The long awaited law on the restriction of cash payments was finalised on 22nd February 2011 and officially came into force three days later.
Given the history of cash deals and under declared values in the property market, it was widely expected that the new law would be met with a degree of resistance and some difficulty in implementation. Somewhat surprisingly, though, the new payment regime seems to have become de facto practice very easily and very quickly. Asked whether the new law had affected property transactions, David Livingstone from Property Partners BG commented, "There have been no indications from any of our partners that the new payment rules have caused any difficulties. It's early days yet but, ultimately, the law will mean that sellers will price their properties more realistically, the legalities will be more transparent and buyers can be more confident about their purchase, all of which has to be good for the property market"
Under the new law the maximum amount which can be paid as a cash transaction is 15000 BGN, approximately 7700 Euro. If the sum is equal to or higher than 15000 BGN, or it is a payment of less than 15000 BGN but part of an agreement for a sum above 15000 BGN, it must now be paid with a bank transfer or through a bank account. The law also applies to payments under deals and agreements concluded before the law entered into force but not completed at the time of enforcement.
In terms of the sale and purchase of properties the new law removes the possibility of cash payments, cash deposits or full payments for properties whose price is equal to or above 15000 BGN. Payments of such sums must now be made only via a bank transfer. One of the main objectives behind this law is that it will lead to a considerable contraction of the grey economy and to a corresponding increase in revenues to the state budget because it will provide documented financial records for the correct calculation of taxes and VAT.
The law provides strict sanctions for cash payments made above the allowable limit. Upon a breach of the law, businesses or legal persons will be sanctioned with the amount of the full sum paid, while individuals or physical persons can be fined by up to 50% of the full sum paid under the deal.
Given the history of cash deals and under declared values in the property market, it was widely expected that the new law would be met with a degree of resistance and some difficulty in implementation. Somewhat surprisingly, though, the new payment regime seems to have become de facto practice very easily and very quickly. Asked whether the new law had affected property transactions, David Livingstone from Property Partners BG commented, "There have been no indications from any of our partners that the new payment rules have caused any difficulties. It's early days yet but, ultimately, the law will mean that sellers will price their properties more realistically, the legalities will be more transparent and buyers can be more confident about their purchase, all of which has to be good for the property market"
Under the new law the maximum amount which can be paid as a cash transaction is 15000 BGN, approximately 7700 Euro. If the sum is equal to or higher than 15000 BGN, or it is a payment of less than 15000 BGN but part of an agreement for a sum above 15000 BGN, it must now be paid with a bank transfer or through a bank account. The law also applies to payments under deals and agreements concluded before the law entered into force but not completed at the time of enforcement.
In terms of the sale and purchase of properties the new law removes the possibility of cash payments, cash deposits or full payments for properties whose price is equal to or above 15000 BGN. Payments of such sums must now be made only via a bank transfer. One of the main objectives behind this law is that it will lead to a considerable contraction of the grey economy and to a corresponding increase in revenues to the state budget because it will provide documented financial records for the correct calculation of taxes and VAT.
The law provides strict sanctions for cash payments made above the allowable limit. Upon a breach of the law, businesses or legal persons will be sanctioned with the amount of the full sum paid, while individuals or physical persons can be fined by up to 50% of the full sum paid under the deal.
For advice, assistance and information about Moving to Bulgaria, we recommend that you visit our website at MovetoBG.com - for accommodation options, resources and services, we suggest Bulgaria Gateway - and for all the latest listings and offers of properties for sale, Property Partners BG
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