Does anyone know for defininte the CGT rate on an investment property in Bulgaria for an individual - i.e. no company has been set up?
I have seen quite a few percentages quoted but would like to hear the correct one.
The current CGT rate in Bulgaria is 15%. As there is a double taxation agreement between Ireland and Bulgaria you would then expect to pay a further 5% when you bring funds back to Ireland:
The main thing to watch out for is the value of the property that is put in the Notary deed. Everybody will tell you it's normal practice to put a lower value on the notary deed but this is illegal practice and will eventually disappear. If you put 30% of the value of the property on the notary deed you will save a small amount on property tax but the developer will save a large amount on VAT. In the long term you will end up paying a lot of capital gains tax. The lower value on the notary deed is a tax evaluation amount (set by the municipality). These values are way behind current market valuations but Bulgaria will get smarter with their tax laws and will increase these figures substantially over the next few years. This means when you sell it's likely that you will end up paying a lot of CGT.
My advice would be to get the full value on the notary deed in the short term and then you're laughing.
Be careful buying in Bulgaria, it's a great country but don't believe the marketing brochures that tell you where is the best place to buy. I guarantee that if you go Bulgaria a few times over a 6 to 12 month period you will end up buying a better quality house/apartment in a better area for investment and probably at a similar if not lower price!
[broken link removed] are a very good accountancy based in Varna. They are relatively expensive (for bulgaria) but well worth the money.