Over the last 10 years Bulgaria has become one of the key areas in the Balkan region attracting foreign investment. Many positive things can be said about conditions in the country today and changes which have taken place within its economy, but it is important that some of the main issues surrounding foreign investment be clarified, firstly by defining the exact forms this investment can take.
According to Bulgarian law a ‘foreign investment’ is any investment made by a foreign person, in any of the following:
• Shares and stakes in commercial companies
• Ownership title over buildings and limited ownership title over property
• Ownership title and limited ownership title over movable property when considered long-term tangible assets
• Ownership title over enterprise
• Securities, including debentures and Treasury bonds, as well as their derivative instruments issued by the State, by the municipalities or by other Bulgarian legal persons, with a remaining term until maturity not shorter than 6 months
• Loans, also in the form of financial leasing, for a term not shorter than 12 months
• Intellectual property title - articles of copyright and kindred rights, patent inventions, utility models, trade marks, service marks and industrial designs
• Rights stemming from concession contracts and contracts for the assigning of management
It is also important to identify who can be classified as a foreign investor under the Foreign Investments Act:
• Legal entities, not registered in Bulgaria
• Partnerships, not legal entities, registered abroad
• Individuals who are foreign citizens and have permanent residence abroad
Foreign naturals, or legal entities with foreign participation, when willing to invest in different business fields, should initially obtain official permission from the following state authorities:
• The Banking Act - for engaging in banking activities and participation in banking companies
• The Insurance Act - for engaging in insurance activities and participation in insurance companies
• The Control of Explosives Act, Firearms and Ammunitions – for manufacturing of, or trading in, weapons, ammunitions and military equipment
• The Ownership Act - for acquisition of ownership rights over buildings and limited property rights over real estate in border areas and certain geographic regions, determined by the Council of Ministers
The Bulgarian government has an open and liberal attitude towards foreign investors; in recent years a more regulatory business structure has been put in place which offers them very favourable conditions, whilst the Bulgarian legal framework has begun adapting itself to EU requirements. Hence an excellent backdrop for investment has been created, and the country is very soon expected to become an even more highly sought after investment area within Europe.
