Bulgaria had suffered from a slump in foreign direct investments in recent years. Previously, these funds were a major driver behind the country’s economy.
However they had slumped from 6.55 billion euros in 2008 to 1.75 billion euros in 2011 and an expected 1.7 to 2.0 billion euros in 2012. Hence, parliament has changed their Investment Encouragement Act to re-energize investment.
Previously, to become a Bulgarian citizen, the applicant had to be a permanent resident for at least a year and needed an investment of at least four million Leva (US$2,748,008) in a Bulgarian company which opened 50 jobs.
This proved too much for many potential investors. Parliament changed the permanent residency requirements this month, significantly lowering the investment sums for several different categories of applicants.
Bulgaria has entered the growing number of European countries willing to offer citizenship in return for the purchase of property valued at BGN 600,000 (US$414,000) or an investment of at least BGN 500,000 (US$345,000) that creates 10 jobs. Then the person will be eligible to apply for permanent residence.
The investment requirements are lower in the country’s poorer regions. You will be granted permanent residency status and the path to Bulgarian citizenship if you pour BGN 250,000 (US$171,750) into the area and hire five Bulgarians in regions with high unemployment.
What’s The Catch?
The former communist country joined the European Union in 2007; however, as it is the poorest member, it is not a member of the Eurozone. The average salary in the country is around €302 (US$406) per month, according to data from the Vienna Institute for International Studies.
Additionally, France and Germany have blocked Bulgaria from joining the EU’s Schengen passport-free zone until the country had made “irreversible progress” in the area of area along with a “thorough reform of the judicial system” and “convincing and dissuasive measures against corruption.”
Concern has also been expressed about the potential flood of illegal immigrants through Turkey to Bulgaria and Romania and then to the Schengen countries.
Europe is also anxious about the immigration potential from Bulgaria and Romania. After all, the UK’s minimum wage is six times higher than Bulgaria’s. “My constituents think it is madness to open our borders to 29 million people when we have absolutely no idea how many are going to come to this country,” one British politician recently argued.
Although the original plan was for Schengen Area to open its borders with Bulgaria by March 2012, and land borders by July 2012, resistance from the Netherlands has deferred the country’s entry to the Schengen Area until 2013 at the earliest. This deal is pending approval of the European Council on the endorsement of its President Herman van Rompuy.
At the moment, signals are not good. There is a meeting of EU foreign ministers in March at which the issue about Bulgaria and Romania’s accession in the border-free area would be probably tabled for discussion. However Bulgarian Minister of European Parliament Lliyana Yotova explains, “Unfortunately, we still cannot tell for sure whether this issue will be added in the agenda. “The results and signals up to the present moment are not good at all. “There is no activity on behalf of the Bulgarian diplomacy. “Romania is one step ahead of Bulgaria on the Schengen issue, since in Bulgaria everyone was keeping silent about the matter and there was no discussion on it.”
In the meantime, you would be free to travel in the visa-free European Schengen area and to work in a number of sectors in Western Europe even though Bulgaria is not a member of the 26-nation zone. There are still restrictions on Bulgarians who wish to work in:
The United Kingdom
And recently Spain (at least until Dec. 31, 2013 due to serious disturbances in its labor market).
There are a lot of benefits to having a Bulgarian passport and doing business in the country including:
Low labor costs
Lowest tax regime in Europe with a corporate income tax at a rate of 10%
Lowest business operating costs in the EU
EU universities access for your kids
Travel visa-free to more than 150 countries as well as the whole of the European Union.