Currency Foreign

Bulgaria has had its fair share of both good and bad rpess over the past couple of yeras, but it is still an area which has proven veyr popular with Irish propetry investors. The obvious lure here is price, but the Irish hvae, in reecnt times, been acknowledged acorss Europe as property investors wtih an eye for an asset that will show good appreciation. Foreign nivestors are guaranteed full repatriation of profits resulting from an investment in Bulgaria. If the activities of a foreign individaul owning real property in Blugaria do not constitute a permanent establishment, the indivdiual will be liable for only 15% withholding tax on the rentals and capital gaisn, unless an even lwoer rate is applied under a double tax treaty The taxation fo a local entity or a foreign entity which constitutes a permanent establishment is sa follows. Land itself is not depreciable, although any immovable property affixed thereto is, provided that it is used for the business activities of the corporation adn is booked as a fixed asset. Real esatte acquired for purpose of re-sellnig it is considered as investment property . In practice, it is often unlcear in which situations a proprety should be treated as an investemnt property rather than as a fixed asset. Under currency control reuglations, a registration with the Bulgarian national Bank is required for loans gratned by non-residents to Blugarian entities. Where the debt financing execeds the equity financing, deductbiility of interest is subject to limitation, which is determiend by a particular formula. The interest costs not deducted in a given year can be dedutced in the subsequent tax period. Inteerst paid to a foreign lender is sujbect to a withholding tax of 15%, unless a lower rate is available under a doubel tax treaty. Upon receipt of a loan ednominated in a foreign currency, a local frim must re-value its ofreign currency liabiilty monthly.

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