Overview of Bulgarian citizenship by investment
Advocate Vasil Markov’s overview of Bulgarian citizenship by investment program
The Bulgarian citizenship by investment program is perhaps the most flexible and affordable citizenship program. The investor is not required to open a private bank account in Bulgaria and buy government bonds through a Bulgarian bank. On the contrary, the investor can buy Bulgarian government bonds from any local bank in the country of his/ her residence and maintain the investment there.
If the investor has purchased Bulgarian government bonds from abroad, he/she has to provide a legal certificate of the purchased bonds. These bonds are offered by LGT Bank which has branches in Hong Kong, Singapore, Dubai, Bahrain and other locations. The only drawback with LGT bank and other international banks, are their requirement that clients should deposit at least 5 million CHF (or its equivalent in USD or EUR) with the bank in order to open a private bank account. Bulgarian banks do not have requirements regarding the minimum deposits of funds, and the client can deposit as less as the minimum required investment amount of only 512,000 €. Another difficulty is that it is more expensive to get financing from international banks, where the security is obtained through Bulgarian government bonds.
Our law firm may assist you to open a private bank account in Bulgaria and buy Bulgarian government bonds through a local bank in Bulgaria. Unfortunately, the investor has to travel to Bulgaria, as Bulgarian banks are unwilling to open bank accounts for non-EU citizens remotely.
Does the Bulgarian Citizenship by investment have a sound legal basis?
The Bulgarian citizenship by investment program does not have a dedicated government website as the St Lucia citizenship by investment program. Despite this fact, the Bulgarian citizenship by investment program is supported by the Bulgarian legislation in the Foreigners of the Republic of Bulgaria Act and the Citizenship Act.
Art. 25. (1) (Previous Article 25 – SG 36/09) Permit for permanent residence may be obtained by the foreigners who:
- have invested over BGN 1 000 000 or increased their investment by this amount by acquisition of:
(b) bonds and treasury bills, as well as derivative instruments issued by the State or municipalities, with a residual term to maturity of not less than 6 months;
Art. 12a. (New, SG No. 16/2011, amended, SG No. 108 of 2013) A person who has been granted a permanent residence permit on the grounds of Art. 25, para. 1, item 6, 7 or 8 or as a member of the family of such a person or Art. 25, para. 1, item 13 – in connection with Art. 25c, para. 2, item 2 or 3 or Art. 25, para. 1, item 16 of the Aliens Act in the Republic of Bulgaria, may acquire Bulgarian citizenship if it satisfies the conditions under Art. 12, para. 1, items 1, 2, 3 and 4.
Art. 14a. (New, SG No. 16/2013) (1) (Amended, SG No. 108 of 2013) A person who is not a Bulgarian citizen and meets the conditions under Art. 12, para. 1, items 1 and 3, may acquire Bulgarian citizenship by naturalization if:
- (Amended, SG No. 108/1913, amended, SG No. 22/1915, in force as of 24.03.2015) not less than one year ago has been granted permanent residence in the Republic of Bulgaria on the grounds of Art. 25, para. 1, item 6 or 7 of the Aliens Act in the Republic of Bulgaria and:
(a) has increased its investment under the same terms of the law to a value of at least BGN 2 million;.
How long should I maintain the Bulgarian government bonds?
There is a common misconception that the investor should maintain the investment for five years. This requirement only applies for the Bulgarian citizenship by investment ordinary track, where the applicant obtains Bulgarian citizenship and passport only after holding a permanent residence in Bulgaria for five and half years. By applying under the fast-track, you can sell the bonds 24 months after the citizenship is granted according to Art. 22, para 3 of the Citizenship Act:
Art. 22. (1) The naturalization on the basis of which Bulgarian citizenship has been acquired may be revoked if the person:
- (New, SG No. 16/1913) has not maintained the investments which have become grounds for acquiring Bulgarian citizenship for at least two years from the date of naturalization – in the cases under Art. 14a, para. 1.
Financing the purchase of Bulgarian government bonds
Since the amendments that have taken place in the Bulgarian legislation, banks cannot finance private individuals directly. Nowadays, private individuals can authorize investment brokers to act on their behalf in front of the bank. This way, the bank finances the investment broker and the in turn, the investment broker finances the private individual.
However, the middleman – the investment broker – makes the procedure more expensive. The investment broker is paid a commission and the banks’ interest rates on financing are higher than before.
Where should I apply for Bulgarian citizenship?
You can lodge your citizenship application in person, with the Ministry of Justice in Sofia, Bulgaria or with the nearest Bulgarian embassy or general consulate. Citizenship applications are submitted only in person. You cannot authorize a lawyer or a consultancy firm to file your application on your behalf.
How long does it take to obtain Bulgarian citizenship by investment fast-track?
The advertised time for obtaining Bulgarian citizenship is 18 months; however, it may take up to 24 months. Citizenship by investment applications are considered within 6 months by the Ministry of Justice; however, the National Security Agency can extend the consideration time by 3 months, for reasons of national security.
Bulgarian Citizenship Act
Art. 35. (Amended, SG No. 41/2001, amended, SG No. 33/2010) (1) The Minister of Justice shall make a proposal for the issuing of a decree for granting Bulgarian citizenship within:
- (new, SG 16 of 2013) six months – on applications for acquisition of Bulgarian citizenship under naturalization under Art. 12a and 14a;
Time taken for issuance of Bulgarian passport
You can apply for a Bulgarian passport with the Ministry of Justice in Sofia, Bulgaria or with the nearest Bulgarian embassy or general consulate. Passport applications are submitted only in person by the applicant. You cannot authorize a lawyer or consultancy firm to file your citizenship application on your behalf.
Deadlines for issuing a Bulgarian passport – Ministries and Interior Ministry.
Ordinary issuance – up to 30 calendar days
Fast issuance – up to 3 working days
Express – up to 8 hours
NB: Citizenship application with embassies and general consulates are considered for a longer period.
Ordinary issuance – up to 90 days
Fast issuance – up to 60 days
Are EU citizens eligible to apply for Bulgarian citizenship by investment?
EU citizens cannot apply for Bulgarian citizenship by investment unless they hold a passport of a non-EU country.
Donations vs Investment
Some countries advertise citizenship by investment, but in fact, it is citizenship by donation. In other words, you do not get returns on your investments. This is the case with Dominica/ St. Kitts and Nevis (see http://nomadcapitalist.com/2016/06/20/best-citizenship-by-investment-programs/). On the other hand, the Bulgarian citizenship by investment program requires the applicant to buy government bonds, to be paid coupons every six months, and the bonds to be sold 24 months after the applicant is granted Bulgarian citizenship and passport. The Bulgarian citizenship by investment is a true investment program.
If you have any queries regarding investment and Bulgarian citizenship, please do not hesitate to contact us.