Legal Procedure
Each client chooses an apartment. They then conclude a reservation contract and pay a reservation fee. The reservation will last for a period of 30 days. During this period, interested parties can visit Tsarevo and view the construction. If they decide to purchase one of the Hermes apartments, the costs of the trip for up to two people (flight tickets, hotel and transport at a maximum of 420 euro per person) are deducted from the purchase price for the apartment. We shall arrange the hotel, flight tickets and transport in Bulgaria via the CK Alexandria travel agency.
At the end of the reservation period, the interested party and the seller conclude a Pre-Contract Agreement, in which the seller undertakes to build the property and sell it to the interested party and the buyer undertakes to purchase the property.
If no Pre-Contract Agreement is concluded, the reservation fee remains with the seller.
After the reservation fee is paid, the property is removed completely from the offer. The Pre-Contract Agreement may be signed in the Czech Republic or in any other location by the purchaser personally or by his representative on the basis of a power of attorney. The power of attorney must be verified by any Bulgarian notary public or by any Bulgarian consul abroad.
Payments for the purchase of the property will proceed according to the method of payment agreed upon in the Pre-Contract Agreement (there are two variants - see the pricelist). The reservation fee becomes part of the first instalment of the purchase price.
After the completion of the property and after gaining an AKT 15 form/document concerning the completion of the construction (pursuant to Bulgarian law), the seller transfers the property to the buyer by signing a document on the registration of title before a notary public.
The buyer becomes the owner of the property by signing a notarial deed before a notary public in Tsarevo. The right of ownership is protected by a special form of registration made before a notary public with the local competence of the Municipal Court/town of Tsarevo. Both parties must be present during the registration. They may be there in person or they may be represented on the basis of a power of attorney. The power of attorney must be verified by any Bulgarian notary public or by any Bulgarian consul abroad.
Should the property be purchased by spouses, the law of the Czech Republic applies in regard to the spouses' property situation. (According to Bulgarian law, there are no impediments to property being purchased by one of the spouses - both spouses automatically become 50/50 owners of the property.)
Upon concluding a Pre-Contract Agreement, a Contract on the Administration and Maintenance of the Property is concluded, which means the buyer entrusts the seller with the maintenance of his real estate.
After the construction of the building or before its completion, the owners or future owners may be offered contracts on the arrangement of tourism services by the Alexandria travel agency (tour-operator services). These services will be separate from the Contract on the Administration and Maintenance of the Property.
Tax Issues and Charges
Upon acquiring the property, the buyer pays the following:
Local tax (similar to real-estate-transfer tax) amounting to 2,6% of the contractual price but not less than the estimated value stipulated by a tax assessor. The acquired property is to be registered with the Revenue Authority within two months of the date of the notarial record of the transfer. The tax assessment is to be submitted during registration.
A notary's fee amounting to around 210 euro from a purchase price amounting to 50,000 euro and 260 euro from a purchase price amounting to 100,000 euro.
A charge for the registration of title in the Land Register amounting to 0.1% of the purchase price.
Other Charges:
Annual real-estate tax is another taxation obligation, which amounts to 1.5 BGN (Bulgarian lev = Bulgarian currency; 1 € = 1.945 BGN) for every 1,000 BGN (e.g. for an apartment with a value of 100,000 BGN, you pay 150 BGN per year). The Revenue Authority may assess real-estate tax on the basis of a tax valuation made by a tax assessor.
Capital gains tax in the event of any future sale amounts to 10% for natural persons and legal entities. In Bulgaria, there is no five-year time test for the non-payment of capital gains tax as there is in the Czech Republic. The income of these persons/entities during future sales will be taxed by a final tax on the difference between the sale price and purchase price of the property. If a foreign natural person or legal entity decides to purchase property via their Bulgarian subsidiary, tax is applied as with a local entity, i.e. corporate capital gains tax amounting to 10%. If the company decides to pay out a dividend after the deduction of capital gains tax, a 7% tax will be deducted from this at source in accordance with Bulgarian law.
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