Economic Information about Bulgaria


key indicators


why bulgaria


basic details about bulgaria

Bulgaria’s economic situation has seen some drastic changes in the past 16 years, namely its difficult transition, both politically and economically, and the poor economic situation that followed it. At the turn of the millennium, however, encouraging changes began occurring in the country. First of all, the revamped mentality and outlook of the county’s developers, builders and final consumers have all changed for the better ,after all of them had internalized the need to provide a calm and comfortable environment at a low cost. The companies’ final products have greatly improved following these changes.
The economic and political stability established at the beginning of 2002 brought consequently years of strong growth in the construction business. The country’s banking system also contributed in bringing forth substantial improvements in the life standard. It can be said therefore that a construction “boom” is currently unfolding in Bulgaria’s market and current forecasts promise continued grown in the construction sector for the coming years.

Undoubtedly, a significant step forward for the country has been Bulgaria’s entrance into the European Union. Bulgaria certainly benefits from the EU’s economic prosperity as well as from the stable situation in the greater European market, without mentioning other geopolitical factors and the benefits of globalization, making Bulgaria’s economy part of the global market. The entrance of foreign investors and developers into Bulgaria’s construction market will create greater competition and in turn, bring forth improved end products. Greater workmanship and higher standards of services can already be seen as the country’s construction sector is bracing itself to be a worthy competitor on European level.

Having mentioned all the above, one can be assured that the prices of dwelling in Bulgaria will certainly not see a decrease as the country enters the world stage. A continued sale increase will remain between 15% and 25% while standards of quality, comfort, and environmental issues will surely not be compromised. Previous examples, such as Spain and other nations, teach us that new construction indeed plays a dominant role in a country’s real-estate market. The modern consumer today understands that quality of life does not only depend on a good dwelling, but must also take into consideration other factors such as the environment as well as sociological and visual factors. Entrance into the European Union brings a raised bar of standards in all of these fields.

Why Bulgaria?
  • Economic and political stability

  • 10% Cooperative tax (lower than the EU and Cyprus), 0% for industrial companies which work in areas with high unemployment rate.

  • In the year 2006 the Bulgarian economy reached a growth of 6%, the highest in Europe where the average is 2.3%.

  • After entering the EU, Bulgaria is receiving 12 billion euro budget during a period of 7 years, for infrastructure rehabilitation.

  • Possibility to return investment funds to the origin country with no charge.

  • Private lawyers and notaries

  • 22% of the citizens are high educated

  • Rent expenses are 30% from the average of EU countries.

  • 24% yearly tourism growth.

  • The lovely seacoast, the mountains, the climate, the rich cuisine, the culture and the people turn Bulgaria into an attractive tourism destination.

Official name: Republic of Bulgaria
Surface: 110,993 sq. km.
Geographical location:
Republic of Bulgaria is located in the northeastern part of the Balkan Peninsula. On the west Bulgaria has a common border with Serbia and Macedonia, with Greece and Turkey on the south, on the east is the Black Sea and with Romania to the north mostly along the Danube.
Main natural resources: Ore, Coal, wood
Population: 7,679,290 inhabitants
Population density: 69, 3 inh./ km2
Main population groups: Bulgarians 85,8%, Turks 9,4%, Others 6,7 %
Religion: Orthodox 83,9 %, muslims 12,1 %, others 1 %
Languages: Bulgarian
Capital (inhabitants): Sofia (1 377 531)
Main cities: Sofia, Plovdiv, Varna, Burgas
GDP growth (annual rate): 6.2 % (2006)
Unemployment (annual rate): 8 % (2006)
Productivity (annual rate): 8.7 % (2006)
Export of goods and services: 8.5 % (2006)
Import of goods and services: 13.1 % (2006)
CPI: 5.00 % (2006)
Form of government: Parliamentary Republic.
State formation: Year 681 – establishment of the Bulgarian state
March 3rd 1878 (liberation of the Ottoman Empire)
Bulgarian Constitution: 16th April 1879, revised in 12th July 1991
Electoral system: Proportional
Administrative division: Bulgaria is divided into 28 provinces
Establishment of diplomatic relations: Since 9th June 1879
European Union: Bulgaria is a member in the EU since 1st of January 2007
Entry requirements: Passport or identity card. No visa is required for EU citizens.
Currency: Lev (leva) divided into 100 stotinki
Exchange rate Lev/Euro fixed at: 1 Lev = 1.9553 Euro
Public holiday: 3rd of March

Business sectors of highest potential for US investors
Sector Opportunities
○ Availability of skilled personnel – 7% of the workforce with engineering university degree
○ Reasonable labor cost - $1.13 total hourly compensation for manufacturing workers (2005)
○ Electrical engineering
○ Mechanical engineering
○ Electronics
○ Automotive parts manufacturing
○ Reliable telecom infrastructure
○ Talent pool of qualified multilingual IT and F/A professionals
○ Reasonable office prices
○ IT support Centers
○ F/A shared service centers
Real Estate:
○ FDI inflow in RE amounts to EUR 1 262 m, 2006
○ The fastest growing sector in the country.
○ 3 times more than 2005
○ Development of trade centers
○ Development of business parks
○ Development of residential parks
○ Development of convention centers
○ 4.8 m foreign tourists have visited Bulgaria for the period Jan-Nov 06
○ 5.5% growth compared to the same period 2005
○ Construction of luxury hotels
○ Development of winter resorts
○ Development of balneology and SPY tourism
○ Development of rural and alternative tourism
○ Golf tourism

