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VOICEOVER:
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DERREN JOSEPH:
Okay, Ruth, it’s great to see you this afternoon. Thank you for joining us. My name is Derren Joseph, and we are HTJ.Tax. We are a team of cross-border tax advisors, accountants, and lawyers who seek to demystify the sometimes-confusing world of international tax. And today, we have the pleasure of joining us, an expert in taxes in Bulgaria. This is Rositsa. Would you like to introduce yourself, please?
ROSITSA ANEVA:
Hello Derren. Thank you for having me. It’s a pleasure to talk with you about Bulgarian Advantages. My name is Rositsa, and I’m an accountant. I work for freelancers and companies, especially from Europe and other countries like ex-Soviet Union countries and, of course, those from Turkey. Bulgaria is a very interesting country. We are situated near Turkey.
We share a border with the European Union and the Black Sea with Turkey. We are nearby Greece and Romania. We were a pro-Russian country, but now we joined Europe since 2007. Our economy is growing now because we found that investing in Bulgaria is the best-kept secret in Europe because we have many advantages. For example, almost all of our people are political workers and are very educated. It’s also very easy to set up a company in Bulgaria, which is the point of our conversation.
DERREN JOSEPH:
Of course. Okay. Right. So, as you mentioned, Bulgaria is a popular destination for freelancers, independent contractors, and the like. I believe that Bulgaria has some sort of digital nomad visa. Are you, are you able to speak about that?
ROSITSA ANEVA:
Yes. Digital Nomads. According to Cisco systems, Bulgaria has ranked as the third best destination with very good internet.
DERREN JOSEPH:
Okay. Number three. Fantastic.
ROSITSA ANEVA:
Yes, number three, I have clients who set up a company here in Bulgaria, but I didn’t see them at all because they’re traveling all over the world but paying their taxes here in Bulgaria. We are famous for our 10% taxation. This is an annual tax-10%, nothing else. So, according to UK Government Outsourcing Association, Bulgaria was named as a new offshore zone for 2015.
But you know we can’t because we are in the European Union, so our tax is almost the best I have heard worldwide. It’s just 10% of everything you earned as a company or as a Digital Nomad. This is very interesting for Digital Nomads in Bulgaria because we also offer the lowest rent in Europe and have a very good internet communication system.
As for Broadband, our government can set up a company almost online. Everything can be done online. So, you can make your company or set up a business in three working days.
DERREN JOSEPH:
Okay. That’s fantastic. So to cover it, it has been a part of the EU since 2007. It’s not part of the Schengen area or part of the Eurozone yet, but perhaps that creates opportunities for people outside of Europe. It’s relatively easy to come to Bulgaria. For those who qualify for the equivalent of a visa waiver, you can stay there for up to a couple of or a few months. And then there’s a Digital Nomad’s Visa, and I think that’s a type D visa. Yes, I think it is.
ROSITSA ANEVA:
Yes. It depends if they’re from the European Union, they just need to extend their stay. But if they’re from outside the European Union, they must apply for a visa. Yes.
DERREN JOSEPH:
Okay. So, need to apply for a type D visa. Okay, that’s great. Now let’s go into starting a company. So, you can start a company in three days. Do you need a local agent? If so, how much does it cost? What does incorporation cost, and what’s the process like?
ROSITSA ANEVA:
Yes, capital is two-level, which is less than two Euros. You can set up a company, and this is the minimum capital. You can almost set up a company with an electronic stamp. In Bulgaria, it’s very common for everyone to have an electronic stamp or an electronic signature. And this is useful for us. You can almost do everything with your computer and electronic stamp, especially setting up a company.
All you need to do for now is go to the bank and open a bank account, and ride this capital from two-level or more. You must create a bank account for this. After setting up a company, which of course, you can do by yourself if you have an electronic stamp, or you can use a local agent. We use lawyers. Lawyers because some documents must be prepared by a lawyer, especially if you have more shareholders than one.
After setting up a company, you can make everything with your company. For example, selling or buying. It’s very common in Bulgaria to set up a company to buy property, especially apartments, and land because you can have citizenship for buying Bulgarian land.
And this is the only option to buy land–to have a company that buys land. We have a beautiful coast, and many people prefer to set up a company and buy land to build resorts. And so, setting up a company is an option to have citizenship and be the owner of Bulgarian land.
