Foreign Ownership Regulations In Bulgaria

Published on September 29, 2025 and written by Cyril Jarnias

Bulgaria, a European Union member state since 2007, offers numerous opportunities for foreign investors interested in acquiring real estate or starting a business. However, as in any country, there are specific regulations governing foreign ownership that are crucial to understand before proceeding. In this article, we will explore in detail the various aspects of these regulations, from legal restrictions to practical advice for investors, including approval processes and the rights and obligations of foreign property owners.

Legal Restrictions on Foreign Property Ownership

Contrary to some misconceptions, Bulgaria has significantly eased its restrictions on foreign property ownership in recent years, particularly since joining the European Union. However, some important limitations remain that investors should be aware of.

For EU and EEA citizens, the situation is relatively straightforward. They enjoy the same rights as Bulgarian citizens regarding real estate acquisition, including agricultural and forest land. This equal treatment stems directly from the principles of free movement of capital and non-discrimination within the EU.

In contrast, for third-country nationals (non-EU/EEA), certain restrictions persist:

• They cannot directly acquire agricultural or forest land. However, this restriction can be circumvented by establishing a Bulgarian company, which can then purchase these types of land.
• The purchase of real estate properties (apartments, houses) is permitted, but only for personal or commercial use, not for speculation.
• Acquisition of land with buildings on it is possible, but the land itself cannot be separated from the building.

It’s important to note that these restrictions do not apply to foreign legal entities with a registered subsidiary or branch in Bulgaria. These entities are considered Bulgarian legal persons and therefore enjoy the same rights as local companies.

Approval Process for Foreign Acquisitions

Although Bulgaria has simplified its procedures for foreign investors, there is still an approval process to follow, which varies depending on the type of property and the buyer’s status.

For EU/EEA citizens, the process is relatively simple:

• No prior authorization is required for purchasing real estate, including land.
• The purchase must be registered with the local land registry, as with any real estate purchase in Bulgaria.
• A declaration of the source of funds used for the purchase may be requested, in accordance with anti-money laundering regulations.

For third-country nationals, the process is more complex:

• Purchasing real estate properties (excluding agricultural and forest land) requires authorization from the Bulgarian Ministry of Finance.
• This authorization is generally granted if the buyer can prove they have the necessary funds and that the purchase is not for speculative purposes.
• The approval process can take several weeks, or even months.
• Once authorization is obtained, the purchase must be registered with the local land registry.

It’s important to note that for the purchase of agricultural or forest land by third-country nationals, the process is different:

• Since direct purchase is not permitted, establishing a Bulgarian company is necessary.
• This company must be at least 50% owned by Bulgarian or EU/EEA citizens.
• The purchase of land by the company must be approved by the Ministry of Agriculture.

In all cases, it is highly recommended to engage a local specialized lawyer to navigate these procedures and ensure all legal requirements are met.

Rights and Obligations of Foreign Property Owners

Once the acquisition is approved and finalized, foreign property owners in Bulgaria enjoy numerous rights but must also comply with certain obligations.

Rights of foreign property owners:

• Right to use, rent, or sell the property (subject to the previously mentioned restrictions for agricultural and forest land).
• Legal protection against expropriation, except for public utility purposes and with fair and prior compensation.
• Right to transfer income generated by the property abroad, after paying due taxes in Bulgaria.
• For business owners, right to repatriate profits after taxes.

Obligations of foreign property owners:

• Payment of property taxes and taxes on rental income, if applicable.
• Compliance with local urban planning and environmental regulations.
• Annual declaration of assets held in Bulgaria to the tax authorities of their country of residence (according to the legislation of the relevant country).
• For business owners, compliance with Bulgarian legal and tax obligations, including maintaining accounting records and filing tax returns.

It’s important to note that Bulgaria applies a corporate tax rate of 10%, one of the lowest in the European Union, which can be particularly attractive for foreign investors considering starting a business in the country.

Additionally, foreign property owners should be aware that Bulgaria has implemented strict anti-money laundering measures. Significant real estate transactions may undergo thorough scrutiny, and buyers must be prepared to justify the source of funds used for the acquisition.

Advice for Foreign Investors

Investing in Bulgaria can be an interesting opportunity, but it’s crucial to prepare well to avoid potential pitfalls. Here are some essential tips for foreign investors:

1. Conduct thorough due diligence

Before any purchase, it’s essential to carefully verify the legal status of the property:

• Examine property titles and the property’s history for at least 10 years.
• Check for the absence of liens, mortgages, or other restrictions on the property.
• Ensure the property complies with local urban planning regulations.

