Overview of Property Taxation

Bulgaria has one of the most affordable property tax regimes in the EU. Annual property taxes are low, transfer costs are reasonable, and there is no wealth tax on real estate holdings. Understanding your tax obligations as a property owner — whether Bulgarian or foreign — helps you budget accurately and stay compliant.

Annual Property Tax (Данък върху недвижимите имоти)

Every property owner in Bulgaria must pay an annual property tax to the local municipality where the property is located.

Tax Rate

• Ranges from 0.1% to 0.45% of the tax assessment value
• The exact rate is set by each municipal council and varies by municipality
• Troyan municipality applies a rate within this range

Tax Assessment Value

The tax assessment value is not the market value. It is calculated using a formula based on:

• Location of the property
• Type of construction (reinforced concrete, brick, wood)
• Year of construction
• Total built-up area
• Floor level and building height

In practice, tax assessment values are typically significantly lower than market prices, resulting in modest annual tax bills.

Payment Deadlines

• Tax is due in two installments: by June 30 and by October 31
• Paying the full annual amount by June 30 qualifies for a 5% discount
• Late payment incurs interest penalties

Waste Collection Fee (Такса за битови отпадъци)

In addition to property tax, owners pay a waste collection fee (commonly called “garbage tax”). This fee covers:

• Waste collection and transportation
• Waste treatment and disposal
• Cleaning of public areas

The rate is set by each municipality, calculated as a per mil (per thousand) of the tax assessment value. This fee often exceeds the property tax itself.

Transfer Tax (Данък при придобиване на имущество)

When property changes hands, the buyer typically pays a local transfer tax:

• Rate ranges from 0.1% to 3%, set by the municipal council
• Calculated on the higher of the declared sale price or the tax assessment value
• Most municipalities apply a rate of 2–3%
• Due at the time of the notary act signing

Capital Gains Tax

For Individuals

• Capital gains from property sales are taxed at 10% (personal income tax rate)
• Exemption: if the property was the seller’s primary residence for at least 3 years before the sale, the gain is tax-free
• Exemption: sale of up to two properties per year if owned for more than 5 years (and not used for business)

For Companies

• Capital gains are included in the company’s taxable profit and taxed at the standard 10% corporate tax rate
• No special exemptions apply

Tax on Rental Income

Individual Owners

• Rental income is taxed at 10% (personal income tax)
• A 10% deduction for expenses is automatically applied to the gross rental income
• Non-resident individuals must declare rental income in Bulgaria

Company Owners

• Rental income is part of corporate profit, taxed at 10%
• Actual expenses can be deducted, potentially reducing the effective tax rate

Tax Registration for Foreign Owners

Foreign property owners must:

1. Register the property with the local municipality tax office
2. Obtain a Bulgarian tax identification number if they do not have one
3. Declare the property within two months of acquisition
4. Pay annual taxes by the prescribed deadlines

Non-resident owners who are not present in Bulgaria can authorize a local representative to handle tax filings and payments.

Tax Benefits and Reductions

Some municipalities offer reductions for:

• Primary residence — reduced property tax and waste fee rates
• Renovated properties — temporary tax reductions for energy-efficient renovations
• Rural properties — some municipalities in less urbanized areas have lower rates

Property Taxes in the Troyan Area

Troyan offers competitive property tax rates compared to larger cities. The combination of lower tax assessment values and moderate municipal rates means annual property taxes on a typical apartment may be just BGN 50–200 per year, making property ownership very affordable.

Get Tax Advice for Your Property

Understanding and managing property tax obligations is essential for foreign owners in Bulgaria. Attorney Biser Dimov in Troyan can advise you on tax registration, help you understand your specific obligations, and connect you with local accountants for ongoing compliance. Contact us for a consultation.