DERREN JOSEPH:
Before we get into that, let’s first make sure that we catch up with the process for incorporating a company. First and foremost, you need a bank account. Now, banking is super challenging in many other jurisdictions. Does Bulgaria allow remote bank account opening? Can I open a bank account remotely, or do I need to fly to Bulgaria??
Many banks have such services to have an online meeting, for example, thrift banks. But it’s enough to set up a bank account. Of course, we have been using electronic bank accounts for many years. Yes, they’re allowed to set up a company. They set up offices here in Bulgaria, so they have offices here in Bulgaria.
So, you can do everything by assistant here in Bulgaria.
DERREN JOSEPH:
So, if you want to open one (bank account), you can do it remotely. If you want to use one of the challenger banks. Use one of the online banks. But then that requires some sort of Bulgarian-type identification. Right? You need to have an ID or a company document that says it is in Bulgaria, right?
ROSITSA ANEVA:
Yes. There are two options. If you are a European Union citizen, you can first apply for a permanent ID. You can get it on the same day that you applied for it. And with this ID, you can go to every bank you want to set up a company or a bank account.
Another thing that people from third countries are doing is, they’re setting up companies with their national documents. This can also be done. But there must be some difficulties with the bank accounts because you know that there are many European regulations, and one of these regulations is to check your identity. And this can take a month.
DERREN JOSEPH:
Yeah.
ROSITSA ANEVA:
Or two months,
DERREN JOSEPH:
Yeah. and Books.
ROSITSA ANEVA:
There are decisions; many lawyers in Bulgaria made companies and then sold them to shelf companies.
DERREN JOSEPH:
Yes. Shelf companies. Yeah. Yeah. Okay. Gotcha.
Okay, gotcha. Thanks. You mentioned as well, you know, starting a company to hold Bulgarian real estate. And that’s a nice segue into citizenship by investment. Can you talk about citizenship by investment in Bulgaria?
ROSITSA ANEVA:
Yes. You are a big specialist for golden Visa in Bulgaria. We had a golden Visa also. But the European Union requested countries to change programs, and Bulgaria was the first one of the countries to make such changes. And now we do not have such a thing as a golden visa. We changed this golden Visa with very interesting investment programs in which you can buy investment funds.
So, if you invest in investment funds, you can get this golden Visa. It’s not the same but an old name for Golden Visa. Now, it’s an investment where you can purchase shares in Bulgarian companies. This is the option. Also, you can buy shares from the Bulgarian Stock exchange.
DERREN JOSEPH:
Right? So the typical stuff is, once the company creates a certain number of jobs and contributes to the economy. So, as you know, because we are recording this in February 2023 and this month already, the headlines have been Portugal and Ireland.
ROSITSA ANEVA:
Yes. And Greece also, Greece.
DERREN JOSEPH:
Yes. And Greece as well. Yeah. The Golden Visa program. So, in that sense, Bulgaria, as you said, were more proactive, and they have restructured their situation so that it’s a residence by investment. Yes. And after becoming a permanent resident for two or six years, you can apply for citizenship, but you have to be properly a resident in Bulgaria first.
ROSITSA ANEVA:
Yes. And you can use your citizenship to go to many countries, you know, as a European Union citizen. Even though we are not in Schengen. You can go to many countries with this citizenship. And it’s very Interesting. Bulgaria is very interesting because our border with Turkey made us very competitive. After all, Turkey is a big producer of goods. And you can stock their goods in Bulgaria and sell them all over Europe.
DERREN JOSEPH:
Right. And so, it’s like an entry point into Europe. Yeah.
ROSITSA ANEVA:
Yes. And because we are a very close country to Turkey, we are going there without Visa. Just cross the border, and when you’re there, you can buy everything.
DERREN JOSEPH:
Right. And, just to add to what you said, the minimum investment for the Residency by investment program is 250,000 or 200,000, Right?
ROSITSA ANEVA:
Yes.
DERREN JOSEPH:
And this is Euros, even though it’s not or what, what is the currency in Bulgaria? Is it Lev?
ROSITSA ANEVA:
Yes. Lev
DERREN JOSEPH:
Right. Great, great. But when you look online, you see the numbers quoted in Euros. I guess, to make it easier to understand?
