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Foreign Direct Investment in Central Europe: Bulgaria

Foreign Direct Investment in Central Europe: Bulgaria

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The global pandemic has impacted all markets, with subsequent ramifications for M&A. Investors are now seeking greater protection against general lock-downs and supply-chain disruptions, while governments aim to protect critical supplies and services by imposing new regulations on foreign investment in crucial or strategic industries. 

If you are considering investment opportunities in Bulgaria, take a look at this overview to get insight into the regulations on foreign investment in strategic industries.

​The following overview is an extract from the Foreign Direct Investment in Central Europe publication, which gives insight into the regulations on foreign investment in strategic industries in the region.

Have FDI screening rules been implemented (or will they be implemented) in the country?

Bulgaria has not yet implemented FDI screening rules and mechanisms in accordance with Regulation 2019/452 (the “Regulation”). There are currently no indications of such rules and mechanisms being discussed in Parliament.

Although, there is no general restriction, screening or limit of foreign investments in Bulgaria, there are certain industry-specific restrictions adopted by various laws. The Act for Economic and Financial Relations with Companies Registered in Jurisdictions with Preferential Tax Regime, their Related Parties and Beneficial Owners introduced in 2014, prohibits companies, domiciled in offshore jurisdictions and companies

under their control, from engaging in certain economic activities, including banking and insurance activities, public procurement procedures, privatization transactions, acquisition of municipal property, gambling licenses, radio and television operators, auditors, etc. The law however provides for various exceptions. Under the Gambling Act, foreign investors (i.e. non-EEA nationals and legal entities) are also subject to more stringent requirements regarding investments in the gambling industry, where, to be eligible to invest in a local entity, holding a gambling license, a foreign investor is required to have invested at least EUR 10M in other activities in Bulgaria and created 500 jobs or to organize gambling games in a casino located in a hotel of four or more stars owned directly or indirectly by the investor. Pursuant to the Bulgarian Agricultural Land Ownership and Use Act, foreign investors (i.e. non-EEA nationals and legal entities) are generally barred from the acquisition of agricultural land on the territory of the country, unless this is allowed pursuant to an international treaty to which Bulgaria is a party. Companies with direct or indirect shareholding by offshore companies are also prohibited from acquiring agricultural land.

The general support, informational, administrative support, certification and collection of statistical data of the foreign investments in Bulgaria    is carried out by the Foreign Investments Agency, which is tasked with preparing an annual report on foreign investments in the country. Foreign investments are further monitored by the Bulgarian National Bank (BNB), which is tasked with keeping statistical information on loans between local and foreign entities. In this regard, locally domiciled legal entities are obligated to report to the BNB any received financing, exceeding the amount of BGN 50,000 (approx. EUR 25,000) within 15 days of its receipt. BNB is also entitled to request from any local and foreign person information relevant to the balance of payments and the international investment position of the country.

The Bulgarian merger control requirements apply to foreign and domestic mergers. The decision making body with respect to approvals or blocking of notifiable concentrations is the Commission for Protection of Competition. Additional regulatory clearance may be necessary in the regulated sectors such as banking, financial services and insurance and energy, among others.

Definition of FDI

Due to the lack of legislative measures on the implementation of FDI screening rules in accordance with Regulation, Bulgaria currently does not have a legal definition of FDI.

Definition of foreign investor

Similarly to the definition of FDI, the Bulgarian legislator has not yet established a legal definition of a foreign investor for the purposes of the FDI screening rules in accordance with Regulation.

Do the following scenarios trigger the screening? 

1. Acquisition of 10% or more of voting rights in the company: N.A

2. Establishment of a new branch: N.A

3. The production of new products: N.A

4. Establishment of a new company in which foreign investor will have more than 10% voting rights: N.A

5. The transfer of use or operational rights in infrastructure or assets that are indispensable for the operation of strategic companies: N.A

6. Other screening triggers: N.A

By Reneta Petkova, Partner, Deloitte Legal

Deloitte Legal Law Firm at a Glance

Deloitte Legal Adriatic is a unique law firm consisting of teams of highly specialized lawyers, providing a vast range of legal services, and part of the commercially integrated Deloitte Legal Group. Deloitte Legal Adriatic has a team of 50 legal professionals, qualified in their jurisdictions, at offices across 8 countries: Albania, Bosnia, Croatia, Kosovo, Montenegro, North Macedonia, Serbia and Slovenia. Across the Adriatic region, our offices assist clients in this interlinked, highly complex, and dynamically developing region. We are among the largest law firms in our jurisdictions and have offices in each of the most important business centers. With a multi-lingual international team, all of whom are fluent in English, we can assist clients through our dedicated language desks including in Chinese, German, French, Russian, and many other languages, including all the Balkan languages.

Deloitte Legal Adriatic’s bundled, technology-enhanced, cross-border capable service array is a step ahead in providing clients with effective business solutions, and in these challenging times is even more important than ever before in our Adriatic Region. Our team has a collaborative orientation as well as the country specific and international legal and business savvy your business needs. Like our clients, we also know that sure success, in addition to everything else, usually requires winners to simply work both harder and smarter. We are here for our clients to do just that.

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Besides traditional legal fields, we are building prominence in growing fields such as Business Integrity, Legal Management Services, Tax Litigation & Controversy, E-commerce, and Fintech. We take pride in being able to pioneer in industries and practices ahead of many other law firms. We have the benefit of accessing cutting-edge data, technical aspects, and operational realities of various industries through our internal Deloitte collaboration with various service lines (Consulting, Financial Advisory, Tax, and others). This market intelligence is again unparalleled among  our competition and presents a wealth of opportunities for genuine insights to evolving trends.

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Local contacts:

1. Albania and Kosovo

Deloitte Legal Sh.p.k

Sabina Lalaj, Attorney-at-Law, Managing Partner


2. Bosnia and Herzegovina

Advokatsko društvo “Legal Partners” d.o.o.

Aida Hamur, Attorney-at-Law 


3. Croatia

Krehić & Partners in cooperation with Deloitte Legal

Tarja Krehić, LL.M. (DUKE)

Attorney-at-Law, Managing Partner


4. Serbia, Montenegro and North Macedonia

Law Office Antonić

Stefan Antonić, independent attorney at law in cooperation with Deloitte Legal