Bulgarian investment legislation introduces the principle of equality between Bulgarian and foreign citizens and entities: investors treated equally regardless of their nationality. Restrictions on business activity carried out by foreign persons could be impose in very limited sectors (e.g. gambling, tobacco processing, medical research). Doing business in Bulgaria does not require mandatory registration for the purpose with the exception of certain sectors where licensing regime is introduced. At the same time, there is no limit as to foreign participation in companies registered in Bulgaria.
Investment promotion in specific sectors: certificates for investment class
Under Bulgarian law, investors can obtain certificates for class of their investment. Depending on the size of the investment, the economic sector and region of the country in which the investment is implemented, the investor can receive a certificate for class of investment.
(“Class A”or “Class B”) or a certificate for Priority Project.
Investments that can receive a certificate for class are investments in tangible and intangible assets and in the creation of related new jobs, meeting the following cumulative conditions:
1. The investments are connected with the creation of a startup enterprise or expanding an existing enterprise/business activity.
2. The investments take place in one of the following economic sectors:
In the industrial sector – manufacturing.
In the services sector – High-tech activities in the field of information technology and services; R & D and professional activities in central offices; Education; Human health and medical care services; Warehousing and support activities for transportation.
The revenues from the investment project to be at least 80% of total revenues of the company.
The investment to be maintained for at least five years (three years for SMEs).
The term for implementation of the investment should be up to three years.
The amount of investment for the project to be no less than 20 million levs – for Class A and 10 million levs for Class B investment projects. This threshold may be reduced for investments in economically disadvantaged regions and for investments in high-tech activities of the industrial and service sectors.
At least 40% of the eligible costs to be financed through own resources of the investor or through external financing in a form that excludes public support. To create and maintain employment directly related to the implementation of the investment project, and which represents a net increase in the number of employees in the company, for a minimum period of five years for large enterprises and three 3 years for SMEs.
The assets acquired for the purposes of the investment to be new and purchased at market conditions by persons independent of the investor. The investments which have received a certificate for class are promoted through the following measures: – shorter terms for administrative services (Class “A” and”B”); individual administrative services (Class “A”); options for acquisition of title or limited rights in rem over real estate at preferential terms and conditions (for Class “A” and “B”); financial aid for construction of technical infrastructure elements (for Class “A” investments and in case of a joint application of two or more investment projects from class “B”); financial aid for staff training for acquiring professional qualifications of persons occupying the new jobs created through the investments (Class “A” and “B”).
Investment promotion in all sectors: certificates for priority investment projects
Priority investment projects can be implemented in all sectors of the economy. Those are projects essential for the economic development of the country or its regions and meet the requirements specified in the law with respect to minimum amount of the investment (BGN 100 million) and a minimum number of newly-created jobs (two hundred). The criteria can be decreased: if the project envisages the establishment of an industrial zone or technological Park; if the project is implemented in the high-tech or knowledge-based services sector or in the high-tech manufacturing sector; and/or if the priority project will take place in a municipality with high level of unemployment.
Priority investment projects can benefit from any incentives provided for investments with a certificate for class, and in addition can benefit from the following options:
- transfer or establishment of limited rights in rem over real estate owned by state and municipal companies at prices lower than the market prices;
- financial aid grants for investments in the education and research sectors as well as for investments in the manufacturing sector;
- institutional support and public-private partnership.