ROSITSA ANEVA:
Yeah. Yes. One lev is almost a Euro. We are connected. We have a board here.
DERREN JOSEPH:
Right. So, it’s pegged to the Euro.
ROSITSA ANEVA:
Yes, we are connected with the Euro. Everything is under control. We are happy to say that although we’re one of the not-very-big countries. We have a very good exchange rate for our currency.
DERREN JOSEPH:
Okay. And, of course, I think Bulgaria is super popular, at least in my little ecosystem. It has relatively low taxes. And corporate tax is headlined at 10%, which is quite low. But how does that work? How do you qualify for the 10% corporate tax?
ROSITSA ANEVA:
It’s the only one tax–10%. So, if you have a Bulgarian company, you must make an annual report and tax declaration with a 10% annual tax.
DERREN JOSEPH:
And is, is this a 10% tax on the worldwide income or both your incomes?
ROSITSA ANEVA:
Yes. Worldwide income. Of course, some transfer pricing rules are the same as in other countries. We have transfer pricing laws with some European countries, for example, Germany or Portugal. I have clients from Portugal. They said that Bulgaria’s economic environment is better than Portugal’s. So, I think that a 10% tax is almost Offshore. Tax.
DERREN JOSEPH:
Okay. And for the purposes of transfer pricing and treaties and stuff like that, for establishing or getting a permanent establishment in Bulgaria, what do you need to have or what would you need to demonstrate? So, do you typically need a physical office, or can you have a virtual one? Or do you need one?
ROSITSA ANEVA:
For setting up a company, you must, you must write in your papers where your office will be
DERREN JOSEPH:
Right.
ROSITSA ANEVA:
Or where the National Revenue Agency can find you.
DERREN JOSEPH:
Yes.
ROSITSA ANEVA:
And there is also an option to have a virtual office. Of course, your company must have an address and not only a Postal box. Right?
DERREN JOSEPH:
Yeah. Yes, yes. So, what about if you wanted to get a tax Residency certificate?
ROSITSA ANEVA:
The Tax Residency certificate is for the company.
Yes. Okay. If you have rent rental contract,
DERREN JOSEPH:
Right. Have…
ROSITSA ANEVA:
If you have a property, of course, if you have a center of living, your family is here. Your …
DERREN JOSEPH:
Yes?
ROSITSA ANEVA:
Your salary is paid in the Bulgaria bank account. It is year by year for every country.
DERREN JOSEPH:
So what about for a company? What do I need to demonstrate if I want to get a tax Residency certificate for my Bulgarian company?
ROSITSA ANEVA:
Just apply online for your tax residency certificate
DERREN JOSEPH: That’s fine… and nothing else?
ROSITSA ANEVA:
Yes, nothing else.
DERREN JOSEPH:
Okay, gotcha. So, but what you were just describing was a tax Residency certificate for an individual to demonstrate that they are resident in Bulgaria?
ROSITSA ANEVA:
For individuals, it’s almost the same because you’ll get your certificate for Bulgarian tax administration. It’s not that you are paying your taxes in Bulgaria. You must, for example, send your certificate to the tax administration in Belgium.
DERREN JOSEPH:
Exactly. Yeah.
ROSITSA ANEVA:
Yes. You can, and you must issue this tax certificate every year.
DERREN JOSEPH:
Right. and the Residency threshold is 183 days, right? 1-8- 3,
ROSITSA ANEVA:
Yes. 1-8- 3
DERREN JOSEPH:
Okay. Okay. Yes.
ROSITSA ANEVA:
Or if you have property here, or your family lives here–Center of life.
DERREN JOSEPH:
Yeah. Center of life,
ROSITSA ANEVA:
Yes. Demonstrates a center of life.
DERREN JOSEPH:
And so, if I set up the company in Bulgaria, if someone from outside of the EU, because if you’re within the EU is super easy, but if someone from outside of the EU, to set up a company in Bulgaria, can that company get them some sort of work permit
ROSITSA ANEVA:
For the owner? No, but not…
DERREN JOSEPH:
For?
ROSITSA ANEVA:
… for staff. If they work remotely from their homes outside Bulgaria, no. They will work as freelancers, sort of …
DERREN JOSEPH:
Right. What if they wanted to move to Bulgaria? What if someone outside the EU wants to work for the company you set up? Is it simple to get a work permit?
