Bulgaria capitals

A general introduction to the regulation of foreign investments in Bulgaria

An excerpt from The Foreign Investment Regulation Review, 9th edition


After the collapse of the Soviet bloc, Bulgaria underwent significant socio-economic restructuring and opened its market to global capital, while integrating into European and global production networks. An essential element of the reform was to create a healthy business environment in which businesses can start, invest, grow and exit. All of this was achieved with the support of the European Union (EU), which Bulgaria joined in 2007.

The attractiveness of Bulgaria as an investment destination lies in the combination of three main factors: committed and skilled workforce, low costs of doing business (including labor),2 and full openness to trade and investment. The Bulgarian government seeks to attract foreign investors by offering them public financing, favorable tax treatment (including a 10 percent flat tax rate), preferential land purchase options and many other types of land. assistance and benefits. The generally healthy economic performance, gradual convergence with the EU common market, political stability and fiscal prudence have ensured stability and enabled Bulgaria to attract leading foreign investors.

Bulgaria has a long and rich tradition in the information technology sector and is still known as the Silicon Valley of South Eastern Europe.3 Many world famous companies such as SAP, Cisco, Atos, VMware, Johnson Controls, Microsoft, IBM and Oracle have already established themselves here. Bulgaria ranks 17th globally for 2021 and has traditionally been ranked among the top 20 outsourcing destinations in the world by AT Kearney Global Services Location Index.4 Foreign investors attracted by outsourcing opportunities in Bulgaria include Coca-Cola, Concentrix, Experian, HP and Sutherland. The Bulgarian automobile industry has also received special attention from foreign investors. It produces auto components and parts for brands such as Lamborghini, Bentley, Porsche, Mercedes-Benz, BMW, Audi and Tesla. The rapid rise of the industry in recent years has resulted in the sector expanding to the point that it is currently estimated at 11% of the country’s gross domestic product, prompting many investors to consider opening a second or even a third factory. .5 Other industrial sectors with the most promise for Bulgaria include: environmental technologies (including waste treatment and waste-to-energy technologies); electricity generation (including biomass, gas and nuclear power); travel and tourism (which plays a vital role in the country’s economy); agriculture (including the food and beverage industry, as well as agricultural machinery and equipment); Safety and security; medications; and the health and medical sector.6

Generally, Bulgaria grants national treatment to foreign investors and there are no general limits on foreign ownership or control of companies, nor is there any screening.7 or restriction of foreign investment in Bulgaria. As an exception, the 2014 law on offshore companies8 lists 27 activities prohibited for businesses by companies registered in tax havens and entities under their control, but the law also provides for a number of exceptions.9 There are also specific restrictions on foreign investment in the gaming industry under the Gaming Act of 2012.ten and with respect to the acquisition of agricultural land under the Agricultural Land Ownership and Use Act 1991.11 However, these restrictions mainly apply to countries that are not members of the European Economic Area (EEA) or the EU. Regulatory restrictions on business activities such as licensing, registration and authorization requirements sometimes involve the registration of companies under the laws of Bulgaria or another EU member state or state. EEA, but this in itself does not constitute a barrier to investment as foreign investors are free to incorporate or participate in Bulgarian companies.

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