Bulgaria and Capital Gains Tax

Hi,

I'm buying an apartment in Bulgaria. The developer is also giving a portion of the land with this apartment for free (nasty developers keep the land and then will charge you ground rent in the future). They plan on selling you the company which has the land and the apartment as part of this company. However, I wil end up paying coporation tax in Bulgaria when I sell on this company. I'm worried that when I bring the money back to Ireland I will get stung with Capital gains tax also.

My proposal to the developer is that they transfer the land for free to me as part of the company and transfer the apartment at full price under my personal name (in Bulgaria you need a company to buy land but not for an apartment). If I sell on the property I'll pass on the land for free and just sell the apartment as a private sale. As Ireland and Bulgaria have a double taxation agreement and the capital gains tax in Bulgaria is 21% I think I won't have to pay any CGT in Ireland.

Can you please let me know your opinion.

Thanks,

Ian

As there is a double taxation agreement in place once you pay the bulgarian CGT you are not liable for CGT here

As an Irish resident, you are assessable to CGT on foreign gains. When you sell the property, you will need to calculate your Irish CGT position according to Irish CGT rules in force at that time. Any Bulgarian CGT you also pay can be used as a credit against your Irish liability, presuming of course that the double tax treaty between the countries is still in place at that stage.

Despite what the last poster said, the fact that you pay Bulgarian CGT does not automatically exempt you from Irish CGT.

try reading this [broken link removed]

"If I sell on the property I'll pass on the land for free and just sell the apartment as a private sale "

I am very confused as to why you are getting this land ?

Is the apartment built on this land or is this land seperate from the apartment? If you intend to "pass on the land for free" when you sell, then why bother with the hassle of the land, why not buy the apartment from the developer as a private individual, not a company & tell the developer to keep his land ?

You need to be very careful who you are delaing with when buying in Bulgaria, I placed a deposit on an apartment in January this year & was told by the Irish agent 2 weeks ago that the apartment was sold to someone else & there was nothing I could do about it. I can only assume that I was gazumped & I have now lost 5 months time.

It is also important to make sure that the price you are paying for your apartment includes VAT & ensure your contract docs includes this.

Hi,

When you buy an apartment typically the developer retains ownership of the land that is shared by all the apartments. This means in the long term the developer can either try to sell you a portion of this land in the future or charge you ground rent on it. I'm dealing with an Irish Developer who sells you the apartment and the land together as one package as he's not interested in doing anything underhand.

Regarding the situation that happened to you, you probably signed a preliminary contract in English and not in front of a notary. This document will not stand up in a bulgarian court of law so you have no rights whatsoever. With the Irish developer I signed and Irish contract directly with him.

Regarding the vat issue, the developer will place the full amount on the notary deed not the tax estimation price (i.e. lower price put on the notary deed so they only pay vat on this lower amount).