Bulgaria

The Bulgarian foreign direct investment (FDI) regime entered into force on 12 March 2024 through amendments of the Investments Promotion Act (IPA). The purpose of the regime was to ensure the local level application of Regulation (EU) 2019/452 (FDI Screening Regulation). The Bulgarian legislator, however, went the extra mile and expanded the scope of application by broadening the scope of both the concept of foreign investor and of foreign investment. 

What triggers a filing?

A filing is required when an investment meets all the following criteria: 

• It involves a foreign investor. 
• It is considered a foreign investment.
• It pertains to a sector listed in Art.4, para 1 of the FDI Screening Regulation, and  
• It meets at least one statutory threshold.

What is an FDI?

FDI refers to any investment aimed at the establishment or maintenance of lasting and direct ties between the foreign investor and the entrepreneur or the company to whom/which the capital has been provided in order to carry out economic activity in Bulgaria. This includes among others: (i) the effective participation in the management or control of a company carrying out economic activity; (ii) expansion of, extending the capacity or diversifying the production of the existing company; and (iii) the establishment of a new company. Passive investments, such as portfolio investments, are not considered FDI.

Who is a foreign investor?

Foreign investor under Bulgarian law is:

• a citizen of a non-EU member state; or
• a legal entity seated in a non-EU member state.

Additionally, the following EU-based entities are also considered foreign investors:

• EU seated entities that are directly or indirectly controlled by non-EU individuals or by a non- EU seated legal entity; or
• EU seated entities that:
  • are directly or indirectly controlled by one or more non-EU individuals or legal entities due to a contractual agreement or internal rules;
  • make an investment for the benefit of a non-EU entity or an entity directly or indirectly controlled by such a person.

Which are the FDI relevant sectors?

FDI relevant investment concerns one of the sectors listed in Art.4, para 1 of FDI Screening Regulation, namely: 

• Critical infrastructure, including energy, transport, water, healthcare, communications, media, data processing or storage, aerospace, defence, electoral or financial infrastructure, sensitive facilities, as well as land and real estate crucial for the use of such infrastructure.
• Critical technologies and products, including artificial intelligence, robotics, semiconductors, cybersecurity, aerospace and defence technologies, energy storage, quantum and nuclear technologies, nanotechnologies, and biotechnologies.
• Supply of critical inputs, including energy, raw materials, and food security. 
• Access to sensitive information, including personal data or the ability to control such information; and 
• Media freedom and pluralism (investments that could impact the independence or plurality of the media).

What are the thresholds?

The investment must meet at least one of the following thresholds: 

• acquisition of at least 10% of the shares in a company operating in Bulgaria or exceeding the value of EUR 2,000,000; or
• acquisition of at least 10% of the shares in a company operating in Bulgaria and engaged in high-tech activities; or 
• a new investment exceeding EUR 2,000,000. 

Are there exceptions or specific cases?

An investment requires authorisation regardless of the statutory thresholds in the following cases:

• if there is information that the FDI may impact the security or public order; and a substantiated request is made by the State Agency for National Security and the State Intelligence Agency. 
• if a non-EU state holds a direct or indirect participation in a foreign investor’s capital, including cases where the investor has received significant funding from a government entity. Publicly traded foreign investors are exempt, provided that non-EU state participation does not exceed 5%.

By exception, new investments or investments not exceeding EUR 2,000,000 are subject to screening if proposed by a member of the FDI Screening Council (the authority competent to review and authorise FDIs in Bulgaria) with competence in the FDI relevant sector, in coordination with the representatives of the National Security State Agency and State Intelligence Agency.

The following investments are subject to screening, irrespective of meeting the general criteria:

• FDI in activities and objects involving production of energy products from oil and of petroleum products in facilities part of or adjacent to the critical infrastructure.
• FDIs by investors from Russia or Belarus.

The FDI authority may open an ex-officio screening procedure in respect of an investment for which the foreign investor did not make a filing, but which is potentially in scope of the screening regime, where, 

• the authority has become aware of new circumstances - in this case a screening procedure can be opened within three months of becoming aware of such new circumstances; or
• the authority has received an opinion from the European Commission; or a notification from an EU Member State with sufficient information (in this case the procedure can be opened if the investment was made not more than two years before the receipt of the opinion or notification).

In addition, Bulgarian law leaves the option for potential ex-post screening of FDI that has been commenced or made during the transitional period after entry into force of the law and before the obligations for prior FDI filing become effective.

How is the screening process designed?

The application for FDI screening is made to the Bulgarian Interinstitutional FDI Screening Council through the Bulgarian Investment Agency. Such application is in a standard form and must include (among others) the ownership structure of the foreign investor and of the direct investment company, ultimate investor, approximate FDI value, the products, services, business operations of the foreign investor and the direct investment company and the EU member states where they operate; the funding of the investment and its source, the planned date for completion, etc.. The application can be submitted simultaneously with applications for authorisations under other laws (e.g. merger control). As of 10 March 2025, the standard form application, information on the documents required and the conditions for applying are not yet available due to the delay in the FDI implementation process. 

By law the review period for an FDI screening application is set at 45 days, with a possible extension of up to 30 additional days. 

The outcome of the application is a resolution of the FDI Screening Council which either approves the investment, approves the investment conditionally, subject to certain measures, or rejects the application if the investment affects national security, public order, or EU interests.

What happens if the investor does not comply? 

If a transaction/investment is closed/implemented prior to obtaining the FDI authorisation, the investor faces penalties, including a fine of 5% of the investment's value, with a minimum of BGN 50,000 (approximately EUR 25,000). The FDI Screening Council, notwithstanding the financial penalty, may impose restrictive measures necessary to ensure security or public order, including change of control, change and/or termination of activities, termination of foreign direct investment and other appropriate measures. 

Any additional considerations?

As of 10 March 2025, the FDI regime is not operational as the necessary implementing legislation is not yet approved and the screening authority not yet established. Based on IPA, FDI’s initiated after 12 March 2024 but before the adoption of the implementing regulations are not subject to notification requirements.

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