Transcript Regulatory and Legal Framework to Investments in Bulgaria

Regulatory and Legal
Framework to
Investments in Bulgaria
Kamen Shoylev,
New Balkans Law Office
Bulgarian Investment Forum,
Tokyo Chamber of Commerce and Industry,
14 December, 2012
Bulgaria: rule of law
• Stable and predictable rate of domestic
law-making
• Role of EU legislation
• 31 areas of acquis communeautaire
• Role of binding international treaties: a
pure monist approach to international
law
Bulgaria: rule of law
• Civil justice
• Commercial courts are trusted by
parties (€33.7 mn fee revenue vs.
€476 mn in England (2010))
• Regulators
• Administrative justice
Investment opportunities
• Three typical rationales we see:
• as a launchpad to the EU market;
• as a production and knowledge
economy base; and
• because of specific local opportunities
in energy, agriculture, infrastructure.
As an entry point to the EU
• Customs Union between Bulgaria
and the other 26 (soon 27)
countries of the EU
• The 4 Freedoms inside the EU:
• of capital;
• of workers;
• of goods;
• of establishment and services.
As an entry point to the EU
• Low or no regulatory barriers for
doing business within the EU
• An example: passportisation
• Financial intermediaries (brokerdealers)
• Insurance companies
• Banks and other credit institutions
As an entry point to the EU
• Single authorisation or licensing
regimes: eg road haulage, airlines
or e-money providers
• Non-discrimination
• Recourse to a central dispute
resolution system (European courts,
harmonisation of laws)
State aid to certified
investments
• Priority projects can be related to all
sectors, subject to EU State Aid rules
• Subsidies not given in mining, primary
agriculture and shipbuilding
• Special priority projects: ≥€50mn, ≥ 200
new workplaces over 3 years or hightech and R&D: €10m + 50 working
places
• Industrial zones’/technology parks’ setup
State aid to certified
investments
• Benefits:
• Lowest possible cost to acquire gov’t /
municipal land; waived taxes for
planning status changes
• Working group for project support
appointed by the Council of Ministers
• Financial grant scheme for up to 10%
of the investment project cost (50% in
R&D)
As a production and
knowledge economy base
• An established skills base in ICT:
‘Dell’ of the Soviet bloc
• A recent upstream migration of
businesses to higher-end services
and own products
• A cluster of some 1,000 IT companies
in Sofia
Setting up a business
• Ease - density of 7.7/1,000 (2011)
• Types available - 10, of which 2 most
frequently used
• Capital requirements - €1
(GK)/~€12,500 (~KK)
• Post-registration compliance is nononerous
• Cross-border re-domiciliation
Income tax on business
profits
• Flat rate at 10% (joint-lowest in the
EU)
• Simplified rules on reliefs and
deductions
• Withholding tax on dividends
generally at 5%
• Network of 68 DTAs, including Japan
Income tax on business
profits
• Treatment of capital gains as income
• No capital/asset taxes
• Transfer pricing - largely OECD
model
• Profits of partnerships
Other taxes and charges
and tax administration
• Transfer taxes (0.1-3% on real estate,
0.4-6.6% on inheritance estates)
• Local property taxes (0.01-0.45%
p.a.)
• VAT - EU Consolidated VAT Directive
2006
• Filing and administration
Employment
• Flexibility of hiring and firing
• Trade unionisation - shift from high to
low
• Duties of key employees and
directors
• Upholding of restrictive covenants
• Social security contributions burden
Real estate
• Centralised, comprehensive national
property register of titles inc. cadastral
and mapping information
• Use of notary system
• General ease and speed of transfer of
title
Intellectual property
• Membership of PCT, EPC, OHIM,
Berne, Rome, Paris, WIPO and
others
• Copyright - droit d’auteur to economic
rights transition - licensing issues
• Trade mark protection - robust
enforcement, recent move to
opposition procedure for national
marks
Intellectual property
• Patents: national + EPC, mooted
“enhanced coop”
• Design rights
• Database rights
Enforcement of intellectual
property rights
• Civil actions
• Criminal law options
• New initiatives
Establishing security and
financing
• Central Register of Pledges
• Ordinary pledges
• Charges by way of mortgage:
registration
• Role of Company Register
Dispute resolution
• More specialist domestic courts
• Speed
• Quality of judgments
• Costs follow the judgment
Arbitration
• Party to the New York Convention
• Arbitration regularly used both
domestically and cross-border, good
compliance and enforcement
• Multiple domestic tribunals
• ICC/LCIA/AAA/Stockholm/Vienna
popular seats
Thank you.
Questions we can help with?
• For regular updates on Bulgarian
investment topics, please visit
www.newbalkanslawoffice.com