Problems for Buyers Having Properties in Bulgaria

In the near past many foreign citizens have established Bulgarian limited companies only for the purpose of owning a land. As result the main role of the companies is “just to own the land”; they do not have any business activity and usually have been established with minimum capital. By law the companies are separate legal persons from their owners and have a couple public obligations, including submitting an annual tax return in the local tax office and publishing the annual financial report at the Commercial register. For that purpose the buyers need to use the services of local accountants and lawyers who must consult and support them for fulfilling of all the obligations.

However, it appears that most of the buyers actually have no idea what is happening with their companies and are not in contact with Bulgarian accountants/lawyers after purchasing the land and establishing the companies. They are thinking that as the company has no activity it is not necessary to pay additional costs for accountants, lawyers, state fees. It is a fact that many people have no any accountancy and tax documents for their companies, they do not know, for example, if the company has been submitted the tax return for the prior financial year or if the annual property tax fee has been paid. Respectively, when they decide to close the companies and to transfer the properties included in it, it occurs that they have big tax obligations and must be fined. But as they do not live in Bulgaria and usually have no local contact person for communication and delivering of official messages, sometimes the local tax offices initiate an executive procedure against the properties owning by the companies as it is the only way to receive any amounts from such companies. Of course, it is the worst scenario that may happen, but the foreign people have to know that they have duties to their companies and to the state.

In order to avoid the above listed problems we would like to advise all foreign buyers who have been purchasing a land in Bulgaria through limited companies to collect all relevant financial (tax and accounting) documents for their companies, to be in contact with local professionals who are able to advise them correctly and accordingly and to care about keeping the respective obligations. Otherwise, they will not be able to close down the companies (with liquidation), they risk to be subject of revision by the National Revenue Agency for non fulfilment of obligatory obligations.

This article is provided by “Valova & Angelova” Law firm