Bulgarian citizenship by investment 2022 fast track options

Bulgarian citizenship by investment

Buy Bulgarian citizenship by investing in Bulgarian companies or mutual funds

Fast track Bulgarian citizenship

Following the 2021 amendments to the Foreigners in the Republic of Bulgaria Act and the Bulgarian Citizenship Act, adopted by the National Assembly, Bulgaria offers new options for obtaining citizenship by investment. These amendments allow non-EU citizens to practically buy Bulgarian citizenship by investing in the economy of the country. Current legislation offers four different types of investment:

  1. Investment in shares of Bulgarian commercial companies traded on a regulated market or a multilateral trading system in the Republic of Bulgaria, at a market value of not less than BGN 2,000,000.
  2. Purchase of shares or stocks in collective investment schemes (mutual funds) originating in the Republic of Bulgaria, with a value of not less than BGN 1,000,000.
  3. Shares in alternative investment funds established in the Republic of Bulgaria with a value of not less than BGN 1,000,000.
  4. Contribution to the capital of a Bulgarian commercial company in the amount of not less than BGN 2,000,000 for a priority investment project in Bulgaria implemented by the company.

Any of the above investments grants directly Bulgarian residence permit to the investor and to their families (spouses and children under 18). A second investment at the same value during the second year from obtaining the residence permit grants citizenship. Thus, a non-EU citizen can get an EU permanent ID card for less than 6 months and an EU passport for two-three years. read more

Debt collection Bulgaria – debt recovery proceedings

Bulgarian debt collection proceedings is the final step for effective collection of business and personal debts and in most cases they are preceded by successful court litigation proceedings. Without this final step the rights implemented in a court judgment or a writ of execution cannot be materialized.

Bulgarian debt collection proceedings are not completely codified which unfortunately leaves many loopholes and opportunities for various legal interpretations. Debt recovery proceedings in Bulgaria are officially conducted by bailiffs (public or private enforcement agents). Debt collection agencies in Bulgaria could also help but in the end the role of a debt recovery lawyer is frequently most important. The regulations in force, especially of the registration of real estates, has many imperfections which can be used to sabotage the entire debt collection process. An experienced Bulgarian debt collection lawyer can undertake an investigation and carry out a number of researches in many different institutions with the aim of discovering all assets of the debtor. If the assets are not enough, sold or burdened, the solicitor can undertake specific legal actions for the return of sold or donated property back to the ownership of the debtor and thus they can be used to cover all amounts on the creditor’s writ of execution. read more

EU Laws & Cryptocurrencies – Trading Rules & Legislation

As of 2021, more and more European and world virtual currency traders choose Bulgaria for their headquarters of cryptocurrency business. There is still no law on virtual currencies based on blockchain technology, neither in Bulgaria, nor in the EU, nor in any other developed country, although cryptocurrency trading (Bitcoin, Ethereum, etc.) has been flourishing for years. Supervisory authorities in various EU countries issue sporadic guidelines, recommendations and warnings, but this has nothing to do with creating a legally regulated framework for crypto trading to adhere to, let alone uniform legal requirements. read more

Bulgarian tax residency for EU, non-EU and British citizens

Tax residency in Bulgaria, where both personal and corporate income tax rates are 10 %, is a popular option for quite some time for many EU and non-EU citizens. Recently British citizens doing business and travelling in EU countries are anxious about their rights after Brexit. Over one million Brits are now already living outside the Island all over Europe.

The draft Withdrawal Agreement between the UK government and the EU envisages that British citizens will keep the right to live and work in the country where they reside at the time of the withdrawal. Both parties confirm that this has been surely agreed and further amendments in this section of the Withdrawal Agreement are not expected. Moreover, the negotiators agreed that there shall be a transitional period of 21 months (from 29 March 2019 until the end of 2020) before UK leaves the EU completely. So, according to the last draft of the Withdrawal Agreement, UK citizens residing on the basis of EU law before the end of the transitional period will maintain the residence rights they currently enjoy, under the currently applicable conditions and limitations. This protection includes also rights which are in the process of being obtained: citizens will be able to acquire the right to permanent residence after five years of lawful residence, even if the five-year period is completed after the end of the transition period. So, if you are a British citizen trading with EU partners, travelling around Europe or you are self -employed, providing services to EU clients, or you simply need to lower your taxes, and you wish to become a Bulgarian (tax) resident benefiting from current EU laws and the rights they give, you have a little time to do it.

