Buying property through a company in Bulgaria: when it makes sense, and the traps

Why buy property through a company at all

If you are a foreign buyer looking at Bulgarian property, you will run into a specific historical fact fairly quickly: non-EU citizens cannot own land directly in Bulgaria, only buildings. Land ownership by individuals and companies from outside the EU/EEA is restricted by the Constitution unless an international treaty says otherwise. For decades, the practical workaround was to found a Bulgarian company (typically an EOOD, a single-owner limited liability company) and buy the land through it, since a Bulgarian-registered company can own land regardless of who owns the company. That is still the case today if you are not an EU/EEA citizen.

Beyond land ownership, three more reasons come up constantly among the owners we talk to:

• VAT credit on a new-build purchase. If the company is VAT-registered and buys a new property to use in a taxable activity, such as renting it out commercially, in some cases the VAT registration lets you reclaim the VAT paid on the purchase as input tax credit. We say “in some cases” on purpose: the property has to qualify as “new” under the law, the supply has to be taxable rather than exempt, and the property genuinely has to serve the business, not personal use. This is not automatic, it depends on the case, so get it checked against your specific deal before you sign, with an accountant or tax advisor.
• Buy-to-let as a business. If you plan to rent the place out, running it through a company means maintenance, repairs and depreciation reduce the taxable base, and rental income is company revenue, not personal income you have to explain separately to a foreign tax authority back home.
• Managing it from abroad. Owning through a Bulgarian company also means the company, not you personally, is the counterparty for utilities, insurance, letting agents and repairs. That is convenient when you are not in the country to sign paperwork in person.

The company is not free to run once it owns property

Here is the trap: you buy the property through the company, enjoy the tax result, and then forget the company is a living entity, not a one-time transaction.

From the day of purchase, the company carries obligations regardless of what else it does:

• Full bookkeeping every month, even while the property sits empty.
• An annual financial statement and a tax return every year, mandatory for every EOOD or OOD (Bulgaria's single-owner and multi-owner limited liability company forms), regardless of turnover.
• A depreciation schedule for the property: a formal timetable for writing down its value, for accounting and tax purposes, year after year.
• Monthly VAT returns if the company is VAT-registered, even at zero turnover.

In other words: a “dormant” company holding a property is not actually dormant on paperwork. It sleeps on activity, but stays awake on filings. That gap is exactly why we built a Dormant Company plan, priced for this minimum, instead of making you pay for a full accounting service you do not need.

The tax mechanics, in plain terms

Depreciation. Buildings fall into the asset category with a maximum annual tax depreciation rate of 4%, meaning the property's value is written off gradually, over roughly 25 years. Each year this reduces the company's taxable profit, legally and predictably.

Declaring rent. If the company rents the property out, the income is booked as business revenue. It is not declared separately as “personal income”, because it is not: it belongs to the company.

Corporate tax. The company's profit, including from rent, is taxed at the flat 10% corporate rate, after deducting recognized expenses: depreciation, maintenance, loan interest, insurance.

On sale. This is where people get caught off guard. If the company claimed VAT credit on the original purchase and then sells the property before a set period elapses (the rule generally looks at a 20-year adjustment window for VAT credit on real estate), part of the deducted VAT may have to be repaid to the state, proportional to the remaining period. Separately, if the sale price exceeds the property's tax book value, the difference is profit and is taxed under corporate tax. The calculation is not trivial, and this is exactly where owners who work it out themselves, on a spreadsheet, without seeing the full picture, get it wrong.

The common mistake: using the company's property yourself

A familiar pattern: the company buys an apartment, the owner moves in “temporarily”, or lets a relative use it rent-free. Bulgarian tax law looks at this closely.

The company's owner and the company itself are treated as related parties. If the company's property is used for free, or below market rent, by the owner, the manager, or someone connected to them, this can be classified as a hidden profit distribution. The consequences are unpleasant: the expense is not tax-deductible, an additional tax applies to the distribution, and if the tax authority audits it, the numbers can grow quickly with interest and penalties.

This area has real nuance, and the specific verdict depends on the case: how the property was used, at what price, for how long. Do not self-diagnose here, talk to an accountant. If you are thinking of living in your company's property, even briefly, say so to your accountant beforehand, not after the fact.

The “one company per property” pattern

Owners with more than one property rarely stack them all into a single company. The pattern we see constantly among buy-to-let owners, including many living abroad, is one EOOD per property. The logic is simple and defensive.

• If a problem arises with one property, a tenant dispute, a legal claim, a lien, it stays isolated in its own company and does not threaten the others.
• Selling one property is cleaner: you sell the shares of one EOOD, or the property itself, without untangling a balance sheet shared with five other assets.
• Between tenants, while the property sits empty, the company switches to “dormant” mode: minimal bookkeeping, minimal cost, but a clean status and history for the next tenant or buyer.

The cost of this pattern is administrative: several companies mean several annual reports, several filings, a bit more coordination, all while you may be managing it from a different country and time zone. That is exactly why managing several companies from one place, instead of a separate accountant per company, removes the specific fatigue foreign owners describe most.

FreeMe.bg and property: exactly what we are building for

None of the above is theoretical for us. FreeMe.bg is built specifically for EOOD owners with a property inside: a company without complex daily operations, but with real accounting and tax duties that cannot be skipped, including when the owner lives abroad. The smart assistant tracks the depreciation schedule and deadlines, and a certified accountant reviews the specific situations, personal use of the property or a future sale, before they turn into a problem. Deeper consultations, tax planning around a sale for example, are billed separately, but the core monitoring is part of the subscription.

Useful next reads:

Which company type to pick if you are buying property through it
How VAT and tax filing will work
Managing several companies from one place

FreeMe.bg is live, and property owners running things through a company are exactly what we built it for. Log in with your Google account and manage your property today.