Bulgaria
Investment climate and business opportunities
June 2014
• Investments and economic relations
• Why invest in Bulgaria?
• Government incentives
Investments and economic relations
FDI Inflow:
In million euro
10000
9052
9000
8000
7000
6728
6222
6000
5000
4000
2437
3000
2000
1151
1330
1070
1092
1000
0
2006
2007
Source: Bulgarian National Bank
2008
2009
2010
2011
2012
2013
Investments and economic relations
FDI Inflow:
FDI by Host Country,
1996-2013 (€ mln.)
Switzerland
1347.2
Italy
1401.6
FDI flows by industry,
1996-2013 (€ mln.)
3207.8
Other
2647.4
Telecom
1439.7
USA
2383.6
UK
7056,2
Manufacturing
2745.4
Germany
3490.6
Energy
2089.4
Cyprus
2948.3
Construction
1855.3
Russia
7059,5
Trade
3560.1
Greece
5750,9
Austria
6306,2
Netherlands
0
1000 2000 3000 4000 5000 6000 7000
Source: Bulgarian National Bank
7479,3
Finance
7936,9
Real Estate
0
2000
4000
6000
8000
Investments and economic relations
The role of Italy as a trade partner for Bulgaria:
1981.4
2000
1925.9
1872.3
1760.8
1800
1626.3
1511.2
1600
1200
1392.2
1318.4
1400
1271.9
1216.5
1141.6
1334.4
1763.8
1695.9
1892.8
1675.2
1458
1092.6
1132.5
1000
1043.2
800
600
400
200
0
2004
2005
2006
2007
2008
2009
Export
Import
2010
2011
2012
2013
……….. – Bulgarian trade relations
Why invest in Bulgaria?
WHY INVEST IN BULGARIA?


Political and business stability
−
EU and NATO member
−
Currency board
−
Low budget deficit and government debt
Low cost of doing business
−
10% corporate tax rate (0% in high unemployment
areas)


−
10% personal income tax
−
Lowest cost of labor within EU
−
Favorable office rents and low cost of utilities
Access to markets
−
European Union / EFTA
−
Russia
−
Turkey / Middle East
Educated and skilled workforce
Why invest in Bulgaria?
Real GDP Growth:
8
6.5
6.4
6.2
6
4
3.4
3.2
2
1.7 1.8
2
0.4
0.6
0.4
0.9
0.1
0
2006
2007
2008
2009
2010
-4
-4.5
-5.5
EU
Source: Eurostat
2012
-0.4
-2
-6
2011
Bulgaria
2013
Why invest in Bulgaria?
Taxation in Bulgaria:
Country
Bulgaria
Serbia
Romania
Hungary
Czech Rep.
Poland
Turkey
Slovakia
UK
Italy
Spain
Germany
France
Income Tax (%)
Corporate
Individual
10
10
15
10-20
16
16
10/19
16
19
22
19
18/32
20
15-35
23
19-25
23
0-45
27.5
23-43
30
24, 75-52
30-33
14-45
(effective)
33.33
5.5-41
Source: Worldwide - tax
Social Security (%)
Employer
Employee
17.9-18.5
12.9
16.9
16.9
28.45
16.5
28.5
18.5
34
11
22.14
13.7
27
15
34.8
13.4
13.8
12
30
10
29.9
6.35
VAT (%)
20
20
24
27
21
23
18
20
20
21
21
19.7
20.6
19
50
20
19.6
Why invest in Bulgaria?
Business costs in Bulgaria:
Location
Price Q1 2013, EUR/sq m/month
Office prime rent in Sofia CBD
Class A 10-12
Office prime rent in Sofia non CBD
Class A 8 – 11
Office rent in Sofia
Class B 5 – 8
Office prime rent in Plovdiv
Class A 4 - 6
Office prime rent in Varna
Class A 3 – 6
Office prime rent in Burgas
Class A 3 - 5
Prime rent for contemporary industrial space
3-5
Industrial construction Prime industrial and
logistics, Sofia region EUR/sq m/
350-450
Why invest in Bulgaria?
Business costs in Bulgaria:
€/GJ, 2013
€/kWh, 2013
Gas prices for industrial users in
Europe
12.23
Germany
11.03
France
Electricity prices for industrial
users in Europe
0.124
Slovakia
Czech Rep.
0.101
0.094
Spain
10.65
EU Average
EU Average
10.56
Hungary
0.090
Italy
10.53
Romania
0.090
Austria
10.70
Turkey
0.089
Germany
0.086
Estonia
0.084
Poland
Bulgaria
Czech Rep.
10.06
9.89
9.00
0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00
Source: Eurostat
Bulgaria
0.080
0.000 0.020 0.040 0.060 0.080 0.100 0.120 0.140
Why invest in Bulgaria?
Potential fields of collaboration
Services:
• Transport and Logistics
• Information technologies
• Outsourcing of business processes
• Health and tourism related to healthy lifestyle
Industry:
• Transport equipment and machine building
• Electronics and Electrical engineering
• Chemical industry
• Food and Agriculture
Resources:
• Mineral bottled water
• Sea and winter resorts
• Balneology
Government incentives
Government incentives
Legal framework for investing in Bulgaria:
• Equal treatment of Bulgarian and foreign investors
• Thresholds of investments that need to be covered in
order to apply for investment certificate Class A, B
and Priority investment projects
• Business plan and several standard documents
required
Government incentives
Investment incentives under the Investment Promotion Act:
• Acquiring state or municipal land without a tender procedure
(investments Class A and B)
• Financial support for construction of technical infrastructure
elements (only for class A)
• Acquiring state or municipal land without a tender procedure on a
lower cost, but not lower than the price evaluation for tax
purposes (Priority investments)
• Lower tax rate on changing the status of the acquired land
(Priority investments)
Government incentives
Investment incentives under the Investment Promotion Act:
The incentives for class A and B could be:
• Shortened administrative procedures
• Reimbursement of labor costs paid by the employer
• Financial support of up to 25% of the entire costs for specific
training of minimum 50 employees
The incentives for Priority investment projects
could be:
• All the incentives for Class A and B
• Financial grants of up to 50% for education and
R&D projects;
• and up to 10% for manufacturing projects
Government incentives
Legal framework for investing in Bulgaria:
Tax incentives:
• 10 % corporate tax (flat rate)
• 0 % corporate tax in areas with high unemployment rate
• 10 % personal income tax rate (flat rate)
• VAT exempt for import of equipment for investment projects
Thank you
for your attention!
Sofia 1000, 31 Aksakov Str.
Phone: (+359 2) 985 5500
Fax: (+359 2) 980 1320
E-mail: iba@investbg.government.bg
Web: www.investbg.government.bg