Informes Sectoriales OP - Icex

Oficina Económica y Comercial 

de la Embajada de España en Sofia 

Informes Sectoriales 

OPORTUNIDADES DE INVERSIÓN Y COOPERACIÓN EMPRESARIAL 

TOURISM AND RE- 

LATED SERVICES 

IN BULGARIA

Informes Sectoriales 

OPORTUNIDADES DE INVERSIÓN Y COOPERACIÓN EMPRESARIAL 

TOURISM AND RE- 

LATED SERVICES 

IN BULGARIA 

This market report has been elaborated 

by NEWTON Finance Bulgaria 

AD under the supervision of the 

Spanish Economic and Commercial 

Office of the Spanish Embassy in 

Sofia 

Febrero 2006

TOURISM AND RELATED SERVICES IN BULGARIA 

INDEX 

1. INTRODUCTION 5 

1.1. THE BULGARIAN ECONOMY 6 

1.2. PROSPECTS OF THE BULGARIAN MARKET 9 

1.3. APERTURE TO FOREIGN INVESTMENT 11 

2. OVERVIEW 17 

2.1. DEFINITION AND DESCRIPTION OF EACH SECTOR 17 

2.2. GENERAL OVERVIEW OF TOURISM SECTOR 20 

3. POLICIES AND LEGAL FRAME FOR FOREIGN INVESTMENT 25 

3.1. GOVERNMENT POLICIES AND REGULATIONS FOR FOREIGN INVESTMENTS 

IN TOURISM AND RELATING SERVICES 26 

3.2. POLICIES FOR THE PROMOTION OF INVESTMENTS 27 

3.3. IMPLEMENTATION METHODS 28 

3.4. RELEVANT ADMINISTRATIVE BODIES 31 

3.4.1. GOVERNMENT ORGANIZATIONS IN THE TOURISM SPHERE 31 

3.4.2. NON-GOVERNMENTAL ORGANIZATIONS IN THE TOURISM SPHERE 33 

3.4.3. LOCAL AND REGIONAL TOURIST ORGANIZATIONS 35 

4. PRACTICAL ASPECTS OF THE INVESTMENTS 36 

4.1. MAIN COSTS FOR INVESTMENTS IN THE TOURISM SECTOR 36 

4.1.1. LABOR COSTS 36 

4.1.2. TAXATION 37 

4.1.3. PROPERTY TAXES 41 

4.1.4. PROPERTY COSTS 41 

4.1.5. LABOR AND SOCIAL SECURITY LEGISLATION 42 

4.1.6. TOURISM TAXATION 42 

4.1.7. TOURISM FEES 43 

4.2. MAIN BARRIERS TO INVESTMENTS 43 

4.2.1. GENERAL BARRIERS TO INVESTMENTS 43 

4.2.2. SPECIFIC BARRIERS TO INVESTMENTS IN THE SECTOR 45 

4.3. SEARCHING FOR A PARTNER. ASPECTS TO BE CONSIDERED WHEN 

NEGOTIATING A CONTRACT 48 

4.4. FOREIGN AND SPANISH INVESTMENT IN THE SECTOR. MAIN SUCCESSFUL 

CASES OF IMPLEMENTATION IN BULGARIA 51 

5. ANALYSIS OF THE MARKET OFFER 55 

5.1. DOMESTIC PRODUCTION AND MAIN PRODUCERS 55 

5.1.1. TYPES OF TOURISM 55 

5.1.2. HOTELS AND RESTAURANTS 59 

5.1.3. TOUR OPERATORS 63 

Spanish Economic and Commercial Office of the Spanish Embassy in Sofia 3


5.1.4. DEVELOPERS 63 

5.2. FOREIGN PRODUCTION AND MAIN SUPPLIERS 65 

5.3. GEOGRAPHIC DATA 66 

6. ANALYSIS OF THE MARKET DEMAND 69 

6.1. GENERAL CONSUMPTION TRENDS 69 

6.2. CONSUMER PROFILE 73 

6.3. GEOGRAPHIC LOCATION OF MAIN MARKETS 79 

6.4. PERCEPTION OF SPANISH PRODUCTS 81 

7. OPPORTUNITIES AND RISKS FOR SPANISH COMPANIES 82 

BIBLIOGRAPHY 86 

ANNEXES 87 

LEGISLATIVE FRAMEWORK IN THE TOURISM AREA: 87 

GOVERNMENT ORGANIZATIONS ON THE INTERNET 87 

NON-GOVERNMENTAL ORGANIZATIONS ON THE INTERNET 87 

TOURISM EXPOS IN BULGARIA: 88 

TOP 10 HOTEL COMPANIES 2004 88 

MAIN TOUR OPERATORS 89 



1. INTRODUCTION 

The territory of Bulgaria covers an area of 110 993.6 km 2 . Situated in the southeast 

of the Balkan Peninsula, it is bordered by the Danube River and Romania to the 

north, the Black Sea to the east, Turkey and Greece to the south, and Serbia and 

FYROM to the west. The area is strategically placed between north and south Europe 

and between Europe, Asia and the Middle East. The total length of its boundaries is 

2245 km, of which – 52.6% land areas, 30.6% river areas, and 16.8% sea areas. The 

country is divided into 28 regions. 

