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 the buildings and lots 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 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 greenspaces and landscaped links between greenspaces and nature-conservation areas, for decorative water features, for public access and transport, including bicycle paths and for movement of people with disabilities, etc).
No tax is levied on:
- 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).
Taxable persons
The taxable persons are:
- the owners of taxable corporeal immovables;
- 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;
- 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 liability for tax applies to these persons in proportion to the parts appertaining to them.
Immovable property tax is payable irrespective of whether the corporeal immovables are used of not.
Taxable amount
The taxable amount for taxation of residential and non-residential properties owned by individuals is the tax assessed value of the immovable, 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 law.
How is the tax assessed value arrived at?
The tax assessed value of corporeal immovables is determined at rates specified in an annex to the Local Taxes and Fees Act depending on the type of the immovable, the location, the surface area, the structure and the depreciation, and is communicated to the taxable persons.
Rates of tax
The rate of immovable property tax is determined by an ordinance of the Municipal Council, within a range of 0.1 to 4.5 per mille of the tax assessed value of the corporeal immovable.
Exemption from taxation:
The following are exempt from immovable property tax:
- any immovables constituting public municipal property;
- any immovables constituting public state property, except where the immovable has been allocated for use to another person and this person is not exempt from tax;
- the chitalishtes;
- 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;
- any houses of worship of the lawfully registered religious denominations in Bulgaria;
- any parks, any sports grounds, any playgrounds and other such immovables for public use;
- any buildings designated as cultural assets, where not used for a for-profit purpose;
- any museums, any galleries, and any libraries;
- any immovables which are directly used for the operation of public transport;
- any buildings which were commissioned prior to 1 January 2005 and which meet specified energy efficiency standards for a period of seven and three years and, where measures for utilization of renewable energy production sources are furthermore applied for satisfying the needs of the building, the exemption is for a period of ten and fifteen years.
The immovables constituting public municipal and public state property, as well as the buildings owned by the Bulgarian Red Cross and by the Red Cross organizations of the other Member States, by the higher schools and the academies and the places of worship 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.
Tax reliefs
A provision is made for a tax relief for corporeal immovables used by individuals as their main residence. A rebate of 50 per cent applies to the tax due on any such immovables.
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 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.
In respect of any immovable used as a main residence by a person who has lost more than 50 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.
Time limits for submission of returns
According to the provision of Article 14 (1) of the Local Taxes and Fees Act, the owner of, or, respectively, the holder of the limited real right to, any newly constructed or otherwise acquired immovables is required to notify the municipality exercising competence over the situs of the immovable of such construction or acquisition within two months by submitting a tax return for levy of an annual immovable property tax.
Where the owner or, respectively, the holder of the limited real right, is an enterprise, the book value and any other circumstances relevant to the assessment of the tax must also be stated in the return.
Upon alteration of any circumstance relevant to the assessment of the tax, the taxable persons must notify the municipality by a tax return within two months.
Tax remittance
The immovable property tax is payable in two equal instalments within the following periods:
- from 1 March to 30 June; and
- not later than 30 October of the year for which the tax is due.
Any taxpayer, who or which prepays the amount of tax due for the whole year from 1 March to 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 by the Tax and Social-Insurance Procedure Code.
For administrative purposes, Bulgaria is divided into 264 municipalities. Each municipality builds and maintains a database on the corporeal immovables 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 owned. Notification may alternatively be 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 instalments which 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 by 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
According to the provision of Article 4 (2) of the Local Taxes and Fees Act, any delinquent tax is collected with interest under the Interest on Taxes, Fees and Other 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 BGN 10 or exceeding this amount but not exceeding BGN 400, and any such legal person is liable to a pecuniary penalty of BGN 500 or exceeding this amount but not exceeding BGN 3,000, unless subject to a severer sanction.
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.