Updated last 26.03.2021
This section provides the following information:
- What are the types of investment promotion measures?
- What are the promotion measures and incentives facilitating investments certified as class “A” and “B”?
- What are the promotion measures and incentives facilitating investments in Priority Investment Projects?
- What are the promotion measures and incentives facilitating investments certified as class “C”?
- What major tax incentives can be used for investments?
What are the types of investment promotion measures?
Investment projects are promoted depending on the size of the investment and the employment created. Four types of certificates are issued:
- Investment project certificate – class “A”;
- Investment project certificate – class „B“;
- Investment project certificate – class „C“;
- “Priority investment project” certificate.
What are the promotion measures and incentives facilitating investments certified as class “A” and “B”?
Once the investor obtains the respective certificate they can take advantage of a number of promotion measures and incentives that are aimed to facilitate the implementation of the investment project:
- Shorter deadlines for administrative services concerning procedures including under the Spatial Development Act, the Roads Act, the Water Act (for example, faster issuance of a permit for design, more accelerated approval of investment projects, more accelerated issuance of fire safety certificate, etc.) – valid for class “A” and “B” investments;
Individual administrative servicing required for the implementation of the investment project – valid for class “A” investments.The measure includes the provision of comprehensive and accurate information as to the documents required, the deadlines and fees under the applicable laws, as well as assistance for the issuance and receipt of all documents required. In order to take advantage of this measure you have to file a request to the Invest Bulgaria Agency (IBA) as a hard copy and on electronic carrier, or electronically (with or without an electronic signature);
|Important to know
The fees for the issuance of all documents, regardless of the investment class, are at the expense of the investor.
- Simplified regime (without tender or competition) for the acquisition of the title of ownership or limited material rights (right to use, right to passage, etc.) on real estate – private state and private municipal property, on properties, included in the capital of solely-owned companies with state or municipal interest and commercial companies, which capital is property of solely-owned commercial companies with state interest, as well as at leasing such properties – valid for class “A” and “B” investments;
- Financial support for the construction of elements of the technical infrastructure (public municipal / state property), for example – bridges, tunnels, overhead crossing, underpasses, railway crossings, etc., transmission lines, power substations, drinking and wastewater treatment plants, etc.) – valid for class “A” investments and two or more investment projects “B” in the respective industrial zone .
Priority for the use of this type of measures is given to investments implemented in high-technology activities  (set out in detail in the Rules on the Implementation of the Investment Promotion Act ) or activities in economically disadvantaged regions ;
- Financial support for the professional qualifications training of the people employed in the newly created job positions related to the investments – valid for class „А“ and „B“ investments. This type of measures may only be used for investments in high-technology activities or investments in economically disadvantaged regions and when the annual wage of the employees working under employment legal relationship in the enterprise is higher than the average for the country for the respective economic activity, in which the investment design is implemented;
- Financial support for partial refund of the statutory social security contributions made by the investor at his expense in the capacity of an employer for statutory social security, additional mandatory pension insurance and mandatory health insurance of the newly hired employees for the implementation of the investment project (the measure is applied when the annual wage of the persons working under an employment legal relationship in the enterprise is higher than the average for the country for the respective economic activity, in which the investment design is implemented – valid for class “A”, class “B” investments.
|Important to know
The refund of social security and health insurance contributions costs covers a period not exceeding 24 months as of the opening of the respective job.
What are the promotion measures and incentives facilitating the investments in a Priority Investment Project?
Investments projects that are certified as a Priority Investment Project may take advantage of all the promotion measures set out above for class “A” and “B” and the following additional measures:
- The financial aid for construction of the technical infrastructure may also be related to other elements of the technical infrastructure, stipulated in the regulations for application of the Promotion of Investments Act
- Sale or establishment of limited material rights on properties (private state or private municipal property), without tender or competition at prices lower than the market prices (but not lower than the tax assessment) and exemption from payment of state fees upon change of the intended purpose of the land;
- Sale, exchange or establishment of limited material right against consideration without tender or competition on properties owned by sole owner entities with state or municipal participation, as well as commercial entities whose capital is owned by sole owner commercial entities with state participation at prices lower than the market ones (but not lower than the tax assessment);
- Institutional support (for example, establishment of interdepartmental working group to ensure the provision of support with participants representing the stakeholders from the central and territorial executive authorities, the academic circles and non-government organisations), public-private partnerships with districts and municipalities, academics and others;
- Provision of grants for investments in education and scientific research (up to 50% of the project minimum level aplicable value) or investments in the processing industry (up to 10% of the project minimum level aplicable value).
- Opportunity for cooperation with the regions and municipalities, with higher education institutions and scientific organizations, as well with solely-owned companies with state or municipal interest or with budget enterprises, which could also be co-founders for incorporation of a commercial company through direct agreement with the investor
What are the promotion measures and incentives facilitating investments certified as class “C”?
- Shorter deadlines for administrative services provided by the municipality on the territory of which the investment is implemented;
- Individual administrative services provided by the municipality on the territory of which the investment is implemented;
- Acquisition of title of ownership or limited material rights on properties – private municipal property, without tender or competition (the measure is implemented, if it is not requested by an investor for class “A”, class “B” investment or priority investment project concerning the same property).
|Important to know
The procedure for the implementation of the promotion measures for class “C” investments is stipulated in an ordinance of the respective municipal council.