With the exception of the Danube lowlands to the north and the Thracian plain in 

the south, the country is dominated by mountain ranges. It offers a rich diversity of 

landscapes, from mountainous terrain to rich farmland in the Danube Valley and 

130 km of beaches along the Black Sea. Bulgaria is one of the fastest growing tourist 

destinations in Europe and aside from the summer resorts on the Black Sea coast 

and winter skiing resorts in the mountains, it offers a range of other attractions including 

mountain scenery, history and wildlife. 

According to the latest census taken in 2001, the population of Bulgaria towards 

01.03.2001 was 7 932 984 inhabitants. More than one half (51.6%) is concentrated 

in 40 towns with more than 25 000 inhabitants. 32.3% of the population lives in the 

largest towns of Bulgaria with more than 100 000 inhabitants, which is approximately 

one third of the whole population. There are nine Bulgarian towns with population 

of more than 100 000 inhabitants: Sofia, Plovdiv, Varna, Burgas, Russe, Stara 

Zagora, Pleven, Sliven and Dobrich. Sofia is the capital of the country, with population 

of 1 173 988 inhabitants, followed by Plovdiv (338 302), Varna (320 668), Burgas 

(209 479), Russe (178 435), Stara Zagora (167 708), Pleven (149 174), Sliven 

(136 148) and Dobrich (100 000). The average density of the country’s population is 

71.5 inhabitants per km 2 . The regions of Sofia, Plovdiv and Varna are the most urbanized 

ones. 



1.1. THE BULGARIAN ECONOMY 

Since 2001 the economic growth of Bulgaria has been stable. Bulgaria has maintained 

a high degree of macroeconomic stability with strong economic growth, relatively 

low inflation and falling unemployment, but the external deficit remains high. 

GDP in 2004 compared to 2000 rose 20.5 percent. The increase was lowest in 2001 

(4.1%). Boosted by strong domestic demand and high investment, real GDP grew at 

5.6% in 2004 which was the highest rate since the start of transition. GDP per capita 

in purchasing power standards increased to 30.8% of the EU-25 average. In the first 

half of 2005, economic performance continued to be strong with a GDP growth rate 

of 6.2%. 

Main economic indicators 

№ Indicators 2000 2001 2002 2003 2004 

1 Gross Domestic Product 26 753 29 709 32 335 34 547 38 008 

(BGN m) 

Indexes 

2000=100 100 104.1 109.2 114.1 120.5 

Previous year=100 100 104.1 104.9 104.5 105.6 

2 Inflation (CPI-100, %) 10.3 7,4 5,8 2,4 6,2 

3 Investment (BGN m) 4 206 5 415 5 909 6 694 7 957 

Investment/GDP (%) 15.7 18.2 18.3 19.4 20.9 

4 Unemployment (%) 16.4 19.5 16.8 13.7 12.0 

5 Employed (thousands) 2 980 2 940 2 979 3 166 3 236 

6 Foreign trade 

Export - FOB (BGN m) 10 274 11 176 11 858 13 042 15 617 

Import - CIF (BGN m) 13 857 15 897 16 451 18 797 22 726 

Balance (BGN m) -3 583 -4 721 -4 593 -5 755 -7 109 

Balance/GDP (%) -13,4 -15,9 -14,2 -16,7 -18,7 

Source: BNB 

Investment activity speeded up. From 2000 to 2004 the value of the investments 

(gross fixed capital formation – GFCF) almost doubled with its share in the GDP rising 

by 5.2 points from 15.7% to 20.9%. Since the beginning of 2003, progress has 

been made in the privatization of several large enterprises, including shipbuilding 

and telecommunications: 

♦ In October 2003, 75% of the Varna shipyard was sold to the Bulyard shipbuilding 

company, a US / Bulgarian joint venture company. 

