Business opportunities in Bulgaria

The Bulgarian Constitution stipulates that foreign persons (legal entities, individuals or civil partnerships registered in a foreign country) must enjoy equal rights with local persons when conducting economic activities in the Republic of Bulgaria except where otherwise provided by the law (“national treatment”). This principle covers the entire range of economic and legal forms used for business activity. The Encouragement of Investment Act (EIA) provides for equal treatment of local and foreign investors in the Republic of Bulgaria. Foreign investors in Bulgaria can obtain the same assistance and use the same privileges and opportunities as granted by the law to local investors.

If a bilateral treaty, signed and ratified by the Republic of Bulgaria, provides for more favorable investment terms and conditions for international investors, the citizens or legal entities of the respective contracting country will enjoy preferential investor treatment (“most favored nation status” )

Protection of investments

The Republic of Bulgaria is a party to 64 bilateral agreements for mutual protection and encouragement of foreign investment (for a list please refer to Appendix A).

It is also a party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. Every Bilateral Investment Treaty has a standard clause providing that, in the case of a dispute between the Republic of Bulgaria and a potential investor, this dispute shall be submitted before the World Bank’s International Center for Settlement of Investment Disputes. On these grounds, every investor in Bulgaria has the opportunity to protect their investment if adverse legislation is adopted

Incentives to investors

The EIA envisages different incentive measures and privileges for local and foreign investors who undertake significant investments in certain economic activities within the territory of Bulgaria. The aim of these measures, financed by the state, is to promote large investments and improve the business environment in the country.

The Regulation for Application of the EIA contains all detailed conditions, under which the investors may benefit from the incentive measures.

The EIA and the Regulation for its Application are the legislative basis for implementing a scheme for awarding state aid in conformity with EU legislation. All encouragement measures may be implemented by the state only in compliance with EU state aid legislation for granting state resources to private entities. Investors must therefore fulfill the conditions stipulated in the respective EU legislative acts in order to be eligible to receive state financing.

In order to benefit from the resources under the state aid scheme, investors must apply for a special certificate for class A investment, class B investment or apriority project with the Bulgarian Investment Agency.

The required minimum investment amounts for projects implemented in the industrial sector are:

  • For class A investments – BGN 10 million
  • For class B investments – BGN 5 million.
    The required minimum investment amounts for projects implemented in the services sector are:
  • For class A investments – between BGN 2 – 3 million depending on the type of the services sector

For class B investments – between BGN 1 – 1.5 million depending on the type of the services sector.
Lower minimum investment amounts are envisaged in the case of investments in the industrial sector in economically disadvantaged regions and in high technology activities in the industrial and services sectors.

Investors implementing projects related to a number of economic sectors in Bulgaria, explicitly listed in the EIA, may apply for a certificate for priority project if the project meets any of the criteria set out in the law, e.g. the amount of the investment exceeds three times the minimum amount for class A investment, or the project includes development of industrial zones or high- tech parks with technical infrastructure.

The investors awarded with certificates for priority projects can be supported by the state with a package of the incentive measures described below.

The certificates for class A investment, class B investment and priority projects are issued by the Minister of Economy and entitle the investors to benefit from the following incentive measures financed by the State:

• Right to purchase state or municipal real estate property or to acquire limited property rights over state or municipal real estate property, located near the investment site, without tender procedures, upon evaluation of the real estate property by at least two licensed independent valuers and upon written consent of the Minister of Economy and the Minister of Regional Development and Public Works for those real estate properties owned by the State, and approval of the respective municipal council for any municipal real estate properties.

In order to take advantage of this incentive measure, the investors awarded with certificates for class

  • A investment, class B investment and priority projects must apply
    to the relevant local authorities by submission of their investment projects and the documents set out
    in the law. Non-implementation of the investor’s investment project within the implementation term and for the amount of investment, and non- commencing of project works within two years from the date of signing the contract are grounds for termination. The investor may not dispose of the real estate property (or the limited property rights), acquired according to the procedures under the EIA, prior to the expiry of a five-year term as from the date of implementation of the respective investment project.
  • Buildings and other sites financed with EU funds cannot be subject to the above incentive transactions, unless 10 years have expired from the completion of the construction to submission of the application by the investor.
  • Financing of construction of technical infrastructure elements, such as roads, drainage networks and facilities,
    and others. Investors awarded with certificates for class A investment or at least two or more investors awarded certificates for class investment where the investment is located in an industrial zone are eligible to
    receive such financing.
  • This procedure must be executed in accordance with the requirements of the EIA, the Regulation for Application of the EIA, the state aid legislation and the EU legislation regarding state aid. The Council of Ministers grants such financing only after a tender is held by the Ministry of Economy to evaluate all submitted investment projects.
  • Financing of professional training of persons, hired by class A and B investors in relation to certified investments, provided that the financing is implemented in accordance with the requirements of the EIA, the Regulation for Application of the EIA, and EU Regulation 651/2014. The Council of Ministers grants such financing only after a tender is held by the Ministry of Economy to evaluate all submitted investment projects.
  • Issuance by local or governmental authorities of administrative documents for the realization of the investment project within periods one-third shorter than the periods set out in the relevant legislative acts. The reduced periods for any administrative assistance of the investors contribute to the timely and efficient implementation of their investment projects.
  • Individual administrative assistance and service from the Bulgarian Investment Agency, relating to the submission and obtaining of the necessary documents required under Bulgarian legislation for completion of the investment.
  • Financing in the form of partial refunding of statutory social security contributions and health insurance contributions paid by the investor in their capacity of an employer for the newly hired employees for a period not longer than 24 months from the opening of the respective job positions.
  • the Ministry of Economy to evaluate all submitted investment projects.
  • Financing of professional training of persons, hired by class A and B investors in relation to certified investments, provided that the financing is implemented in accordance with the requirements of the EIA, the Regulation for Application of the EIA, and EU Regulation 651/2014. The Council of Ministers grants such financing only after a tender is held by the Ministry of Economy to evaluate all submitted investment projects.
  • Issuance by local or governmental authorities of administrative documents for the realization of the investment project within periods one-third shorter than the periods set out in the relevant legislative acts. The reduced periods
    for any administrative assistance of the investors contribute to the timely and efficient implementation of their investment projects.
  • Individual administrative assistance and service from the Bulgarian Investment Agency, relating to the submission and obtaining of the necessary documents required under Bulgarian legislation for completion of the investment.
  • Financing in the form of partial refunding of statutory social security contributions and health insurance contributions paid by the investor in their capacity of an employer for the newly hired employees for a period not longer than 24 months from the opening of the respective job positions.
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