Law and regulation of industrial and logistics investment in Bulgaria

Investors in the Industrial and Logistics sector can benefit from cash grants for improving the qualifications of existing employees and creating new employment, as well as for the acquisition of assets and building infrastructure. This financial mechanism is available for both existing and new projects, whereby the structure and amount of the support depends on the size of the enterprise and other factors.

Another category of support is enhanced administrative support for projects which have obtained investment certification. The list of support includes: shortened administrative services, no tenders for the acquisition of state and municipal land, financial support for education, reimbursement of social security contribution costs, financing for technical infrastructure development, exemption from tax for land use conversion, and lower costs for land acquisition. Eligibility for certification and the type of support depend on certain requirements, the main one being the minimum number of new jobs created and minimum investment expenditures.

2. General incentives, from which investors in the I&L sector in CEE-17 can benefit, if no specific ones are available

Investors can benefit from the attractive infrastructural conditions which industrial zones in Bulgaria have to offer, as well as support from the government, the municipal authorities and the various domestic and foreign chambers of industry and commerce in Bulgaria. Currently, there are about 14 industrial zones, with active local and foreign investors. There are also 21 zones with either fully or mostly developed infrastructure which are ready to be invested in, and about 27 zones under development.

The Bulgarian government is expected to adopt the new Industrial Zones Act soon, which will introduce more detailed regulation of industrial zones and additional investment incentives, such as facilitated administrative services and lower fees.

3. Available tax exemptions or preferences for investors specifically in the I&L sector in CEE-17

Bulgarian legislation does not currently provide specific tax incentives for the Industrial&Logistic sector, but there are general ones from which investors in this sector can benefit.

4. General tax exemptions or preferences for investors in CEE-17 that would apply to the I&L sector

The following tax incentives are available for investors: De Minimis/State aid for regional development: 100% remission of income tax for manufacturing/production activities in high unemployment regions (subject to full reinvestment of the remitted tax). Accelerated tax depreciation (of up to 50% per annum) for initial investment assets. Accelerated tax depreciation (100% tax deductibility) for R&D assets in the year of booking the asset. Double deduction of employer costs (salary plus social security expenses) for unemployed or disabled persons (for the first 12 months of employment). Self-charge of VAT on import (facilitating cash flows as VAT credit is used in the same period), plus an option for the accelerated refund of VAT within
30 days for qualifying investment projects. Refund of excise duties on alcohol and alcoholic beverages used for medical purposes - R&D, testing, production of medicines, etc.

Donations: 10% to 50% of the positive accounting financial result (up to 65% of the total accounting profit) is recognised when the expenses are incurred in favour of: hospitals, social institutions, the Bulgarian Red Cross, the National Social Security Institute and others. Food vouchers: monthly social expenses for food vouchers up to BGN 60 (EUR 30) per employee are recognised for tax purposes and are exempted from social security contributions and income tax. Insurance and social security expenses: expenses for supplementary voluntary social insurance, voluntary health insurance and life insurance of up to BGN 60 (ca. EUR 30) per month per employee are recognised for tax purposes.