A unique citizenship for investment program allows investors to gain residency and citizenship in exchange for making an investment in Bulgaria’s burgeoning economy.
Bulgaria has witnessed large- scale foreign investment across many sectors. But the country’s unique citizenship for investment program, launched in 2009, has seen hundreds of smaller scale Middle Eastern investors apply for residence in the country in exchange for investment.
“Foreign high net worth investors from MENA, Asia and CIS (former Soviet Republics) are particularly attracted to the Bulgarian Program because of the physical residency waiver. Not many countries in the world offer this type of flexibility to businessmen and their families, while at the same time guaranteeing safe investments in bonds, permanent residence and future European citizenship with the lowest taxes possible,” said Armand Arton, President and CEO of Arton Capital, a global citizenship advisory firm with offices in Montreal, Sofia and Dubai.
As a full member of NATO and the European Union, Bulgaria is preparing to enter the Schengen zone within the next few months, which means that permanent residents of the country will be granted visa free travel throughout Europe.
Although there are a number of Immigrant Investor programs available throughout the world, the Bulgarian program is unique. As long as an investor meets all the legal requirements and invests €511,292 in the country, they will be granted residency and after five years get citizenship, without ever having to live there or without paying any taxes on their wealth, inheritance or income outside of the country.
Since 2007, a Bulgarian passport entitles its holder to work, study and live freely in most European countries. As an EU citizen, applicant’s children are also entitled to attend an EU university at a lower cost. In addition, the Bulgarian government have made it a top priority to attract wealthy foreign investors by creating tax incentives for foreign businessmen. Bulgaria offers the lowest tax rate within the European Union – 10% flat corporate and personal tax on income made in Bulgaria.
Arton Capital has advised the Ministry of Economy, Tourism and Energy, as well as InvestBulgaria on the legislation, implementation and promotion of the program, in order to attract more high and ultra-high net worth investors to Bulgaria. The most recent recommendation currently before parliament is to implement additional benefits to applicants and their families, such as lifting the age of dependents to 25 years, adding any EU language in the citizenship test requirements, and lowering the required time between residency and citizenship from 5 years to 3 years, as well as allowing a fast track program for those who are already accepted as permanent residents to become citizens in just one year, against additional investment or contribution to the economy of Bulgaria.
Such multiple tier investment options and reduced time to citizenship already exists in the UK Investor program, but the Bulgarian option has more tax benefits and complete flexibility in terms of physical residence, compared to the minimum requirement of 183 days per year, outlined in UK legislation.
Passive and Safe Investment
Bulgaria is the only country in the EU, since 2011, to have their government bond rating upgraded by Moody’s to Baa2 from Baa3, reflecting its ongoing fiscal discipline and improved institutional strength. This also highlights the resilience of Bulgaria’s financial system throughout a volatile period in Europe. As a result of this stable outlook, the Investor Program, which normally requires a passive investment in approved government bonds of €511,292, allows a financing option. This requires a single payment of €180,000 which financial companies like Arton Capital can arrange for foreign investors, allowing them to use their free capital for other investments in Bulgaria with a higher rate of return.
Many Middle Eastern businessmen look to further expand upon their investments in the country. “Bulgaria offers a skilled work force at competitive prices, great strategic location – on the road between Europe and Asia and an attractive tax policy, so it’s only natural that once investors have made the initial commitment to this country, they will want to look for more investment opportunities,” explained Milen Keremedchiev, Managing Director of Investment advisory firm, EU Capital Partners and former politician and deputy minister of Economy and Foreign Affairs.
Fadi Mehio is a Dubai based businessman who has taken part in Bulgaria’s Immigrant Investor Program. He is looking at opportunities to extend his facilities management and interior architecture business to Sofia. “If a country has granted me citizenship, I feel I can also do something in return,” he says. “We have learned a lot in Dubai about building businesses and industry and we can take that experience and know-how there.”