transfer. This is done for the owner to AVOID paying CAPITAL GAINS TAX (which would be approx. 30% of the real purchase price). You might end up in a situation where the owner proposes that either you pay the market value BUT get an official document (Title Deed) stating a far lower price or you do not have a deal. Usually, we recommend that this should be EXPLICITLY agreed in writing before the signing of any document, but if your situation comes to such a dead-end, you should know that having a Title Deed with a lower price does not invalidate your deal. However, such a situation has its financial consequences, such as not having official documents for the money spent and higher taxes if you decide to sell the property afterwards on its real value. Please, consult with your broker/lawyer every aspect of the deal for to avoid any misrepresentation and misunderstanding at a later stage.


Setting up a company

The two most popular legal forms for carrying out business in Bulgaria are a joint stock company (AD) and a limited liability company (OOD), though the law also provides for: sole trader operations (ET), joint ventures, branches, holdings, cooperatives, and representative offices. They all have to be registered with the district court, which is a process that usually takes 2 or 3 weeks, though courts do tend to have some very long holidays!

The first two restrict the liability of the shareholders to the amount of their share in the capital of the company, which means that the AD and OOD are the most preferred forms for doing business by both locals and foreigners.

Whilst in an OOD the shares are attributed to individuals and can only be transferred with a court decision and by entering in the Commercial Register, the shares of an AD are not individually named and can be sold or transferred without informing the court. An AD may issue registered, bearer's and preference shares. Both paper-backed and book-entry shares may be issued. The AD company ensures the anonymity of shareholders and allows for raising funds through issuance of bonds or shares on the stock exchange. An AD is managed by the general meeting of shareholders, and the board of directors or supervisory board and management board.

An OOD's annual financial statements need not be audited by a CPA unless the company happens to meets certain requirements under the Bulgarian Accountancy Act, whereas all ADs have to have their annual financial statements audited by a CPA.

Individuals can also establish both types of companies. In these cases the one-man limited liability company is called an EOOD and the one-man joint stock company is called an EAD. EOODs and EADs are regarded as local legal entities even when the sole owner of the capital is a foreign physical or legal person. These forms are widely used by foreigners to acquire ownership over land in Bulgaria, since foreign individuals are not allowed to own land at present.

In any of these cases you should use a reputable law firm to handle the whole process for you, from choosing the company name to registering the company with the court and all the subsequent compulsory registrations with tax authorities, National Insurance Institute, etc., all of which have to be done within strict deadlines and carry hefty fines if they are not adhered to!

There are many legal firms with excellent reputations and most now speak the major European languages so finding one should not be a problem.


In short the process for setting up a company is as follows:

· Check the company name is free and reserve it;
· Produce Articles of Association;
· Pay in to the bank at least 70% of the obligatory company capital for an OOD (the total capital being 5000 levs); or 25% for an AD (the total capital being 50,000 levs);
· Submit the application to form the company together with the proof you have paid the capital to the district court;
· The company becomes active when it is published in the State Gazette (2 or 3 weeks later);
· Registration with the National Statistical Institute to receive a BULSTAT identification number must be done within 14 days;
· Registration with the National Insurance Institute (NOI) within 7 days;
· Registration with the local tax authority must be done within 14 days;
· Any bank accounts that are opened in the company name must also be registered with the tax authority within 14 days.