Energy projects certified under IEL
Investment project Investor Investment,
EUR mln
Jobs Type of investment support Class
Wind power generation park at Mourgash peak Eco Source Energy, Bulgaria 79.8 23 Speeded-up administrative service, infrastructure support 1
Wind power generation park at Kaliakra Mitsubishi Heavy Industries, Japan & lnos1, Bulgaria 48.0 30 (250 during construction process) Speeded-up administrative service 1
Wind power generation park at Godech Greentech, Denmark 60.4 60 Speeded-up administrative service 1
Construction of themal station (TPS) Maritza East 1 AES, USA 1,047.6 200 (2000 during construction process) Speeded-up administrative service 1

Leading US multinationals in Bulgaria
Company Activity Jobs
Citibank Full-service corporate and investment financial centre 50
IBM* Local sales and IT services 100
Hewlett Packard Local sales support and Global delivery center 65+1000
Microsoft Local sales support and 110 MSFT Academies n/a
CISCO Local sales support and 155 Cisco Academies n/a
American Standard $186 million investment in sanitary ware manufacturing 4,000
Kraft Foods $36 million investment in food processing 400
American Energy Systems $1 billion investment in energy generation 2,200+
PWC Full range professional services 123
Deloitte Full range professional services 100

* Announced the establishment of a Procurement Centre in Oct 2006 which will employ 200 people and will service Western Europe and Latin America

Labour cost structure, 2007
NET salary (EUR)   146.64
Personal Income tax * 11.86
Contributions (employee)** 12.43% 22.50
GROSS average monthly salary in Bulgaria, 3Q 2006   181
Contributions (employer)** 24.08% 43.58

*Personal income Tax in Bulgaria is taxed in accordance with an annual progressive scale that depends on the remuneration
**Employee/Employer Contributions are calculated on the gross salary but on no more than the maximum monthly insurance base fixed annually in the Mandatory National insurance Budget Act. The fixed base for 2007 is BGN 1,400 (~EUR 716)

Utility cost in Bulgaria, 2007
Electricity for Industrial use, medium voltage (1 kV - 60 kV) VAT included, EUR/kWh
3 tariff-reading  
► peak electricity 0.074
► day electricity 0.046
► night electricity 0.028
2 tariff-reading  
► day electricity 0.058
► night electricity 0.028
1 tariff-reading 0.056
Water charges VAT included, EUR/m3
For corporate clients 0.53-0.59
For household use 0.43
Natural gas for industrial users, VAT included, EUR per 1,000 m3 189 to 287

Construction and real estate, 2007
Recent researches of Bulgaria’s real estate and construction market gives us a general picture of the cost of different types of constructions as well as the prices of all stages of the building (including materials, workforce, etc.) It is expected that the price of construction material as well as workforce will see an increase of about 7% in 2007.

Construction and real estate in 2007

Recent real estate and construction researches depicts a forecast of a 7% rise in prices for material and workforce in 2007. Data were gathered from different segments of the various projects and represent the general picture of Bulgaria's real estate and construction markets.

The following is an estimation of prices for workforce, according to the type of construction, the project being built and the end results for 2006:

- Apartment building: 450 EUR/meter
- Shopping center/plaza: 350 EUR/meter
- Office building: 400 EUR/meter
- Secondary freeways: 500,000 EUR/meter

* The prices are for middle-high quality building in accordance with Bulgarian standards.

- Office rent in Sofia (EU/ 1 sq. meter- per month)
1. Type A: 20-28 EUR
2. Type B: 15 EUR

Purchase cost of an office in Sofia, type A: 2000-2500 EUR/sq. meter

Average cost of land:
- agricultural land: 100-250 EUR/sq. meter
- industrial land in large cities: 30-100 EUR/sq. meter

Investment incentives in Bulgaria:

- 10% corporate income tax; 0% for industrial companies in areas with large unemployment
- Invitation to expunge research and development costs
- Annual devaluation rate of up to 50% for all machinery and equipment as well as software and hardware.
- Tax exemption on imported equipment from non-EUR countries for any project with a minimum investment of 5 million EUR that is used within 2 years and creates at least 50 jobs.
- 7% tax deduction on dividends and debt removal (0 % for EU citizens who own at least 20% of the Bulgarian company)
- 24% of the highest limit of personal income tax (monthly salary above 300 EUR)
- Minimum wage of up to one year and refund of all national/medical insurance costs for the employing of young people or temporary agency laborers.

Legislation for investment incentives

- Equal treatment for Bulgarian as well as foreign investors
- Preferred treatment for large investments in industries or services that will be used within 3 years
- 3 levels of investments according to project value:
Level 1: above 70 million BGL (36 million EUR)
Level 2: between 40-70 million BGL (20-36 million EUR)
Level 3: between 10-40 BGL (5-20 EUR)

- All levels of investments receive quicker treatment as well as information services
- Individual principal treatment for Level 1 and Level 2 investors
- Infrastructure assistance for project lot and reduction in land costs for Level 1 investors.