Immovable Property Tax

The tax treatment of immovable property is regulated in Articles 10 to 28 of the Local Taxes and Fees Act.

Scope of taxation

Immovable property tax is levied on lots, buildings and parts of buildings located within the territory of Bulgaria which are situated within the development limits of the nucleated settlements and the dispersed settlements, as well as the lots outside such development limits which, according to a detailed site development plan, have the assigned use under Item 1 of Article 8 of the Spatial Development Act (for residential, public-services, manufacturing, storage, resort, country-house, sporting or recreational functions, for green spaces and landscaped links between green spaces and nature-conservation areas, for decorative water features, for public access and transport, including bicycle paths and for movement of people with disabilities, etc.) as well as after the intended purpose of the land is changed, when required by a special law.

Non-taxable persons

• any lots occupied by streets, roads of the national and municipal road networks and the railway network, up to the delimiting building lines;
• any lots occupied by water sites constituting state and municipal property;
• any agricultural land tracts and forests, with the exception of developed land (in respect of the actually developed surface area and the adjoining ground);
• corporeal immovable property of assessed value of up to BGN 1680.

Taxable Persons

The taxable persons are:

• the owners of taxable corporeal immovable property;
• if a real right to use has been created, the taxable person is the user;
• if a concession has been awarded, the taxable person is the concessionaire. Where an extraction concession has been awarded, the taxable person shall be the owner, with the exception of cases where a right in rem to use the lot or the relevant part of the lot has been created in favor of the concessionaire;
• the owner of a building constructed on a state-owned or municipal-owned lot is furthermore taxable in respect of that lot or the proportionate part of it;
• in respect of an immovable constituting state or municipal property, the taxable person is the person whereto the immovable has been allocated for management.

Where the right of ownership or the limited real right to a taxable corporeal immovable is held by several persons, the tax liability applies to these persons in proportion to the parts appertaining to them.

Immovable property tax is payable irrespective of whether the corporeal immovable property is used or not.

Taxable Amount

The taxable amount for taxation of residential and non-residential property owned by individuals is the tax assessed value of the immovable property, which is determined at rates specified in an annex to the Local Taxes and Fees Act. The taxable amount for taxation of residential properties owned by enterprises is determined in the same way.

The taxable amount for taxation of non-residential properties owned by enterprises is the higher of their book value and the tax assessed value according to the above-mentioned annex to the Act.  

How is the tax assessed value arrived at?

The tax assessed value of corporeal immovable property is determined at rates specified in an annex to the Local Taxes and Fees Act depending on the type of the immovable property, its location, surface area, structure and depreciation, and is communicated to the taxable persons.

Tax Rates

The tax rate for immovable property is determined by an Ordinance of the Municipal Council within the range of 0.1 to 4.5 per thousand on the tax value of the immovable property;

Exemptions

The following are exempt from immovable property tax:

• any immovable property constituting public municipal property;
• any immovable property constituting public state property, except where the immovable property has been allocated for use to another person and this person is not exempt from tax;
• the chitalishte community centers;
• the buildings owned by foreign states which house diplomatic missions and consular posts, on a basis of reciprocity;
• any buildings owned by the Bulgarian Red Cross and by the Red Cross organizations registered in another Member State of the European Union or in another State which is a Contracting Party to the Agreement on the European Economic Area;
• any buildings owned by the higher schools and the academies and used for teaching and scientific research;
• the places of worship and the monasteries intended for religious practice, together with the lots whereon they have been constructed, where owned by the lawfully registered religious denominations in Bulgaria, as well as the prayer houses together with the lots whereon they have been constructed, where owned by the lawfully registered religious denominations in Bulgaria; 
• any parks, any sports grounds, any playgrounds and other such immovable property for public use;
• any buildings designated as cultural assets, when not used for a for-profit purpose;
• any museums, any galleries, and any libraries;
• any immovable property which is directly used for the operation of public transport;
• the corporeal immovable property whereof the ownership has been restituted by law and which are unusable, for a period of five years;
•  the buildings and separate parts of buildings, put into operation before January 1, 2005 and received certificates issued in accordance with the Law on energy efficiency with energy consumption class "A" - for a period of 6 years, starting from the year following the year of issue the certificate and the buildings certifying that in the existing state of the building the technical requirements for a "building with close to zero energy consumption" have been met in the sense of § 1, item 28 of the additional provisions of the Energy Efficiency Act - for a period of 10 years , starting from the year following the year of issue of the certificate;
• the buildings put into operation from January 1, 2005 and before December 31, 2023 and received certificates issued in accordance with the Law on Energy Efficiency, which in the existing state of the building certify that the technical requirements for "a building with close to zero energy consumption" in the sense of § 1, item 28 of the additional provisions of the Energy Efficiency Act - for a period of 10 years, starting from the year following the year of issue of the certificate.