What does it mean to be a Bulgarian resident for tax purposes?

That means that all your world income will be taxed in Bulgaria. For example, if you receive income in a country where income tax is 40 % but you are considered as Bulgarian residence for tax purposes, you are entitled to declare this income in Bulgaria and pay as per Bulgarian tax system. Please note that this rule does not refer to property taxes – property taxes are paid in the country where the property is located.

How one can be sure that there will be no double taxation?

Bulgarian National Revenue Agency issues a tax residency certificate which you show to tax authorities in other countries where you generate the income and they will no longer chase you to pay taxes in these countries and all your income will be taxable only here.

What is necessary to obtain such certificate?

EU laws give an opportunity a person to be considered tax resident of the country where his centre of economic interest is. To show that Bulgaria is your centre of economic interest you need to do the following:

  • First step is to obtain a Bulgarian long term residence as an EU citizen and a Bulgarian ID card with a Bulgarian personal ID number. The procedure is relatively easy and the only one significant requirement is to have a registered address. There are three possible options – to rent an apartment and use it for real, to rent an apartment just for the address registration without the possibility to actually stay there, to buy your own property in Bulgaria. If you buy a property, but do not plan to stay in Bulgaria physically most of the time, you can even rent it for income.
  • Register a Bulgarian company or register as a self-employed service provider and invoice your clients for the work provided to them. Incorporation of a Bulgarian company is the best option, because as a company you can deduct expenses, pay only 10 % on profit and 5 % on dividends.
  • Pay social and health contributions here in Bulgaria.
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    Bulgarian Forex license – fast obtaining and EU passporting

    Obtaining Forex license in Bulgaria

    Bulgarian Forex broker MiFID EU passporting

    Bulgarian Forex license gives right to the broker to operate within the entire EU either by free providing of services or through opening a branch.

    Companies that want to operate Forex business platforms in Bulgaria should be registered as investment intermediaries and licensed by Bulgarian Financial Supervision Commission. They work under the European MiFID which has been implemented in Bulgarian legislation and financial institutions are regulated by the directive with some national specifics.

    There are two types of Forex licenses in Bulgaria which are applicable to brokers, depending on the type of activity:

    1. Brokerage license  – BGN 250 000 (approx. EUR 125 000) minimum required investment capital – that type of license gives the investment intermediary the opportunity to hold clients’ money and securities and to provide any of the following services:
      1. Reception and transmission of orders in relation to one or more financial  instruments, including intermediating for conclusion of transactions in relation to  financial instruments
      2. Provision of investment advice to clients
      3. Execution of orders on behalf of clients
      4. Portfolio management

      Full (Market Maker) license – BGN 1 500 000 (approx. EUR 750 000) foundation capital – that type of Forex license gives Bulgarian investment intermediaries the right to deal on their own account.

      In both cases 25 % of the minimum required capital must be deposited with a bank before filing the application for licensing in Bulgaria and the remaining amount within 14 days from receiving the approval by the Financial Supervision Commission.

      Apart from the capital requirement, there are other requirements that can be summarised in several categories:

    2. Requirement towards the directors (managers) – they must be professionals of good reputation, with proper higher education and experience in the field
    3. Requirements towards the shareholders and the origin of funds of the share capital – as above shareholders can be persons/companies of good reputation, showing clear criminal record and clear origin of investment capital
    4. Capital adequacy requirements
    5. Requirements towards staff, organizational structure
    6. Requirements towards internal control, audit
    7. Technical requirements
    8. read more

    Distribution of votes, profits and dividend in Bulgarian LLC and JSC

    Participation is a commercial company implies various rights to the shareholders, the main being the right to dividend. According to Bulgarian Commercial Act shareholders in a Limited Liability Company are entitled to receive part of the profits in the form of dividends. Distribution of interim dividends (based on current year profits) is prohibited. Companies are allowed to distribute only accumulated profits from past fiscal years.

