Individuals carrying out real estate transactions in Bulgaria will have to register under the VAT Act. This will affect owners of land plots, as well as those who own an apartment in a new building less than 5 years from the date of its use permit.
Such changes are provided for by a new bill submitted by the government to parliament on 2 December 2024.
At present, VAT registration is mandatory for developers who put the properties they have built up for sale, as well as for individuals carrying out three or more real estate transactions during a calendar year. The amendments to the law will extend it to those who carry out one-off transactions as well.
The main reason for the changes was the European VAT directive, which states that any person carrying out a real estate transaction must pay the tax. This applies to all types of transactions involving new construction. Although this information has been in the directive since 2006, the Bulgarian government has now decided that the time has come to tackle tax fraud. This probably refers to the widespread practice whereby a construction plot is bought not by a construction company registered for VAT, but by several individuals. The company settles up with them by handing over apartments in the completed building, and this property is immediately put up for sale.
The new rules are intended to secure higher budget revenues and to curb practices associated with tax avoidance. The changes will affect a fairly large number of people and will alter the process of buying property, so the bill is expected to provoke heated debate in Parliament.
Checking Bulgarian real estate before purchase
What are the consequences of not paying property tax in Bulgaria?
Obtaining a long-term residence permit in Bulgaria on the basis of a property purchase
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