Important changes in local legislation affecting land owners

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Important changes in local legislation affecting land owners

Postby Admin » Thu Jul 05, 2012 10:54 am

Dear all,

Many foreigners have decided to invest in Bulgaria during the last several years. Part of these overseas investors purchased just apartments, but many others have decided to invest in purchasing land plots or ideal parts of land plots, or agricultural land. Back then the local legislation forbidded EU citizens to purchase regulated plots of land on their own names as physical individuals, so many of the investors had to establish local corporate bodies /limited liability companies/ in their names and to purchase land plots or ideal parts of land plots on the name of these companies. But the restriction, related to regulated plots of land, is no longer valid for EU citizens, and still remains for the other overseas individuals, who still have to set-up local companies – personally or via using a local Bulgarian lawyer who will advise them on the procedure and costs. When Bulgaria has joined the EU in 2007 it was agreed that there will be a kind of a restricion term in force for several years and this period has already expired for regulated plots of land, and in 2014 expires for agricultural land. Now EU citizens can purchase land plots in Bulgarian in their own names, but only if the land plot is regulated /in the boundaries of a village or a city/. The restriction connected with purchasing agriculture lands expires in Dec 2013, but it is expected Bulgaria to ask the EU for permission to extend the restriction for purchasing agriculture land with two more years.

Until now all foreign investors, who own regulated land plots or ideal parts of such plot, were asked to keep these on the name of local companies, shareholded by the investors. All this has been connected with annual expenses for keeping the companies existing- submitting accountancy documents, annual financial report at the commerce registry etc. Not to mention the capital gains due when re-selling a real estate owned by a company, and the desperate need to liquidate the empty company anyway after the re-sale of its only asset, in order to avoid paying VAT on the sale. From now on all this headache is no longer needed and if someone wants, they are legally entitled to terminate these companies /and these related expenses for keeping them/. This is possible by just transferring the land plot from the name of the company towards the private individual who is EU citizen. Good local professional lawyers can handle all this process and perform it smoothly in favor of their client’s interests. It is expected that many people from the EU, who own properties in Bulgaria, will start performing this in the next couple of years, just to cut the annual expenses, connected with keeping their companies existing. If you have to liquidate your company anyway, why to wait for inconvenient prospective changes in the local legislations/taxes? Contact us if you need more information and guidance on the above.

Bulgariandeals Team

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