Real estate tax in Bulgaria
In Bulgaria the real estate tax, also called "buildings tax" is levied on buildings and land located within the territory of the country and within the spatial planning areas of settlements, as well as the lands outside such areas, whose intended use, according to a detailed construction plan, falls within Art. 8, item 1 of the Spatial Planning Act and after change of the purpose of the land where that is required by special legislative statute (Art. 10 Local Taxes and Fees Act, or LTFA).
No tax is levied on:
- sites occupied by streets, roads of the national and municipal road networks, and the railway network, up to the limiting construction lines;
- lands occupied by water basins which are state and municipal property
- agricultural land and forests, with the exception of land with buildings and only for the built area and the adjoining it land
- real estate with tax assessment of BGN 1680 inclusive.
The tax is payable regardless of whether the property is in use or not. Where the property is co-owned, the tax payable according to the common parts.
Under Art. 11 LTFA, tax is levied on:
- owners of taxable real estate;
- owners of buildings constructed on state or municipal land;
- person who was given a right of use - in rem (in deed);
- person who was given a right of use - concession (concessionaire);
- users of restituted property that has been restored to the owners, but cannot be used by them (for a period of 5 years)
A feature of Bulgarian tax law is that the tax payable by the person who was given a right to use - in rem. The tax is also payable by the concessionaires, the owners of buildings constructed on state or municipal property, the persons to whom state or municipal property is available for management.
Art. 24 LTFA establishes various tax exemptions. Exempt are for example, municipalities with regard to real estate which is public property, for example community centers, diplomatic buildings, buildings of higher education used for teaching, and others.
Art. 25 LTFA regulates the following two tax reliefs:
- For an estate that is used as a main residence, a discount of 50 per cent applies to the tax due on that estate;
- For an estate that is used as a main residence by a person who has lost between 50 and 100 per cent of their working capacity, a discount of 75 per cent applies to the tax due on that estate.
Calculation of the basis of taxation
For newly acquired property, irrespective of the method of acquisition, taxable persons are obliged to notify the municipal administration where the property is located. Declarations are to be submitted within two months from the acquisition of property or from a change of circumstances, and where the property is acquired by succession, the time limit for submission is 6 months from the opening of the succession (Art. 14 (1) and Art. 32 (1) LTFA). Based on the data given in the declaration, the municipal administrative officials determine the tax assessment on which the tax will be payable. Taken into account are the type, location, construction of the property, etc. The tax assessment is communicated to the taxable person. A different system applies to companies – the tax assessment of real property belonging to companies is the higher between their book value and the tax value pursuant to Appendix №2 of the property, and the tax is calculated according to Annex 2 LTFA.
The tax is measured in parts per thousand, not percentages and is payable in two equal instalments - from 1 March to 30 June and until 30 October of the year to which it is due, such that for persons that paid in advance by 30 April for the whole year there is a discount of 5 per cent.