♦ In June 2004, Bulgaria finalized the sale of a 65% stake in the Bulgarian Telecommunications 

Company (BTC) to a private equity consortium led by Advent International, 

for EUR 230 mln. The estimated investment commitment for the next 

five years is EUR 700 mln. Until recently BTC was the dominant operator in land 

line telecommunications but this has recently changed with the government issuing 

licenses to a number of companies, increasing the total number of BTC’s rivals 

to 11. Some will offer a full range of services whilst others will provide access 

to other networks. 

♦ Five of the Bulgarian district heating companies have been prepared for sale and 

an international adviser has been appointed for the privatization of five of the 

country's thermal power plants. 



♦ The main failure of the privatization program has been in the tobacco industry, 

where the proposed sale of key factories collapsed after BAT withdrew due to the 

restrictions being placed on the deal. This was blamed on the June 2005 parliamentary 

election, with the Movement for Rights and Freedoms, largely backed by 

ethnic Turks who are a dominant worker group in the tobacco industry, unable 

to support the proposed sale. 

Since 2001 employment has increased and unemployment has shrank. The employed 

people in 2004 compared with 2000 grew by 256 000 or nearly 9%. The unemployment 

rate fell by 4.4 points from 16.4% to 12.0%. 

Inflation in the country was continuously decreasing until 2003. Compared with 

2000 it fell over four times. In 2004, however, as compared with 2003, it was 2.5 

times higher. This adverse to the economic development of the country trend continued 

in 2005 when, compared to 2004, the average annual consumer prices jumped 

6.5%. 

Foreign Trade 

After a temporary improvement in 2004, the current account deficit increased again 

considerably in 2005. According to preliminary January – December 2005 data from 

the Bulgarian National Bank (BNB), the current account deficit was EUR 3.163 bln 

(14.9% of GDP), against a deficit of EUR 1.648 bln (8.5% of GDP) for 2004. In case of 

a continued deterioration, additional corrective measures may become necessary. 

Without the possibility for active monetary and exchange rate policies within the 

currency board arrangement, tight fiscal and wage policies are critical for maintaining 

internal and external stability. 

(% of GDP) 

0 

-2 

-4 

-6 

-8 

-10 

-12 

-14 

-16 

Current Account 

1999 2000 2001 2002 2003 I. - XII. 

2004 

I. - XII. 

2005 

Source: BNB. 

Bulgaria’s economic growth has been hampered by the continuously increasing foreign 

trade deficit. According to preliminary January – December 2005 data from 

BNB, the trade deficit amounted to EUR 4.083 bln (19.3% of GDP), and the deficit 

increased by EUR 1.354 bln compared to 2004 (a deficit of EUR 2.729 bln, 14% of 

GDP). Despite a better than expected export performance mainly due to favorable developments 

in commodity prices, the trade balance deteriorated further in 2005 because 

imports surged even more strongly. According to BNB, in January – December 

2005 exports (FOB) amounted to EUR 9.454 bln and were up by 18.4% compared to 

January – December 2004. In 2005 imports (FOB) increased by 26.3% compared to 

2004, reaching EUR 13.537 bln. 



The trade deficit and the current account deficit widened considerably in 2005 also 

because of the increase in oil prices. 

Structural Reforms 

According to the annual EC Monitoring Report 2004, structural reforms have been 

further deepened in all areas. Reforms of product and capital markets have continued 

and are broadly in line with key objectives of the Lisbon agenda. Privatization 

has been completed in many sectors. Good progress was made in the sale of remaining 

enterprises, for example in the energy sector, although not without setbacks and 

delays as regards for example the failed privatization of the tobacco company or the 

cancellation of the privatization process for a thermal power plant. Company restructuring 

in the network industries has been triggered by the privatization of companies 

and the increasing liberalization of markets. 

Preparations for the unbundling of the National Electricity Company have started 

with the separation of accounting systems for different units. The implementation of 

the national program for restructuring the steel industry, adopted in March 2004, is 

to be completed by 2007. Progress in its implementation in the last year included the 

closure of some steel mills, staff reductions and further investments. In coal mining, 

three more coal pits were privatized during the reporting period and preparations for 

the privatization of one of the two remaining state-owned mines are under way. 

Prices for energy, gas and telecommunication have been fully aligned with costs. 

Some cross-subsidization still exists with regard to electricity and heating energy for 

households, but should be phased out in 2006. Following tariff increases for rail 

passenger services, the gap to full cost recovery levels has been reduced. Market entry 

of new firms has been dynamic, but both market entry and exit continues to be 

hampered by relatively costly, complex and time-consuming procedures. 

Although further reform is required, structurally the Bulgarian economy has developed 

considerably. Greater macroeconomic stability has improved in the business 

environment and the agricultural sector's contribution to GDP has halved since 

1997, with the service industry now dominating. 

