According to the Bulgarian–Turkish Chamber of Commerce and Industry (BULTİŞAD), as of August 2023, Turkish investments in Bulgaria have reached approximately €2.5 billion, generating over 15,000 jobs through more than 70 production facilities and 2,500 active companies[1].
At the same time, Bulgarian companies are expanding their footprint in Türkiye, particularly through commercial representative offices and joint ventures. While exact figures remain undisclosed, more than 1,700 Bulgarian representative offices are currently operating in Türkiye in a liaison capacity. Although these offices do not engage in direct commercial activities, there is a rising interest from Bulgarian companies in industrial and logistics investments, especially in border regionsBilateral trade currently stands at around $7.8 billion, with a mutual ambition to raise this figure to $10 billion, as emphasized by the Türkiye–BULTİŞAD business delegation in Sofia, a bilateral trade mission organized to strengthen economic ties between Turkey and Bulgaria. Bulgarian firms are increasingly involved in sectors such as renewable energy, defense, logistics, and border-region manufacturing. Meanwhile, both countries are working to modernize customs gateways and pursue an updated Customs Union framework to further deepen economic integration.
Bulgaria is set to adopt the euro as its official currency on January 1, 2026, becoming the Eurozone’s 21st member. This milestone, formalized by EU acts adopted on July 8, 2025[2], is expected to enhance Bulgaria’s role as a business partner to Türkiye, particularly by facilitating financial transactions and strengthening investor confidence. [3]
This article aims to shed light on the legal foundations that shape Turkish–EU investment cooperation, with a special focus on Bulgaria as both a host and a source of cross-border business activity. Turkish investors must navigate Bulgaria’s EU-compliant regulatory system, while Bulgarian firms operating in Türkiye engage with frameworks shaped by Turkish domestic law and the EU–Türkiye Customs Union. Legal instruments at both the supranational and bilateral levels directly impact firms engaged in trade and investment across this axis. Sectors such as logistics, light manufacturing, and cross-border services are particularly active, benefiting from geographic proximity and a maturing trade volume. Here is a synopsis of several key elements of the system of treaties between Turkiye and the EU, including Bulgaria.
Customs Union Agreement
On October 14, 2024, Türkiye and the European Union embarked on formal negotiations to modernize their longstanding Customs Union[4], a pivotal step towards enhancing economic integration and cooperation. This initiative seeks to expand the scope of the original 1995 Ankara Agreement[5] (Decision No 1/95 of the EU-Türkiye Association Council)[6], which facilitated tariff-free trade in industrial goods, by incorporating sectors such as services, agriculture, and public procurement which directly affects companies engaged in manufacturing and distribution[7].
For Turkish businesses, Bulgaria holds a unique position as the primary overland entry point to the European single market. Due to the Customs Union, trade in industrial goods between Türkiye and EU countries transits through Bulgaria without tariff barriers but it still requires full compliance with EU customs procedures, transit declarations and, in some cases, border inspections. Bulgaria’s role as both a neighboring country, and an EU member state makes it a critical logistics and regulatory checkpoint, especially for enterprises involved in transport, fast-moving consumer goods, and machinery. Firms must account for potential delays, border compliance costs, and coordination with Bulgarian customs brokers or transport agents.