Each municipality should maintain on its website:
- Up to date list of the vacant terrains and other real estates available for the implementation of investments;
- Application forms and templates to obtain class “C” investment certificate.
What key tax incentives may be used for investments?
The corporate income tax on the annual taxable profit is 10%. The corporate tax on the annual tax profit is in the amount of 10 %. The Act provides for various tax reliefs, in the form of assignment of a corporate tax (the reassignment of a corporate tax is the right of a tax liable person not to pay to the state budget the stipulated under the provisions of the Corporate Income Tax Act amounts for corporate tax, but instead to keep these amounts and to spend them for purposes, provided for in a law):
- Tax relief, representing state aid for regional development (under article 189 of the CITA) – at this relief and incentive, the corporate tax for the generated during the year profit from production activity (including for toll manufacturing) is assigned of up to 100 %, if the following conditions exist;
₋ the tax liable person meets the conditions under article 182, paragraph 1 of the CITA;
₋ the activity, performed by the tax liable person, should not be in the branches transport, mining, steel production, energy, production of synthetic fibers, fishing and aquacultures, primary production, processing, realization and marketing of agricultural products, stated in Appendix No. 1 to the Treaty on the Functioning of the European Union;
₋ the tax liable person should perform production activity in implementation of a design and/or project for initial investment only in municipalities, where the unemployment in the year preceding the current year is or exceeds by 25% the average for the country for the same period;
₋ during the whole period the tax liable person should maintain at least 10 jobs, as at least 50 % of them are directly connected to the performed production activity;
₋ during the whole period the tax at least 30 percent of the personnel represent people with permanent address in the respective municipality with high unemployment rate;
₋ the assigned tax should be used in an investment, meeting the requirements of article 189 of the Corporate Income Tax Act (CITA).
- Tax relief, representing aid de minimis (under article 188 of the CITA). The aid de minimis is the aid, granted to one and the same enterprise during certain time period and which does not exceed certain amount (in the general case EUR 200 000), which due to its small amount could not affect negatively to the competition and the EU internal market. For such tax relief to be utilized, the following conditions should be met:
₋ the tax liable person should meet the conditions under article 182, paragraph 2 of the CITA;
₋ the tax liable person should execute production activity only in municipalities, where the unemployment for the year preceding the current one is with 25 % or more higher than the average for the country for the same period;
₋ for the whole period the tax liable person should maintain at least 10 jobs, as at least 50 % of them are directly engaged in the performed production activity;
₋ during the whole tax period at least 30 % of the personnel are persons having permanent address in the respective municipality with high unemployment;
₋ the assigned tax should be used for an investment, meeting the requirements of article 188 of the CITA.
- Tax relief, representing state aid for agricultural producers (under article 189b of the CITA) – the Act allows assignment of the corporate tax in amount of up to 60 %, when the provisions of article 189b of the CITA are met.
- Tax relieves upon hiring unemployed people, as well as for companies hiring disabled people, is stipulated in art. 177 – 178 of Corporate Income Tax Act (CITA).
Withholding tax of 5% is charged on dividends and liquidation shares distributed by local legal entities in favour of:
- Foreign legal entities except in the cases when the dividends are realised by a foreign legal entity with a permanent establishment in the country;
- Local legal entities that are not traders, including municipalities.
No withholding tax is charged on dividends and liquidation shares when distributed in favour of a foreign legal entity, which is a local entity for tax purposes of a European Union (EU) member state or another state party to the Agreement on the European Economic Area (EEA). In other words, if the Bulgarian company distributes profit to a foreign company which is domiciled in the EU or the EEA, the Bulgarian company is not obliged to withhold and pay dividend tax.
10% tax is charged on other incomes of foreign persons having a source in the country. Additional information regarding these liabilities is available in art. 195 of CITA.
When applying the withholding tax, please, have in mind that Bulgaria has signed Double Tax Treaties (DTT) with almost 70 countries which may be applicable in the respective situation.
The procedures for the application of the DTT and the DTT themselves signed by Bulgaria are available on the website of the National Revenue Agency
|Value added tax
The value added tax generally is 20 %. For certain hotel, tourist, restaurant and catering services, delivery of books and food products, suitable for babies and small children, and pampers and sports devices, the tax rate is in the amount of 9 %. In stipulated in the Value Added Tax Act cases the legislator has provided for a zero rate..
The Act (art. 164-166 of VATA) allows for tax incentives in relation to an investment project that:
- Is approved by the Minister of Finance;
- Amounts to more than BGN 5 million;
- Creates more than 20 new jobs;
- Has an implementation term of up to 2 years;
- Has secured financing.
A special procedure is envisaged for charging the tax in the case of import of goods, while the tax may be charged by the VATA registered person, if importing goods (except goods subject to excise duty) as per individual list approved by the Minister of Finance. In this case the customs authorities allow clearance of the goods without effective payment or collateralisation of the tax.
The Act also provides for shorter 30-day deadline for refunding of the tax.
|For more information
Additional information is available on the websites of:
 An industrial zone is an aggregate of one or more adjacent land plots, located on territories, for which according to a spatial plan are designated for manufacturing activities..
 “High Tech Activities” are the determined by EUROSTAT under the EC Statistical Classification of Economic Activities (NACE), respectively its direct application in the Republic of Bulgaria through the Classification of Economic Activities, defined with the Regulations for Application of this Act, as:
a) “High Tech Manufacturing Industries”;