Last Updated on October 22, 2023 by Bulgarian attorney
Inheritance Tax in Bulgaria
In Bulgaria, inheritance tax is a financial levy imposed on the estate of a deceased individual, and it applies to both Bulgarian citizens and foreign nationals who have assets located within the country. The tax rates can vary depending on the relationship between the deceased and the inheritors.
Planning your cross-border inheritance in Bulgaria
You have the option to select either the law of your country of nationality or the law of the country where you were last residing to govern your inheritance. Ordinarily, your inheritance will be overseen by an authority, often a court or a notary, in the EU country where you were last residing. This authority typically applies its own national law to govern the process.
However, European Union (EU) regulations provide you with the flexibility to designate that the law of your country of nationality be the governing law for your inheritance, whether that country is within the EU or not. Nonetheless, it’s worth noting that there are situations where your country of origin may not be as advantageous as having your inheritance regulated by Bulgarian Inheritance law. It’s important to highlight that in Bulgaria, surviving spouses and direct lineal heirs, such as parents, children, and grandchildren, are exempt from paying Inheritance tax.
If you hold multiple nationalities, you can choose the law of any of your nationalities as the governing law for your inheritance.
To make this choice legally binding, it is essential to express your preference explicitly and clearly. You can do this by including the designation in a will or a separate declaration. Your will or declaration will be deemed valid as long as it complies with the requirements of either:
- The EU country where you were last residing.
- The law of your country of nationality, should you choose this option.
Inheritance Tax rates in Bulgaria
- surviving spouses and direct lineal heirs, such as parents, children, and grandchildren are exempt from inheritance tax;
- siblings and the children of siblings – from 0.4 to 0.8 % per portion in excess of BGN 250,000;
- any other heirs – from 3.3 to 6.6 % per portion in excess of BGN 250,000.
The colleagues at TaxFoundation.org have presented inaccurate data regarding Bulgaria’s inheritance tax rate. In reality, it commences at an unmatched 0% for surviving spouses, children, and grandchildren, in direct contrast to their reported range of 0.4% to 6.6%.
What is included in the taxable estate?
- movable property;
- real estates;
- the rights to movable and immovable property;
- other property rights, receivables, bank deposits, and liabilities.
- Inheritance of company shares in Bulgaria
Identifying and appraising the decedent’s estate in Bulgaria
The estate of the deceased is assessed and appraised in Bulgarian Lev (BGN) at the time the succession is initiated, which corresponds to the date of the decedent’s passing.
- real estates – at the assessed value;
- foreign currency and precious metals – at the central exchange rate of the Bulgarian National Bank;
- securities – at fair market value or, where the fair market value cannot be established without considerable cost or difficulty, at face value;
- transport vehicles – at the insured value;
- any other movable property and rights – at fair market value;
- enterprises or company shares – at fair market value or, where determination of the said value requires considerable expense or causes difficulties, according to accounting data;
- real estates located abroad – at a tax value stated in a document issued for taxation purposes by a competent authority of the respective State. The document shall be translated into Bulgarian language by a sworn translator.
The liabilities of the ancestor shall likewise be valued according to the abovementioned rules.
What is the difference between Power of Intestacy and Beneficiary
A “power of intestacy” and a “beneficiary” are two different concepts related to the distribution of assets and estates, especially in the context of wills and inheritance. Here’s how they differ:
The key difference between a “power of intestacy” and a “beneficiary” is that the power of intestacy is the legal framework applied when there is no valid will or when the will is incomplete, while a beneficiary is a person or entity specifically chosen by the decedent to receive assets as per their stated wishes in a valid will or other legal documents. Beneficiaries have a direct claim to the specified assets, bypassing fully or partly the laws of intestacy.