Investment Law

Investments in Bulgaria are governed by the Investment Promotion Act (referred below as “IPA”) and the regulations on its application. As the name suggests the main purpose of the Act is to stimulate investment in Bulgaria, to enhance the competitiveness of the Bulgarian economy through investment in scientific research, innovations and technological development in production and services adding high value while observing the principles of sustainable development and to improve the investment climate.

The governing regime is liberal and its main goal is to attract foreign investors.

Key advantages of Bulgaria as place for profitable investments are:

  • the macroeconomic and financial stability;

  • liberal investment regime;

  • the EU most favourable tax regime;

  • skilled labour;

  • lowest operational costs in Europe;

  • strategic geopolitical position allowing access to key markets like EFTA and Russia.

IPA aims at attracting prospective investors to Bulgaria by introducing a system of incentives for initial investments in tangible and intangible fixed assets and new job opportunities arising out of such investments. The system of investment encouragement is in accordance with EU requirements for state aid, in particular with Commission Regulation (EC) No 800/2008 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union (hereafter referred as “TFEU”).

Companies that invest a large amount of money obtain special status and favourable treatment. There are certain requirements listed in IPA that have to be fulfilled by companies to receive the status of certified investors. Investments exceeding certain thresholds and satisfying particular criteria (see below) are considered as Priority Investment Projects. Apart from the priority investment projects, investments may be Class A or Class B depending on the value of the investment. To obtain certification, the investment must be related to the setting-up of a new enterprise, to the extension of an existing enterprise/activity, to the diversification of the output of an enterprise/activity into new products; or to a fundamental change in the overall production process of an existing enterprise/activity.

The special certificate gives entitlement to use various benefits such as:

  • shortened waiting time for administrative services;

  • individualised administrative services needed for implementation of the investment project;

  • acquisition of a right of ownership or limited rights in rem to corporeal immovables;

  • financial support for training for attainment of professional qualification of people, including interns from the higher schools in Bulgaria, who are occupying the new jobs related to the investments.

  • In addition, investors certified as Class A (or for investors implementing two or more certified investment projects within the territory of an industrial zone) also get financial support by the state in the form of the construction of elements of the physical infrastructure from the nearest constructed element of infrastructure to the boundaries of the property ;

  • Training subsidy may also be awarded.

More about additional requirements for certification and benefits from being a certified investor see below.;

Additional requirement is that the investment must be implemented in specified economic activities:

  • of the industrial sector: processing industry (except for certain economic activities mentioned in Chapter I, Article 1, Paragraphs 2 and 3 of Regulation No. 800/2008);

  • of the services sector:

    1. activities related to information technologies and services;

    2. scientific research and development and professional activities of head offices;

    3. education;

    4. human health and residential care activities;

    5. warehousing and support activities for transportation sector.

  • all economic activities related to priority investment except for the economic activities under Chapter I, Article 1, Paragraphs 2 and 3 of Regulation No. 800/2008.

Besides implementation in certain economic activities, investments must comply with other requirements to obtain a certification, and namely:

  • the classification of the economic activities in which the investment is implemented is determined on the basis of the products (goods and services) planned to be produced, which must be at least 80% of the future total revenue resulting from implementation of the investment in the said economic activities;

  • the income from the implemented investment project must be at least 80% of the total income of the enterprise of the investor for the certain specified period;

  • the period of implementation of the investment must not exceed three years from the date on which the work under the project started to the date of the completion of the project, including for large investment projects;

  • an investment must not be below a certain threshold within a single establishment (depending on the classification of the investment);

  • at least 40% of the eligible costs of the tangible and intangible investments must be financed by the investor’s own resources or by external financing in a form excluding public support;

  • they must create and maintain employment which satisfy certain cumulative conditions set out in Regulation (EC) No 800/2008;

  • investment in the mentioned economic activities must be maintained in the corresponding area where it is located for at least five years, and in the case of small or medium enterprises (SMEs) three years, reckoned from the date of its completion;

  • the tangible and intangible fixed assets acquired must be new and purchased at market conditions from third parties independent from the investor.

Depending on the value of the investment, it may be classified as Investment Class A or Class B. The threshold of an investment, within single establishment, in a general case for the entire country must be BGN 20 million to be classified as Class A and BGN 10 million to be classified as class B. Specific lower thresholds apply if an investment is made in municipalities with high unemployment rate, or investment is made in high technology in the service sector or in the industrial sector.

In order to obtain a certification, an investor must submit an application to the IvestBulgaria Agency prior to commencing any work related to the investment project.