    In the common practice the balance profit is distributed among the shareholders in proportion to their shares. In other words, if in a limited liability partnership there are two partners each holding 50 %, that means that they will receive equal share from the profit, unless otherwise agreed. “Unless otherwise agreed” is a key phrase here, as it gives opportunity to shareholders to stipulate different shares of profit. These stipulations shall be made in writing on the company’s Articles or Operating Agreement. So, practically there are no legal limitations to disproportional distribution of profits in a Limited Liability Company, in case all shareholders agree on that. In all cases, in order to be effective and legally binding, the decision for distribution of profits in the form of dividends should be taken by the General Meeting of Shareholders and duly recorded in writing in the company’s documentation.

    Furthermore, payment of dividends should not confront the Limitation of Cash Payments Act which prohibits cash payments for amounts over BGN 10 000 (approx. EUR 5000). In such cases, payment of dividends must be by bank transfer.

    The distribution of the votes in the general meeting of a Limited Liability Company (LLC) can be agreed in a similar way. Unless otherwise agreed, the voting right is proportionate to the share of the respective shareholder. Nevertheless, shareholders are free to determine different voting powers, regardless of their shares, in case all partners agree to such condition.

    The distribution of profits in Bulgarian Joint Stock Companies (JSC) depends on the type of stocks the respective company issues. A Joint Stock Company is a company the capital of which is divided into stocks with a nominal value. A stock entitles its holder to a single vote in the General Meeting of Shareholders, to a dividend and to a liquidation share in proportion to the nominal value of the stock. Bulgarian Commercial Act, however, provides that JSCs can issue stocks with special rights, the so called privileged shares. They can grant to their owner guaranteed or additional rights to a dividend and/or a liquidation quota. It is possible the privileged shares to guarantee additional dividend but at the same time to deprive their holder from voting rights. Any special rights must be explicitly provided in the by-laws (statute) of the company.

    Open bank account in Bulgaria for offshore company

    Opening a bank account in Bulgaria for an offshore company? This is not a problem since Bulgarian offshore company formation followed by opening a bank account is a straightforward process which takes only a week time. The costs are minimal too.

    But first one should know that Bulgaria is not a typical offshore zone. It is more of a tax haven. In simple words – you get the best from an offshore and a ‘normal’ company registered in EU. From legal point of view Bulgarian offshore companies are ‘normal’ companies, publicly registered and legally operating all across Europe and the world. They are registered under EU jurisdiction which means that they benefit from all EU financial and tax regimes. And from purely psychological point of view they are much more prestigious – because everyone would prefer to deal with an EU based company, which is publicly registered and strictly regulated under EU legal framework – rather than deal with a typical offshore company, which by default hides many details about its business activities, real owners, etc.

    The benefits of a Bulgarian offshore company start with the lowest corporate tax rate in the whole EU – 10 %. Some typical offshore companies in Europe offer 0 % tax but as explained above this is the price for doing 100 % legal business in the entire EU. And all across the world.

    Offshore companies in Bulgaria however have many things in common with typical offshore companies. To start with – nominee shareholders and nominee directors are not explicitly regulated under Bulgarian law but in practice are quite popular. Plus they are 100 % legal. So in other words any savvy businessman can run even a big business quite legitimately under the protection of and using all benefits of a European jurisdiction – while at the same time no one knows that he is the real owner of that business who remain hidden behind nominee shareholder/s and nominee directors.

    Company in Bulgaria with account is something that every local company is entitled to. Anyone can set up a Bulgarian offshore company and then immediately open a bank account in Bulgarian Lev (BGN), Euro (EUR) or any other popular world currency. The fees that Bulgarian banks charge are very minimal, some even offer this service for free. Monthly fees for a Bulgarian company bank account are also very low – in most cases no more than 5 Euros. Another benefit in this relation is that many EU based large banks have branches in Bulgaria – and many corporate clients who use the services of such bank in their home countries prefer to use the services of the same bank, via its branch of course, in Bulgaria.

