When Bulgaria joined the European Union on the 1st of January 2007 it marked a significant period in the history of the country - not only for its' citizens but also for investors and tourists.
At the moment Bulgaria is undergoing numerous improvements to its infrastructure and legal system to bring it in line with EU standards. This has led to lower inflation and improved economic standards and when Bulgaria announced recently the lowest levels of comparative tax in Europe - the scenario was set for an influx of Business Investment and Foreign Direct Investment. This is turn will result in higher wages and a higher standard of living. The downside to this is that prices for tourists will increase. However, real estate prices should also increase significantly and we believe that those investors making early purchases will see the greatest increases.
Indeed it is not an exaggeration to state that the huge levels of investment and regeneration in Bulgaria have revolutionized its' property market. However, prices are still low in comparison with much of the rest of Europe.
Therefore, the indicators would all seem to suggest that now is the time to invest - while prices are still highly affordable.
Indication of growth
- The world health organization indicates - that more than 20 million tourists will be visiting Bulgaria by 2010 - thus driving the demand for accommodation - an obvious plus for property investors. Indeed in 2004 UK tourism to Bulgaria rose by over 60%
- Bulgaria is enjoying very low inflation at the moment
- GDP is expected to be the highest in Eastern Europe
- EU entry
- Rising building costs due to stricter and more controlled construction and labour laws raises standards and of course real estate prices
- Increased economic stability and lower interest rates which will lead to lower mortgages with will drive property prices up
- Budget airlines to begin services to Bulgaria in 2008 (airline deregulation is a prerequisite of EU membership)
- Eu funding of over 4.6 billion Euros over the next two years - the highest amount per capital for any accession country ever (and the EU currently has no plans to extend membership)
Therefore, this could be the last opportunity for the foreseeable future to invest in a country which is benefiting from the economic transformation that EU status brings.
Bulgaria's EU membership is already benefiting UK and Irish investors.
CGT has been reduced to 10% on the balance between the declared purchase price and the declared sale price minus 10% (recognized by the law) as expenses that reduce the taxable profit.
BUT there will be no capital gains tax in Bulgaria if the following conditions are met:
- During the calendar year the person has sold only one real estate in BG
- During the calendar year the person has sold up to 2 real estates but more than 5 years have passed since the person has acquired the estates in question
- For tax purpose the person is considered resident of a member state of EU or another state from the European Economic Area
Note: This is for information only. MTS INVESTMENTS still recommend you take independent tax advice before purchasing.
www.lesstax.co.uk