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Is Bulgaria a Good Option for Crypto Nomads?by@ilinskii
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Is Bulgaria a Good Option for Crypto Nomads?

by Ilia IlinskiiApril 5th, 2024
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There is still no separate legislation in Bulgaria that defines and regulates cryptocurrencies and the licensing of these activities.
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Recently Bulgaria has become a member of Schengen zone. It’s also known for its low tax rates compared to other EU countries, which opens up great opportunities to become a permanent resident or doing business and conducting legal economic activities in the country. Such low personal income tax rates as in Bulgaria (10%) are also available in Andorra (10%), Romania (10%) and Hungary (9%).


Headline corporate income tax in Bulgaria is also 10%. Under certain circumstances, this rate may be applied to cryptocurrencies on a company's balance sheet, but until MiCA finally comes into force Bulgaria is likely to remain uncertain about the regulation of cryptocurrencies, but is unlikely to ban them. In 2014, the local tax office passed a ruling according to which profits from the sale of cryptocurrencies are subject to a 10% tax rate.


Last but not least - Bulgaria is a good place for tourist vacations at the sea. It also has relatively low cost of living and real estate prices compared to other popular destinations.


How to get residence permit in Bulgaria for digital nomads?

Actually in the past, most remote workers obtained a residence permit in Bulgaria through opening a trade representative office of a foreign company. In fact, it was enough just to have a legal entity abroad and having passed the legal formalities one could count on obtaining a residence permit for all founders of the representative office (up to four people per company). However, now the procedure will be considerably toughened and the requirements for the turnover of the representative office will be 250,000 euros per year.


Another alternative is to register as a self-employed person, it will be necessary to prove two years of work experience and knowledge of Bulgarian language at the level of B1 - to pass an exam in local institutions. Other possible ways are described below.


Residence permit for students. Foreigners enrolled as full-time students in a higher education institution in the Republic of Bulgaria may obtain a long-term residence permit for a period of up to one year. This will require a certificate of enrollment in the Republic of Bulgaria and proof of payment of the enrollment fee.


Residence permit for pensioners. It is necessary to prove the fact of receiving a pension and the availability of financial means for living in the country (a little more than 3000 euros in the account).


Employment in a local company. For this purpose, it is necessary to get a job in a Bulgarian company. By the way, social payments or taxes from the salary over and above the income tax in Bulgaria is 24%.


Residence permit for self-employed. It will be necessary to confirm the work experience for two years and, knowledge of the Bulgarian language at the level of B1 - pass the exam in local institutions. Perhaps it is not as difficult as it seems.


Investment activity. One of the most attractive options is to invest a capital of at least 250.000 euros in a business in Bulgaria, provided that you own at least 50% of the shares of the company. A mandatory condition is the creation of ten full-time jobs for Bulgarian citizens.


If you do not want to register as a self-employed person and pass the Bulgarian language exam, you can apply for a residence permit by study or employment in a local company. Also if you will be moving as a whole company, you can relocate your employees. A pensioner's visa is suitable for persons of retirement age.


Before you can apply for a residence permit, you must first enter the country on a national D visa. The documents for this visa are submitted to the Bulgarian consulate. The grounds for issuance of the D visa depend on the chosen category of residence permit.


Depending on the chosen category, the residence permit, as a rule, includes such items:

  • A copy of the passport;

  • Proof of source of income.

  • Health insurance valid on the territory of Bulgaria;

  • Certificate of no criminal record;

  • Confirmation of sufficient financial means for the period of residence;

  • Proof of availability of housing for residence in Bulgaria;


The application for a residence permit is processed on average within two weeks from the moment of its submission. After 5 years from the moment of obtaining a temporary residence permit in Bulgaria and provided that the holder of the status has been absent from the country for no more than 30 months, it is possible to apply for a permanent residence permit in Bulgaria.

Bulgarian citizenship by roots and naturalization

You can apply for Bulgarian citizenship by naturalization after 5 years of residence in the country. By the way, this option is especially convenient for those who will receive residence permit under the investment program. For the investor and his family is not required to confirm knowledge of the state language, as well as to renounce native citizenship.


There is also an opportunity to obtain a passport of this country in the presence of Bulgarian relatives. A foreign citizen who at least one of his parents or grandparents was Bulgarian by nationality has the right to apply for Bulgarian residence permit and citizenship.

What about crypto regulation?

There is still no separate legislation in Bulgaria that defines and regulates cryptocurrencies and the licensing of these activities. But there are certain rules on taxation and transactions with crypto. Back in 2014, the local tax service was one of the first in the world to adopt a resolution according to which the profit from the sale of cryptocurrencies is subject to a tax rate of 10%.


By the way, the basic income tax rate for legal entities in Bulgaria is also 10%. Under certain circumstances, this rate can be applied to cryptocurrencies on a company's balance sheet. Despite the lack of licensing to cryptocurrency companies in Bulgaria apply standard AML rules, the same as to other financial activities and, according to the law firm Gofaizen Sherle operations with crypto for legal entities are legal. By the way, this is confirmed by the fact that the country is home to one of the largest European and global crypto exchanges - Nexo.

Nexo: real case of crypto business with Bulgarian origin

Nexo is one of the top European cryptocurrency companies. For those who have a residence permit in Europe, Nexo can quite easily issue a crypto card with no fees. And this company has Bulgarian origins, Nexo's co-founders are Antoni Trenchev and Kosta Kantchev. Bulgaria can be a place, which provides innovation in the field of blockchain.


From public sources we can conclude that the company at least had an office in Sofia - it was a place there that a raid was carried out as part of the investigation initiated by the Bulgarian prosecutor's office against the exchange in early 2023. The prosecutor's office later dropped the investigation and acknowledged that the exchange had not violated the country's laws. Nexo representatives also call this investigation the politically-motivated operation of Bulgarian authorities and demand that it be recognized in court. However, currently the company is developing its operations in other jurisdictions, including Dubai, where it recently received preliminary approval from local regulator VARA.


The Nexo case is important because it shows that a successful company with roots in Bulgaria faced certain difficulties when operating in the country - so the regulation of cryptocurrencies in Bulgaria needs to be improved. In general, although there is likely to be uncertainty about the regulation of cryptocurrencies in Bulgaria until MiCA (European-wide laws regulating cryptocurrencies) finally comes into force.

However, Bulgaria still compares favorably with some European countries in that it has a low tax rate and operates crypto ATMs. So for individual relocation Bulgaria is definitely suitable, especially now - when the country has entered the Schengen zone from April 1, 2024 together with Romania.

Conclusion

Any country has its disadvantages. Such disadvantages are relevant for Bulgaria:

  • High unemployment and low wages. It is one of the poorest countries in the EU.
  • Possible increase in taxes and tightening of crypto regulation in the future. The country will soon enter the euro zone.


By entering the Schengen Bulgaria can become a bridge for its new residents to move and relocate to the European Union. Low tax rates, one of the lowest cost of living in the EU, good climate - all these are unconditional advantages of this country. So far there are few options for nomads to obtain residence permits here - it is easiest to move as a whole company or get a study residence permit. But as they say, people living in Bulgaria, now the prices are even lower than in Serbia, which has recently become a popular place for relocation.


If you interested in crypto regulation, you can watch global crypto regulation rating here and get updates on my Telegram channel.