ROSITSA ANEVA:
No, it’s not. These are some of the disadvantages. Our filter is very old. I think that this will be the next thing that will be changed. Because for other European countries, we have a lot of opportunities for them to work here, but only some have the opportunity to work outside Bulgaria. And so, we also need more people to come. Now, you know, we are close to the Ukrainian border, and many people are setting up a company here or starting work here.
We have a lot of people, especially mothers, with their children. But now, it’s very easy to have permission to stay and work in Bulgaria because we are an open market.
DERREN JOSEPH:
This is from Ukraine. But how do you get a work permit if you are from outside of the EU, from somewhere else, let’s say from the US or Canada?
For the US and Canada? Yes. But it’s not as easy if you are, for example, from Turkey.
DERREN JOSEPH:
Right? Yes. In Europe if you are from Europe,
ROSITSA ANEVA:
Then you don’t need any. Yes.
DERREN JOSEPH:
So what do you need? So, if someone is from the US, UK, or Canada, what would they need to set up a company in Bulgaria? and they would like to work for that company that they set up in Bulgaria? What steps do they need to take to get a work permit to stay in Bulgaria?
ROSITSA ANEVA:
We have here people who are connected only. You must fill in some documents, of course. And you must get permission as with other countries. In America and Canada is the same. If you can’t find the staff for this position, you can get the staff from outside. But you will need permission from the government to recruit.
DERREN JOSEPH:
Yeah. Right. So that’s pretty typical. So, the company needs to be qualified to recruit from outside.
DERREN JOSEPH:
Yes. It’s not something that takes too long. About four, five, to seven days, you get this permission. It’s not something very difficult. But you must have this permission because social security in Bulgaria is paid by special numbers, ID numbers. And if you want to work in Bulgaria, you will get such a number because social security must be paid.
DERREN JOSEPH:
Right. So, the company would need to get permission to recruit from outside. Then the person would need to go through a process. You said the company should be able to get that permission within, let’s say, a week or seven days. Yes? And how long would it take to process the application from the person coming from the UK or from the US to work in Bulgaria? Roughly how long? Like a month?
ROSITSA ANEVA:
No, you must hire this person immediately if you have this permission by electronic signature. You just need to send a special message to the government that this person will work for you.
DERREN JOSEPH:
Right.
ROSITSA ANEVA:
Not only for foreigners. For Bulgarian citizens also.
DERREN JOSEPH:
Okay. I see, I see. So, in terms of the application process, how long would it be? I guess you probably need a resident director, a Bulgarian director for the company, someone who’s plugged into the official government system. But for the foreigner, how long before the foreigner outside of the EU has permission to work for the company in Bulgaria?
ROSITSA ANEVA:
Seven days?
DERREN JOSEPH:
Okay. Oh, seven days.
ROSITSA ANEVA:
Yes, up to seven days. But if you don’t want to have a director, you can work with your company without a Bulgarian director. I know that Offshore companies must have a director, but in Bulgaria, it’s optional.
DERREN JOSEPH:
Hmm. Okay. That’s, that’s good to know. What about exchange rates, though? Foreign exchange? Are there any controls? So, for example, if someone is making profits in their company in Bulgaria and they want to take it out and, let’s say, repatriated to the UK or the US, are there any limitations, any special permissions that need to be, you know, when you pay your tax, annual tax
ROSITSA ANEVA:
After-tax income?
DERREN JOSEPH:
Yeah.
ROSITSA ANEVA:
Yes. Then, if we talk about the owner, for example, when you pay your 10% company tax on this profit, you can get this profit, of course. And you must pay a 5% dividend tax. After this payment, you can send this money to every country.
DERREN JOSEPH:
Okay. Okay. So, there are no foreign exchange controls? You can take as much money as you want outside of Bulgaria.
ROSITSA ANEVA:
Yes.
DERREN JOSEPH:
Okay. That’s good to know.
ROSITSA ANEVA:
As a company, most companies prefer to send their money as services, you know, something that is done by, for example, a mother company to Bulgarian.
DERREN JOSEPH:
Yeah.
ROSITSA ANEVA:
So you kind of transfer price it out.
