1.  Property Selection

Unlike typical Real Estate Agencies, MaBu only offers a select range of properties that have been thoroughly assed prior to being placed on the market, which in consequence, ensures that the purchasing process is as risk free and smooth as possible. Clients may obtain further information about these properties by visiting the projects section, emailing us on info@mabu.com.mt or by contacting the head office on: 2141 1403.

2.  Use a company or not?

According to the Bulgarian Constitution, foreign individuals may purchase buildings or apartments but not land. Foreign individuals who wish to purchase land may do so by setting-up a company that would then acquire the land.
Forming a company is a relatively standard process that most local legal firms offer, and could range between a few days to several weeks to set-up. Allow around €1500 for legal fees relating to the company formation and €500 pa for administration costs.

The key points to consider are:

• Articles of Incorporation must be prepared & signed by all shareholders in front of a Notary in Bulgaria; a Bulgarian Embassy or apostiled in your home country.
• A local bank account must be established; the minimum share capital required is €2,600 (5,000 leva);
• Company taxes are calculated at 15% of net profit.
• Given that Bulgaria was granted accession into the EU last January 2007, it is envisaged that this legislation will no longer apply for citizens pertaining to member states, and thus, they would have the right to purchase land without needing to set-up a company.

3.  Sale & Purchase Contracts

Once you have successfully identified your property (with MaBu's assistance), you will be given a preliminary sale and purchase contract. This process involves translating and checking that all details are correct. Although MaBu carries out this process prior to placing a property on the market, it is always safer to have this re-checked in order to ensure that all is still in place. Once all is in place, the documents along with the deposit will be passed on to MaBu's legal team that will then finalise the contracts.
  
4.  Transfer of title

Upon completion of the payment of the final instalment, the transfer of title will occur. In Bulgaria, the property registry system works in conjunction with local Notaries. In order to take delivery of your property, you will need to sign the ‘Notary Act’. This is a standard form document transferring ownership of the property into your name. You will receive title deeds within 7-10 days of the Notary Act from the local council.

Note: If you are unable to attend the Notary Act in person, your legal representative may attend in your place. This individual will need to be a qualified Bulgarian solicitor in possession of a ‘Power of Attorney’ agreement. We are able to liaise with you to arrange this.

5.  Additional Acquisition Costs

According to the Local Taxes and Fees Act, the tax payable upon the sale-and-purchase of an apartment is 2% local tax. The basis for calculating the tax is the higher of:

• The apartment’s price as specified in the notary deed, and;
• The tax evaluation of the apartment.

Such tax is payable by the purchaser, unless the parties have agreed otherwise.

Notary fees & procedures

The Bulgarian property system uses Notaries and a Notary Act in order to transfer the ownership of buildings and/or land. Upon completion of the property and prior to signing the Notary Act, the local municipal council conducts a tax evaluation of each property. This valuation represents the minimum value that must be reflected on the Notary Act. It is this value that at a minimum must appear on the Notary Deed in property transactions in Bulgaria.
The notary fees are determined in accordance with the tariff for the Notary Fees. There are various charges but you should allow €1,500-€2,000. Each lawyer or law firm is free to determine its fees, subject to certain constraints. There are also different schemes of determining the fees (e.g. on an hourly basis, a fixed fee etc.). Typically, the rates of the lawyers vary from €80 to €150 per hour. Total legal fees are estimated at €500-€600.

6.  Other Expenses

• Annual property taxes amount to 0.15% of the tax value of the property (usually significantly below the acquisition price);
• Maintenance of your property may be covered by the Management Contract and is charged at a fixed rate in euros per square metre per year; and;
• Waste-collection fees are determined when you register ownership with the local municipality; rates vary from region to region.

Remember to register your new property ownership with the local authorities after completion for rating purposes. This should be done within 60 days following completion.

VAT Implications: Understanding the VAT implications on any property purchase in the Bulgarian property market is extremely important, given the potential mortgage and tax implications. MaBu Ltd. will help you demystify the situation.