There are also Priority Investment Projects, which are related to all sectors of the economy in accordance with the requirements of Regulation (EC) No 800/2008 and are particularly important for the economic development of Bulgaria or for the regions in Bulgaria. Priority Investment Projects are stimulated through a package of measures which also includes the above mentioned benefits. However, they must satisfy one or more of the following requirements:

  • the amount of the investment must exceed at least three times the threshold amount specified for Class A investment;

  • the investment should create new job opportunities, the amount and conditions of which is specified by the Regulation on the Application of IPA;

  • the investment must envisage the development of industrial zones with the technical infrastructure necessary for attracting of investments under conditions and according to a procedure specified in the Regulations for Application of IPA;

  • the investment must envisage development of high technology parks with the technical infrastructure necessary for attracting of investments in scientific research and/or education and/or information technologies, including innovative activities for technological renovation of production products and technologies under conditions and according to a procedure specified in the Regulations for Application of the IPA.

A whole set of documents must be submitted to the Executive Director of InvestBulgaria Agency together with an application for priority investment certification.

Foreign investors which invest more than BGN 1 million in Bulgaria can benefit from permanent residence permit for them and their families. Such permit significantly facilitates the entry and the exit of the country.

Additional requirement is that the investment must be implemented in specified economic activities:

  • of the industrial sector: processing industry (except for certain economic activities mentioned in Chapter I, Article 1, Paragraphs 2 and 3 of Regulation No. 800/2008);

  • of the services sector:

    1. activities related to information technologies and services;

    2. scientific research and development and professional activities of head offices;

    3. education;

    4. human health and residential care activities;

    5. warehousing and support activities for transportation sector.

  • all economic activities related to priority investment except for the economic activities under Chapter I, Article 1, Paragraphs 2 and 3 of Regulation No. 800/2008.

Besides implementation in certain economic activities, investments must comply with other requirements to obtain a certification, and namely:

  • the classification of the economic activities in which the investment is implemented is determined on the basis of the products (goods and services) planned to be produced, which must be at least 80% of the future total revenue resulting from implementation of the investment in the said economic activities;

  • the income from the implemented investment project must be at least 80% of the total income of the enterprise of the investor for the certain specified period;

  • the period of implementation of the investment must not exceed three years from the date on which the work under the project started to the date of the completion of the project, including for large investment projects;

  • an investment must not be below a certain threshold within a single establishment (depending on the classification of the investment);

  • at least 40% of the eligible costs of the tangible and intangible investments must be financed by the investor’s own resources or by external financing in a form excluding public support;

  • they must create and maintain employment which satisfy certain cumulative conditions set out in Regulation (EC) No 800/2008;

  • investment in the mentioned economic activities must be maintained in the corresponding area where it is located for at least five years, and in the case of small or medium enterprises (SMEs) three years, reckoned from the date of its completion;

  • the tangible and intangible fixed assets acquired must be new and purchased at market conditions from third parties independent from the investor.

Depending on the value of the investment, it may be classified as Investment Class A or Class B. The threshold of an investment, within single establishment, in a general case for the entire country must be BGN 20 million to be classified as Class A and BGN 10 million to be classified as class B. Specific lower thresholds apply if an investment is made in municipalities with high unemployment rate, or investment is made in high technology in the service sector or in the industrial sector.

In order to obtain a certification, an investor must submit an application to the IvestBulgaria Agency prior to commencing any work related to the investment project.

There are also Priority Investment Projects, which are related to all sectors of the economy in accordance with the requirements of Regulation (EC) No 800/2008 and are particularly important for the economic development of Bulgaria or for the regions in Bulgaria. Priority Investment Projects are stimulated through a package of measures which also includes the above mentioned benefits. However, they must satisfy one or more of the following requirements:

  • the amount of the investment must exceed at least three times the threshold amount specified for Class A investment;

  • the investment should create new job opportunities, the amount and conditions of which is specified by the Regulation on the Application of IPA;

  • the investment must envisage the development of industrial zones with the technical infrastructure necessary for attracting of investments under conditions and according to a procedure specified in the Regulations for Application of IPA;

  • the investment must envisage development of high technology parks with the technical infrastructure necessary for attracting of investments in scientific research and/or education and/or information technologies, including innovative activities for technological renovation of production products and technologies under conditions and according to a procedure specified in the Regulations for Application of the IPA.

A whole set of documents must be submitted to the Executive Director of InvestBulgaria Agency together with an application for priority investment certification.

Foreign investors which invest more than BGN 1 million in Bulgaria can benefit from permanent residence permit for them and their families. Such permit significantly facilitates the entry and the exit of the country.

For more information about doing business in Bulgaria, see the complete text of our Guide.