DERREN JOSEPH:
Yes. Okay. Understood. Understood.
So in terms of entrepreneurs and remote workers, what is a typical type of entrepreneur that you see coming into Bulgaria and taking advantage of the opportunities that Bulgarian offers?
ROSITSA ANEVA:
Most of them are connected with IT and IT businesses. Many of them are also connected with investment in properties. It is very interesting with properties. We have a very good market for selling enclosed complexes or apartments. And we have four seasons here, so in every season you can go on your holiday. Yeah. And to find someone somewhere to stay.
And our properties have lower prices than other European properties for the same quality. And many people are investing in this in Bulgaria.
DERREN JOSEPH:
Right. Also, technology?
ROSITSA ANEVA:
Yes. Also, the Bulgarian government. Bulgaria is named as one of the best outsourcing destinations. And in Bulgaria, we have many companies which are outsourcing companies and which have 25 languages. I mean, these companies are operating in 25 languages. Bulgaria has a politics to invite companies which are both chemical and communications companies.
In Bulgaria, our pharmaceutical industry is also very developed. We produced many big and very famous pharmaceutical goods and creative industries. We are open to this, but outsourcing companies are a big part of companies that are in our market.
DERREN JOSEPH:
Okay. Sounds pretty good. So fantastic. The infrastructure you said is the third fastest internet? Yes. The Ease of doing business and opening a bank account will be a challenge. If it’s a traditional one, the online ones are much easier to deal with. There is Ease of incorporation and no restrictions in moving funds in and out. Very low taxes, both corporate and personal income tax. Very, very low. You’re already within the EU, and I guess, in a matter of time, you’ll be within the Schengen as well, as an attractive Residency by Investment program that converts into citizenship in as fast as two years, otherwise six.
So, yeah. You know, Bulgaria sounds as if it is definitely a jurisdiction to keep an eye on, and you know, it is an attractive destination.
ROSITSA ANEVA:
Yes.
DERREN JOSEPH:
Yeah. And, if people want to reach you, people who want to find you. What’s the best way to find you? What’s your website?
ROSITSA ANEVA:
My website is very strange. It sounds English, but…
DERREN JOSEPH:
Okay. Yeah.
ROSITSA ANEVA:
The Bulgarian language is similar to Russian,
DERREN JOSEPH:
Right? Right. Yes.
ROSITSA ANEVA:
But yes, it’s difficult. Different, of course.
DERREN JOSEPH:
Okay. Yes. And what about email?
ROSITSA ANEVA:
Email, yes. It’s almost the same.
DERREN JOSEPH:
Okay. What people can do for the native English speakers, if they contact me, I’ll definitely introduce them to you via email so that that might be easier. Yeah, definitely. Okay. Well, Rositsa, thank you so much for your time. Thanks for sharing your insights and perspective on what makes Bulgaria an attractive jurisdiction. Not just to do business on but also to live in, to actually move to, and to pursue citizenship.
ROSITSA ANEVA:
Excuse me. We’re also a good Bitcoin destination. Yes. You can’t buy a property with Bitcoin, but we have very good taxation for Bitcoins and other cryptocurrencies. Now, the Crypto business is not as good as it was, but yes.
DERREN JOSEPH:
So in, in terms of capital gains, capital gains taxes, which would apply to crypto, assume unless you’re a trader. Right. So capital gains are, what would that be? 10% as well?
ROSITSA ANEVA:
Yes. 10%, yes. Okay. But 10% when you use your, your when you exchange your
DERREN JOSEPH:
Crypto for fiat Yes,
ROSITSA ANEVA:
Yes. For fiat, yes.
DERREN JOSEPH:
Right, right. So, okay, so the, and that’s good. So, whether you are a trader or an investor, it’s a very low 10%. Yes. To be fair, seeing that there’s new taxation on crypto in Portugal, which is high. I think it’s as high as 28%, then 10% seems to be very, very attractive.
ROSITSA ANEVA:
Yes. We are trying to have a meeting for Portugal and Bulgaria for crypto. It’s something that we can work together for. Yes.
DERREN JOSEPH:
Work together. Yeah. Okay. Fantastic. So, again, thank you very much, and we’ll see you next time. Bye-bye.
ROSITSA ANEVA:
Thank you. Bye.
VOICEOVER
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