2. Surround yourself with competent local professionals

The assistance of local professionals is invaluable for navigating the complexities of the Bulgarian market:

• Engage a lawyer specialized in real estate law and foreign investments.
• Use an accountant familiar with Bulgarian and international taxation.
• Work with a reputable real estate agent who knows the local market well.

3. Understand tax implications

Taxation can significantly impact the profitability of your investment:

• Inquire about tax treaties between Bulgaria and your country of residence to avoid double taxation.
• Understand reporting obligations in your home country for assets held abroad.
• Evaluate potential tax benefits of establishing a Bulgarian company to hold the properties.

4. Plan for the long term

Investment in Bulgaria should be part of a long-term strategy:

• Study trends in the Bulgarian real estate and economic markets.
• Consider future development projects in the investment area.
• Anticipate potential changes in legislation, particularly regarding Bulgaria’s future accession to the eurozone.

5. Be prepared for bureaucracy

Despite simplification efforts, bureaucracy remains present in Bulgaria:

• Allow for longer than expected timeframes for administrative procedures.
• Keep copies of all documents and correspondence.
• Be patient and persistent in your efforts.

Case Studies: Successes and Pitfalls of Foreign Investors in Bulgaria

To better understand the realities of foreign investment in Bulgaria, let’s examine some concrete cases of investors who have succeeded or encountered difficulties.

Success Case: Investment in Tourist Real Estate

A group of British investors established a Bulgarian company to acquire and renovate a hotel complex on the Black Sea coast. Their success can be attributed to several factors:

• Thorough due diligence revealed the region’s growth potential.
• They worked closely with local lawyers and accountants to navigate legal and tax complexities.
• The investment was structured through a Bulgarian company, thus benefiting from the low corporate tax rate.
• They invested in training local staff, improving service quality and the establishment’s reputation.

Result: Within five years, their investment value increased by 40%, and the complex maintains high occupancy rates throughout the tourist season.

Avoided Pitfall: Agricultural Land Purchase

An American investor nearly lost a significant amount by attempting to directly purchase a large agricultural plot. Fortunately, he consulted a local lawyer in time who informed him of the restrictions for non-EU nationals. The investor then:

• Established a Bulgarian company in partnership with a local associate.
• Obtained the necessary approval from the Ministry of Agriculture.
• Structured the investment to comply with legal requirements while maintaining effective control.

Result: The investor was able to realize his agricultural project, creating local jobs and benefiting from steady growth in his investment value.

Overcome Difficulty: Renovation of a Historic Property

A French-German couple purchased a historic house in a Bulgarian town to convert it into a guesthouse. They encountered several challenges:

• Unexpected restrictions on renovation due to the building’s historic status.
• Delays in obtaining necessary permits.
• Higher renovation costs than expected due to the need to use specific materials and techniques.

Despite these difficulties, they persevered by:

• Collaborating closely with local authorities to find solutions that respected the heritage.
• Adjusting their business plan to account for additional costs.
• Highlighting the unique historical character of the building in their marketing.

Result: Although the project took more time and cost more than expected, the guesthouse is now successful, attracting clients seeking an authentic experience.

These case studies illustrate the importance of proper preparation, thorough understanding of local regulations, and flexibility in facing unexpected challenges. They also emphasize the value of local professional advice and a long-term approach to investment in Bulgaria.

Conclusion

Bulgaria offers real opportunities for foreign investors, with its attractive real estate market, low corporate tax rate, and economic growth potential. However, navigating foreign property regulations requires careful preparation and thorough understanding of the local legal and tax framework.

The main keys to success for foreign investment in Bulgaria are:

• Thorough due diligence before any purchase or investment.
• Utilization of competent local professionals (lawyers, accountants, real estate agents).
• Good understanding of tax implications, both in Bulgaria and in the home country.
• A long-term approach, considering market trends and potential regulatory developments.
• Patience and perseverance in facing bureaucratic challenges.

Although restrictions on foreign property ownership have been significantly eased, particularly for EU/EEA citizens, there remain points of vigilance, especially for third-country nationals wishing to acquire agricultural or forest land.

Investment in Bulgaria can be very profitable for those who take the time to properly understand the market and regulations. With adequate planning and professional advice, foreign investors can take advantage of the many benefits offered by this growing country in the heart of Southeastern Europe.