Property purchase tax in Bulgaria – stamp duty, notary fees, VAT, council tax and other costs and expenses on top of purchase price

If you are considering buying a house, apartment or other real estate in Bulgaria for your holiday home or just as a second home you should be aware that the property purchase involves additional expenses and taxes which come on top of the advertised property purchase price.

 

First of all, when viewing on properties advertised by real estate agents, you should have in mind that selling price can be quoted inclusive or exclusive of real estate agency fees. So, make sure you know in advance whether the agent’s commission is included in the offered price and, if not, who will pay it. Agent’s commission is usually around 3 % of the purchase price, but sometimes agents take commission from both buyer and seller. That is why, it is always cheaper to buy directly from the vendor.

 

Sale of residential properties is exempt from value added tax (VAT) but commercial property transactions are subject to 20 % VAT.

 

Secondly, you need to know that municipal tax, state and notary fees are payable when you buy a property in Bulgaria. Most of these taxes and fees are calculated on the basis of the purchase price. That is why in some cases, people prefer to declare lower purchase price on the deeds which is absolutely not recommendable as this can have serious negative legal consequences, especially in case when you are faced with a situation to cancel the deal afterwards. The below listed fees are payable on the completion of a sale and as rule they are covered by the buyer.

  1. Local transfer tax: Similar to stamp duty in the UK, local transfer tax is paid to the local council. The amount differs in different municipalities, for some rural areas it is as low as 0,5 % of the purchase price, but in big cities such as Sofia, Plovdiv, Varna, Bourgas and in preferred mountain and sea resorts the transfer tax is mounting to 3 %.
  2. Registry fee: this is a state fee for registration of the title deeds with the Registry Agency – Property Register and is amounting to 0.1 % of the purchase price. The percentage is one and the same for the whole territory of Bulgaria.
  3. Notary fees: Transfer of title is witnessed by a a notary public. The notary will charge you for making the deed. The Notary fees are set by the government in a tariff and they also are proportional to the purchase price:
Property price (in BGN) Proportional notary fee exclusive of VAT (in BGN)
1000 to 10000 43,50 + 1,3% of the amount over 1,000
10001 to 50000 160,50 + 0.5% of the amount over 10,000
50001 to 100000 480,50  + 0.5% of the amount over 50,000
100001 to 500000 730,50 + 0.2% of the amount over 100,000
over 500000 1535,50 + 0,1 % of the amount above 500000 but not more than 6000

Notary publics charge 20 % VAT on top of these fees and they usually charge for making additional checks, for making copies of the deeds, for using their escrow bank account to ensure safe payment of purchase price, etc. so the final amount due will be higher than the amounts listed in the table above. If you have a lawyer to represent you in the property purchase process, solicitors usually offer to do some of notary’s public work such as making the property checks, drafting the title deed, offering his own escrow account, etc. and this is included in lawyer’s fees.

 

In most cases notaries charge more for just drafting a notary deed as compared to solicitors who, for even lower price, would not only draft the notary deed but will also prepare encumbrance checks, mandatory registrations, etc. Property buyers should bear in mind that notary publics in Bulgaria charge 2 separate notary fees for a/ witnessing (this is mandatory and cannot be bypassed) and b/ drafting the notary deed (it could be drafted by a lawyer and only witnessed by the notary).

 

If you do not plan to be physically present at the notary completion, you will need to provide a power of attorney and some declarations to your lawyer in advance which will incur additional expenses for notarisation, legalisation and translation of these documents into Bulgarian. Translator’s expenses are inevitable even if you decide to be present personally at notary’s office to sign the deeds for the transfer of title into your name because the notary public is obliged to appoint an official interpreter to ensure that you understand the legal consequences of the deed you are signing.

 

Last but not least, do not forget that after you become an owner of your dream home in Bulgaria, you are obliged to pay annual property tax to local council (municipal authorities). The tax rate is different in different regions of the country, very cheap in rural districts and a bit higher in bigger cities. It is a common practice foreign property owner in Bulgaria to neglect paying those taxes. Delays in paying are not usually a big issue but if the owner fails to pay subsequently, the local council is entitled to place the property under interdiction and initiate legal proceeding against the property owner.

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