Legal Frameworks Enabling Investment Cooperation
Financial Framework Partnership Agreement (FFPA) under IPA III (2021–2027) agreement governs EU financial assistance to Türkiye and sets rules for implementing EU-funded actions, some of which are open to private sector participation, particularly in infrastructure, digitalization, and green transition projects. Small and Medium Size Enterprises (SMEs) and contractors should track EU-funded tender opportunities within this framework. Turkish SMEs are not only eligible for grants and technical support but are also encouraged to form cross-border partnerships with EU-based enterprises, particularly in joint projects with the Balkan neighbors Bulgaria and Greece.[8]
To take advantage of these opportunities, businesses in Türkiye should proactively monitor announcements published by the relevant ministries, ensure alignment with EU procurement and eligibility requirements, and prepare robust documentation to demonstrate their financial and operational capabilities . This participation strengthens private sector engagement in pre-accession cooperation and contributes to aligning Turkish business practices with EU standards.Bulgaria plays a strategic role as a neighboring EU member state both as a recipient of parallel EU funding under the Cohesion Policy and as a partner in cross-border cooperation projects[9], particularly under the Interreg IPA Bulgaria–Türkiye Program[10]. This means that Bulgarian and Turkish firms can form joint consortia, bid for EU-funded projects, or act as service providers or suppliers under shared funding schemes. As such, private actors on both sides should track EU tender platforms, Interreg calls[11], and cross-border technical assistance programs to leverage opportunities that arise from Türkiye’s EU-aligned IPA framework and Bulgaria’s geographic and institutional proximity.
Double Taxation Treaties (DTTs)
Bilateral treaties between Türkiye and individual EU member states help prevent companies and workers from being taxed twice on the same income in both jurisdictions concerned. Firms should stay informed of the applicable withholding tax rates on dividends, interest, and royalties, as well as rules for determining tax residency and claiming tax relief. Türkiye has established a broad network of bilateral DTTs with nearly all EU member states, including a treaty with Bulgaria in force since 1996. The Türkiye–Bulgaria DTT covers various income categories such as business profits, dividends, interest, royalties, and income from employment or real estate. It typically allocates taxing rights between the two jurisdictions and sets withholding tax limits (e.g., on dividends and interest) to protect investors and workers from excessive taxation. The treaty also defines criteria for tax residency, permanent establishment, and dispute resolution, including procedures for claiming relief via tax credits or exemptions. For companies operating in or trading through Bulgaria, understanding the provisions of this treaty is essential for tax planning, especially when structuring contracts, service agreements, or cross-border employment arrangements. It ensures legal clarity, reduces tax risks, and supports smoother compliance in the Türkiye–EU business corridor.
Bilateral Investment Treaties (BITs)
BITs signed between Türkiye and EU countries provide legal protections for foreign investors, such as protection from expropriation, fair and equitable treatment, and the right to international arbitration. Companies investing across borders should familiarize themselves with these guarantees to manage risk and structure their investments effectively. These treaties offer concrete legal guarantees for cross-border investors that go beyond national law, making them highly relevant for risk management and investment structuring.
The Bilateral Investment Treaty between Türkiye and Bulgaria[12], signed in 1994 and currently in force, provides critical protections for investors, including safeguards against expropriation without prompt and adequate compensation, guarantees of fair and equitable treatment, and the free transfer of investment-related funds.
Dispute Resolution and Investment Protection
Despite the opportunities, investing across borders entails a number of legal risks. These include legal uncertainty in newly regulated sectors (such as digital services or climate reporting), and occasional discrepancies between EU directives and their domestic implementation. Investors from both countries may also encounter disputes related to land acquisition, contract enforcement, or regulatory decisions.
To mitigate such risks, it is advisable for businesses to adopt proactive legal strategies, including the use of arbitration clauses in contracts, risk-sharing arrangements with local partners, and continuous regulatory monitoring. Bulgaria has a functional judicial system with dedicated commercial courts, but litigation can be time-consuming.
The BIT between Türkiye and Bulgaria[13] grants investors from both countries access to international investment arbitration (such as ICSID or UNCITRAL) in cases of treaty breaches, offering a legal avenue independent from domestic courts. For Turkish companies investing in Bulgaria or vice versa, this BIT serves as a vital legal instrument for mitigating political and regulatory risks and structuring cross-border investments with a layer of international protection.
