VAT Treatment of Real Estate Transactions in Bulgaria: An Introduction

Property tax Bulgaria

Bulgaria’s Value Added Tax (VAT) law, or ЗДДС (Zakon za Danak Varhu Dobavenata Stoynost), contains specific provisions for real estate transactions. Understanding these provisions is crucial for anyone involved in buying, selling, or leasing property in Bulgaria. This blog post aims to provide a clear and concise overview of the VAT treatment of real estate transactions in Bulgaria, based on the reference text and additional research.

Key Definitions

Before delving into the specifics, let’s clarify some key terms:

  • Real Estate: This encompasses land, buildings, and parts of buildings.
  • VAT: A consumption tax levied on the value added at each stage of the production and distribution process.
  • Taxable Supply: A transaction subject to VAT.
  • Exempt Supply: A transaction not subject to VAT.

VAT on Land Transactions

The sale of land in Bulgaria is generally exempt from VAT. However, there’s a key exception: the sale of regulated land (урегулиран поземлен имот or УПИ), which is land designated for construction according to the Spatial Development Act (ЗУТ). The sale of regulated land is subject to VAT at the standard rate of 20%.

VAT on Building Transactions

The VAT treatment of building transactions depends on whether the building is considered “new” or “old.”

  • New Buildings: A building is considered new if it has not been occupied for more than five years since the date of its occupancy permit. The sale of new buildings is subject to VAT at the standard rate.
  • Old Buildings: The sale of old buildings (those occupied for more than five years) is generally exempt from VAT. However, the seller can opt to make it a taxable supply.

VAT on Leasing of Real Estate

The leasing of land and old buildings is generally exempt from VAT. However, as with the sale of old buildings, the lessor can choose to make it a taxable supply. The leasing of new buildings is always subject to VAT.

Additional Considerations

  • Option to Tax: In several instances, the law allows the supplier to choose whether to treat a transaction as exempt or taxable. This decision should be made strategically, considering the specific circumstances and the VAT status of the parties involved.
  • Place of Supply: For real estate transactions, the place of supply is where the property is located.
  • Taxable Amount: The taxable amount is generally the agreed-upon price. However, in certain cases, it cannot be lower than the acquisition price or cost of the asset.


Navigating the VAT implications of real estate transactions in Bulgaria can be complex. This guide provides a general overview, but it’s always recommended to seek professional advice for specific situations. Understanding the VAT rules can help you make informed decisions and avoid unexpected tax liabilities.

Ready to discuss your specific real estate needs in Bulgaria? Book a meeting with our experts today to learn more about how VAT may impact your transactions.

Please note that this blog post is intended for informational purposes only and should not be considered legal or tax advice. Always consult with a qualified professional for personalised guidance.

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