The immovable property constituting public municipal and public state property, as well as the chitalishte community centers, the buildings owned by the Bulgarian Red Cross and by the Red Cross organizations of the other Member States, the higher schools and the academies and the places of worship and the monasteries of the lawfully registered religious denominations, are exempt from tax subject to the condition that they are not used for a for-profit purpose unrelated to their core activity.

"Prayer house or place of worship" shall have the meaning assigned to it in Item 6 of § 1 of the Supplementary Provisions of the Religious Denominations Act.

"Monastery" shall have the meaning assigned to it in Item 7 of § 1 of the Supplementary Provisions of the Religious Denominations Act.

Tax reliefs

A provision is made for a tax relief for corporeal immovable property used by individuals as their main residence. A rebate of 50 per cent applies to the tax due on any such immovable property.

Within the meaning given by Item 2 of § 1 of the Supplementary Provision of the Local Taxes and Fees Act, "Main residence" is the corporeal immovable property serving to satisfy the housing needs of the individual and of his or her family members during the predominant part of the year.

The main residence relief is enjoyable for only one immovable property.

In respect of any immovable property used as a main residence by a person who has lost more between 50 and 100 per cent of his or her working capacity, as established according to the relevant procedure, a rebate of 75 per cent applies to the tax due.

Deadlines for submission of returns

According to Article 14 (1) of the Local Taxes and Fees Act, the owner of any newly constructed immovable property which is not to be commissioned pursuant to the Spacial Development Act is required to notify the municipality exercising competence over the situs of the immovable property of such construction within two months by submitting a tax return for levy of an annual immovable property tax.

A declaration with the data necessary for determining the tax on the newly constructed buildings and/or self-contained works therein which are subject to commissioning according to the procedure established by the Spatial Development Act shall be submitted by the contracting entity within a 2-month period after the completion of the rough construction work on the building.

Companies have to report within 2 months the book value or any other information relevant for a tax assessment for each newly constructed or otherwise acquired immovable property or limited real right thereto.

Upon remodeling and alteration of the assigned use of an existing building or of a self-contained work in a building, as well as upon alteration of any other circumstance which is relevant to determining the tax, the taxable persons must notify the municipality by submitting a declaration within two months.

Tax Remittance

The immovable property tax is payable in two equal instalments within the following periods:

• till 30 June; and
• not later than 31 October of the year for which the tax is due.

Any taxpayer, who prepays the amount of tax due for the whole year by 30 April, enjoys a rebate of 5 per cent of the amount of tax due.

Administration of the immovable property tax

The immovable property tax is assessed, secured and collected by the municipal administration officers according to the procedure established in the Tax and Social-Insurance Procedure Code.

For administrative purposes, Bulgaria is divided into 265 municipalities. Each municipality builds and maintains a database on the corporeal immovable property located within its territory and of the taxable persons.

Every year, before the starting date for payment of the immovable property tax, every individual receives a notice of the amount of tax due for each immovable property owned. Notification may alternatively be sent via the Internet or in another appropriate way.

The note states the tax assessed value of the immovable (and, respectively, the undivided interest held by the person), the amount of tax due, the time limits and the installments in which it must be paid, and the address of the office where payment must be effected. 

In the cases where the person objects to the liability for tax as assessed, the person may apply for the issuing of an instrument according to the procedure established in the Tax and Social-Insurance Procedure Code, which is appealable according to an administrative procedure and by judicial process, as the case may be. 

Sanctions

In accordance with the provisions of Article 4 (2) of the Local Taxes and Fees Act, any delinquent taxes shall be collected with interest under the Interest on Taxes, Fees and Other Such State Receivables Act.

According to the provision of Article 123 (1) of the Local Taxes and Fees Act, any taxable person, who fails to submit a tax return under Article 14 of the Act, who fails to submit any such return in due time, or who fails to state or misstates any particulars or circumstances leading to underassessment of the tax or to exemption from tax, is liable to a fine of 10 to 400 BGN or in the case of legal persons or sole proprietors the penalty is in the range of 500 to 3,000 BGN, unless a more severe sanction is envisaged.

According to the provision of Article 127 (2) of the Local Taxes and Fees Act, default on payment of the immovable property tax is not treated as an administrative violation.

According to the provision of Article 128 of the Local Taxes and Fees Act, the written statements ascertaining the violations are drawn up by the municipal administration officers, and the penalty decrees are issued by the municipality mayor or by officials authorized by the mayor. The ascertainment of violations, the issuing, appeal against and enforcement of the penalty decrees follows the procedure established by the Administrative Violations and Sanctions Act.