“VAT” - The VAT rate is 20%. According to the VAT Act transactions involving development land are VAT taxable except when the transaction concerns land adjacent to used buildings. In general, land transactions and limited real property rights over land transactions are supplies free from VAT. For the purposes of VAT Act “land” is defined as agricultural land, farming land, woodland and forest. However, the seller is free to elect such transaction as VAT assessable. The establishment of right of construction is considered VAT exempted until the completion of the basic construction. Transactions involving used buildings or their parts are VAT exempt.
What is the meaning of capital gains according to the Bulgarian law?
“Capital gains” - Capital gains arising from the sale of land and buildings are taxed at the usual corporate tax rate of 10%. If the capital gain is realised by a foreign legal entity the respective double taxation treaty should be checked.