The Law on Local Taxes and Fees /ZMDT/ regulates the rules relating to the taxation of immovable property /in their purchase and sale/, inheritances, property acquired by donation and in return, etc., as well as tax the liable persons, i.e. all persons who have to pay the tax.
With this article, emphasis is placed on the taxation of real estate, i.e. buildings and independent objects in buildings, as well as landed properties located on the territory of the country. The most common way to transfer ownership of real estate is through a contract of sale. Other ways of transferring ownership of real estate are through donation, exchange, making a non-monetary contribution to a commercial company, etc. According to the rules of the Law on Obligations and Contracts, the transfer of ownership or the establishment of other real rights on real estate must be carried out by a notarial deed. There are also exceptions to this rule /conclusion of a marriage contract, contribution, etc./.
Until 01.01.2019, everyone /including legal entities/ who acquires the right of ownership of immovable property had to declare this fact by completing and entering a Declaration under Art. 14 of the Law on Local Taxes and Fees in the Local Taxes and Fees Department in the municipality where the property is located.
However, as of 01.01.2019, the obligation of persons who have acquired real estate to declare it in the relevant municipality no longer exists. From this date, the notaries, within 7 days of the execution of the transaction by which the property right is transferred, must send to the relevant municipality information about the completed transfer of the property right for the determination and charging of property tax. After the notaries send information about the completed transaction to the municipality, this practically excludes the possibility of making mistakes when filling out the declaration or missing the deadline for its deposit by the new owner.
It is necessary to note that if before 01.01.2019 a property was not declared in the "Local Taxes and Fees" department at the location of the property in the event of a possible future sale of the property, the seller /current owner/ should declare the property by submitting Declaration under Art. 14 of the ZMDT, in which case the owner of the property will be penalized and will have to pay the taxes due for the property for the last 5 years.
Despite the canceled obligation, it is advisable for the new owner to check with the municipality whether information has been sent about the transfer of ownership.
In addition to the obligation of notaries to send information to the municipal administration, the obligation of the Registration Offices to notify the relevant municipality within 7 days of the transferred, established, amended or terminated real property rights to real estate is also provided. Within one month of receiving the notification from the Registration Office, the employee in the municipal administration determines the annual tax for the transferred, established, amended or terminated real property rights on real estate based on the tax assessment used to determine the tax under this section, and notifies the tax the obliged persons.
The Law on Local Taxes and Fees also regulates the cases of taxation on real estate and newly constructed buildings and structures, as it is provided that for newly constructed buildings, which are subject to commissioning in accordance with the Law on Territorial Planning, no tax declarations for taxation of annual tax. The data that are necessary for determining the tax on newly constructed buildings and/or on independent objects in them, are provided by the contractor of the construction / the owners of the land / to the employees of the municipal administration within two months after the completion of the building in rough construction / signed Act 14/, and these data are provided with a document according to a model determined by the Minister of Finance.
Property inherited by law or by will in the country or abroad of Bulgarian citizens, as well as property in the country of foreign citizens, are subject to inheritance tax. When an inheritance is discovered, the heirs by law or by will, or the testators, or their legal representatives are obliged within 6 months to submit a declaration in the municipality of the last place of residence of the testator, and if the latter had a place of residence abroad - at the location of more most of his property in the country. Inheritance tax is payable by legal or testamentary heirs, as well as testators.