In respect of non-investment related arbitration, commercial arbitration is a widely used alternative in both countries, with institutions like the Bulgarian Chamber of Commerce and Industry offering recognized forums for resolving cross-border disputes, respectively in Türkiye institutions such as the Istanbul Arbitration Center (ISTAC) or the Istanbul Chamber of Commerce Arbitration and Mediation Center (İTOTAM). To minimize legal uncertainty, investors are encouraged to include robust dispute resolution clauses in commercial contracts and consider structuring their investments to benefit from BIT protections.
Law as a Bridge, Not a Barrier
Turkish investors operating in Bulgaria are engaging with more than just a neighboring, market - they are entering a complex legal and institutional space shaped by both EU and national regulations . The increasing harmonization of regulatory standards, particularly in areas such as energy, finance, environment, and transport, creates both legal obligations and strategic opportunities. Businesses that invest in legal expertise through due diligence, compliance mechanisms, and dispute resolution planning are better equipped to navigate this landscape. Ultimately, fostering sustainable investment cooperation between Türkiye and Bulgaria requires more than favorable economic conditions. It depends on a clear understanding of the legal frameworks that define the terms of engagement. As the EU–Türkiye relationship evolves, legal adaptability will be key to unlocking the full potential of cross-border investment.
Bulgaria’s Eurozone Membership: A New Chapter in Türkiye–Bulgaria Financial Cooperation
For international stakeholders, particularly Turkish investors with strong economic ties to Bulgaria, Bulgaria’s transition to the euro presents both promising opportunities and new challenges. The adoption of the euro is expected to enhance Bulgaria’s financial credibility, reduce currency-related risks, reduce foreign exchange costs, and bring greater stability to cross-border financial operations. Euro-denominated transactions may also ease capital flows, support joint ventures, and open access to EU financial instruments.
One of the most immediate benefits for Turkish investors will be the predictable financial planning and stable pricing strategies. As a eurozone member, Bulgaria will offer streamlined access to EU financial mechanisms, lower transaction costs, and a more integrated framework for trade and investment. Anticipated improvements in macroeconomic stability and interest rate convergence are likely to strengthen investor confidence. However, transitional costs, such as price adjustments and new compliance requirements, should also be carefully considered.
Bulgaria’s euro adoption marks a major step in its economic integration with the EU. For Turkish investors, it offers a more stable and transparent investment climate, while it also calls for strategic and legal foresight. Monitoring regulatory reforms, fiscal policies, and market shifts, along with proactive measures like contract reviews and risk assessments, will be essential to navigating this evolving landscape effectively.
[1] Българско-турска търговско-индустриална камара – BULGARIAN-TURKISH CHAMBER OF COMMERCE AND INDUSTRY (BTTIC) directs its activities to uncovering new business opportunities between the two countries in the interest of its members through the development of trade and investment activity.
[2] EU Council regulations and decision published in the EU Official Journal on 14 July 2025: Official Journal L series daily view - EUR-Lex.
[3] For more details on Bulgaria's current entry into the Eurozone and its expected implications, please see the additional section at the end.
[4] Türkiye : Customs Unions and preferential arrangements - European Commission
[5] https://investmentpolicy.unctad.org/international-investment-agreements/treaties/treaties-with-investment-provisions/3136/ankara-agreement-1995-
[6] EUR-Lex - 21996D0213(01) - EN - EUR-Lex
[7] https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/turkiye_en
[8] EU trade relations with Türkiye
[9] https://enlargement.ec.europa.eu/european-neighbourhood-policy/cross-border-cooperation_en
[10] http://www.ipacbc-bgtr.eu/
[11] https://www.interregeurope.eu/call-for-projects
[12] https://investmentpolicy.unctad.org/international-investment-agreements/treaties/bilateral-investmenttreaties/718/bulgaria---Türkiye-bit-1994-
[13] https://investmentpolicy.unctad.org/international-investment-agreements/treaties/bilateral-investmenttreaties/718/bulgaria---Türkiye-bit-1994-
By Nikolay Bebov, Managing Partner, and Inci Sevi Kaya, Consultant, Eversheds Sutherland