    Another very important aspect of bank services in Bulgaria is that almost all banks offer e-banking – operating a bank account over the internet from all around the world. These bank products are highly appreciated by foreign investors who can register an offshore company in Bulgaria but conduct their business from abroad. Any businessman who has activated electronic banking with any Bulgarian bank can make and receive bank transfers like a charm, with only a few clicks on his computer.

    Financial license Bulgaria – regulation of financial institutions

    Financial license in Bulgaria can be obtained quickly and at quite reasonable costs. Bulgarian financial institutions are governed by the Credit Institutions Act and in accordance with its Art. 3, a financial institution is a legal entity different from a credit institution or an investment intermediary. Main activity of licensed financial institutions in Bulgaria is performing one or more of the following:

  • Providing payment services under the Payment Services and Payment Systems Act;
  • Issuing and administering other means of payment (travellers checks and letters of credit) as far as this activity is not covered by item 1;
  • Financial leasing;
  • Guarantee transactions;
  • Trading on your own account or for account of customers in foreign currencies and precious metals with the exception of derivative financial instruments on foreign currency and precious metals;
  • Provision of services and / or activities under Art. 5 para. 2 and 3 of Markets in Financial Instruments Directive;
  • Currency brokerage;
  • Acquisition of credit claims and other forms of financing (factoring, forfeiting, etc.);
  • Issuing electronic money;
  • Acquisition of shares in a credit institution or other financial institution;
  • Lending funds, that are not raised through public deposits or other repayable funds.
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    PSD2 license for payment institution, e-money and payment system providers in Bulgaria

    E-money, payment institutions, payment systems, online payment system providers – at a first glimpse all these terms look similar, but in fact they refer to different issues regulated by:

  • Bulgarian Law on Payment Services and Payment Systems,
  • Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market (amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC),
  • Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009 on the taking up, pursuit and prudential supervision of the business of electronic money institutions (amending Directives 2005/60/EC and 2006/48/EC and repealing Directive 2000/46/EC) and
  • Latest PSD2 Directive 2015/2366/EU of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC.
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    Publication of annual financial statements in Bulgaria

    Although the obligation for publication of annual financial reports of companies is a common rule in almost all European countries, there are numerous differences among the legislation of the member states. In most countries this obligation is only for companies that match certain criteria – certain activity throughout the fiscal year, annual turnover, type of company, etc.

    That is probably the reason why many entrepreneurs that have set up companies in Bulgaria make the mistake not to publish their annual financial statements wrongly assuming that they do not fall among the entities that have this obligation. According to Art. 40 of Bulgarian Accounting Act enterprises are obliged to publish their annual financial statements and their annual management reports as adopted by the General Meeting of partners / shareholders.

    All merchants in the meaning of the Bulgarian Commercial Act, namely: limited liability companies (single member limited liability companies and limited liability partnerships), joint stock companies, general partnerships or sole traders, are obliged  to file and submit their annual reports in Bulgarian Commercial Register by 30 June every year. This obligation is applicable even for companies which have had no activity throughout the fiscal year and for dormant companies.

    Fines ranging from EUR 250 to EUR 1500 are imposed to all who fail to fulfill their obligation of submitting the information with the Commercial Register in Bulgaria within the specified deadline. In the event of a second violation of this rule fines are double.

    The announcement of the reports shall follow a strict procedure rules set in the Bulgarian Commercial Register Act. Announcement is made by filing an application form (available only in Bulgarian language) together with the financial reports, minutes of the General Meeting of shareholders or the relevant body confirming the adoption the annual financial statements and a few mandatory declarations. Applicant can be either the Bulgarian company manager or a lawyer with an explicit Power of Attorney or the company accountant again with an explicit Power of Attorney. Application can be made either on line with an electronic signature or at the local offices of the Registry Agency. Sending your application by post is not acceptable.

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