Nestled between Romania, Serbia, Greece and Turkey, Bulgaria is an emerging EU economy that most people are not likely to have considered for either business or travel. Having joined the EU relatively recently in 2007, the country is still usually associated more with Eastern Europe than cosmopolitan Berlin and Prague. Nevertheless, the Bulgarian citizenship by investment program might be an intriguing possibility for those seeking a simpler pathway to European Union citizenship through a refundable investment, an early advantage in a growing economy or an optimally streamlined tax base for their wealth structuring. This third instalment in our EU migration guide series explores the benefits of the Bulgarian Investment Immigration Program.
Bulgaria’s citizenship by investment requirements are much easier to meet than those of Cyprus and Malta. Applicants who make an investment of €511,292 (or BGN 1 million) in Bulgarian government bonds gain permanent residency in the country, which can be converted to full citizenship after five years, after which the investment, guaranteed by the government, can be refunded without interest. Unlike fund donations or market investments, the expenses, which are less than other programs, are guaranteed to be fully recovered. Doubling the investment shortens the waiting period to two years. The investment can also be financed by the Bulgarian government with a €195,000 deposit, and additional interest due afterwards. External financing with proper documentation is also acceptable for the investment requirement.
There are no language requirements to be met, and Bulgaria does not prohibit dual or triple citizenship.
During the residence period, applicants are not required to be physically present for more than a few days in a year in the country, but will have to maintain a Bulgarian address. This requirement can either be satisfied through a real estate investment, or by opting for nominal rental expenses as low as €60 per month. Those that choose to stay Bulgaria will be enamoured by the country’s scenic beauty, with snow-capped mountains, ski resorts and relaxing, sunny beaches. Although the capital, Sofia, is not a buzzing metropolis and Bulgarian society remains somewhat distant from contemporary European life, the country has a wealth of cultural heritage, having historically been associated with the Roman, Byzantine and Ottoman empires, resulting in distinct Italian and Turkish elements in its architecture, arts and cuisine. Those suited to a relaxed lifestyle in a quiet, peaceful and idyllic setting would find themselves quite happy in Bulgaria, while EU citizenship grants the flexibility to relocate almost anywhere in Western Europe if desired.
Bulgarian citizens enjoy visa free access to 157 countries, including all EU member countries, Canada and Australia. Unlike Malta, Bulgaria is not part of the Schengen area. Applicants should note that the Bulgarian passport does not grant visa free access to the United States.
Bulgaria taxes residents on worldwide income and nonresidents on income sourced in the country. Tax residency is defined as spending 183 days in the country or maintaining a permanent address or sourcing the majority of their income domestically. Those that earn the majority of their income outside Bulgaria will not be considered tax residents. The tax rate is set at a low 10% for both personal and corporate income tax. Structuring wealth and income through Bulgaria certainly streamlines tax burdens considerably.
Bulgarian tax residents can deduct non employment income from their tax base at various rates, such as up to 10% for capital gains from real estate and up to 40% from royalties. Inheritance tax for family members is between 0.4 and 0.8% and 3.3% to 6.6% for unrelated beneficiaries. The Bulgarian tax regime is much less restrictive than the majority of Europe, particularly with regard to tax exemptions for special purpose investment enterprises and special corporate tax regimes available to shipping and gambling enterprises. Companies with fixed assets over €750,000 that post a turnover of €1,250,000 are required to have their financial statements audited. Holding companies registered in Bulgaria are exempt from taxes if the income is generated by an entity in the EU, Iceland, Norway and Lichtenstein. Capital gains from liquidating shares are subject to the 10% flat corporate tax rate. There is a 5% withholding tax rate which will not apply if dividends are routed via an EU country with no withholding tax.
In addition to a low taxes, Bulgaria has low overhead costs for companies seeking to outsource operations. Local infrastructure is developed enough to reliably support most business requirements.
Bulgaria’s Investor Immigration program differs from Malta and Cyprus in terms its lower, fully recoverable cost and shorter waiting time. Its passport program is significantly cheaper than other EU countries, but living in the country may be less appeal than almost any other European country offering citizenship by investment. Investment immigration is a highly complex and consequential process for which making a decision requires a lot of consideration. For some, Cyprus or Malta may be the ideal path while for others, Bulgaria’s unique refundable investment pathway to EU citizenship is a golden opportunity.
Our migration services can help you make the ideal choice based on your circumstances and priorities. Having worked with many globally active clients, we are familiar with all the ins and outs of international investment, relocation and wealth structuring. We are sensitive to our clients’ requirements for confidentiality, help them make the most apt decisions and take a holistic view of family and finances. If relocating to Europe interests you, please don’t hesitate to contact us for a consultation, and we will guide you through every step of the process.
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