Financial Sector 

The currency board arrangement pegging the Bulgarian lev (BGN) to the euro continued 

to contribute to macroeconomic stability. Bank credits to households and 

non-financial enterprises expanded again at almost 50% in 2004 fuelling domestic 

demand and import growth. The Bulgarian National Bank (BNB) took additional 

measures in April 2005 to curb bank credit growth by imposing de facto ceilings on 

the extension of new credits. Partly in anticipation of these measures, credit growth 

increased again at record levels in the first quarter of 2005, but cooled down significantly 

to under 40% until the end of July. Fiscal policy remained stability-oriented. 

Due to better than expected revenues, the general government balance ended with a 

surplus of 1.3% of GDP in 2004 (based on EU accounting standards, ESA 95) contributing 

to the reduction of general government debt to below 40% of GDP in 2004. 

Financial mediation has been further deepened both in the banking and nonbanking 

sector. Due to the high credit growth rates, bank credits to non-financial 

private corporations and households have increased by almost 10 percentage points 

to 35% of GDP until the end of 2004. In line with credit expansion, the ratio of deposits 

to GDP increased by more than 10 percentage points to over 50%. Despite the 

high credit growth, bank performance indicators do not show any obvious deteriora- 



tion in the financial situation of banks. The share of substandard and nonperforming 

loans stood at 3.5% at the end of 2004 down from 4.2% at the end of 

2003. The capital adequacy ratio declined from 22.0% at the end of 2003 to 16.1% at 

the end of 2004 but is still well above the legal minimum of 12%. A new regulation 

on the capital adequacy of banks entered into force in July 2005. The role of the 

non-banking sector in financial mediation remains limited but continues to increase. 

Stock market capitalization has increased as a share of GDP from 7.9% at the end of 

2003 to 21.5% at the end of June 2005. The assets of pension funds have also further 

increased from 1.5% of GDP to 2.4% over the same period. 

1.2. PROSPECTS OF THE BULGARIAN MARKET 

In 2004, the economy approached by another 4.9 percentage points its 1989 GDP 

level, which, according to the Agency for Economic Analysis and Forecasting (AEAF) 

at the Ministry of Finance, will be reached in 2006. Concerning the GDP per capita 

indicator, the 1989 level was already reached in 2004. The share of the private sector 

in gross value added increased by three percentage points compared to the previous 

year, and reached a value of 76.5%. This was due both to the higher participation 

rate, and to the continuing privatization processes. 

Gross Domestic Product 

140 

GDP 1989=100 

130 

125.6 

134.1 

120 

110 

100 

90 

80 

70 

117.6 

110.5 

115.1 

103.8 

108.7 

100 

97.8 

102.6 

100 

93.2 

91.9 

97.1 

88.4 

90.9 84.9 

91.9 

83.3 

82.2 

87 

79.8 80.6 78.8 

83.3 

83.4 

77.2 77.5 79.7 75.9 75.5 77.6 79.6 

72.2 

76.1 76.4 

72.2 

70.9 72.5 

68.2 

60 

1989 

1990 

1991 

1992 

1993 

1994 

1995 

1996 

1997 

1998 

1999 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

GDP 

GDP per capita 

Source: NSI, AEAF 



During the first half of 2005, the Bulgarian economy continued developing at high 

rates. For the first six months GDP increased by 6.2% in real terms, and its nominal 

value reached EUR 9.4 billion. This is the highest growth rate of the physical volume 

of the indicator for the first half of the year for the last seven years and it creates a 

good basis for the realization of an annual growth rate of about 5.7% in 2005. For 

the period 2006 - 2008 the Agency for Economic Analysis and Forecasting expects 

that the positive development of the Bulgarian economy will be maintained, with 

forecasted growth rates of about 5.7-5.9% annually. The factors underlying the forecasts 

are the dynamic exports developments and the increasing volume of investments 

in the economy. 

Both the recent political stability of Bulgaria and its prospective accession to the EU 

have underpinned strong recent growth. One of the key factors driving this has been 

a credit driven boom which has accelerated since the privatization of the banking 

sector. Inflation has increased as a result but it remains in single digits and below 

the regional average. Inflation is forecast to fall back to around 4% this year. 

One area of obvious risk, however, is that if domestic demand grows at a stronger 

than expected rate, then a more strict fiscal and monetary policy will be required to 

avoid deterioration in the deficit. Otherwise the sustainability of the currency board 

might be jeopardized. 

Bulgaria has a lower level of GDP per capita than the average for the last wave of accession 

countries, although this is balanced to some extent by a lower than average 

level of living costs. In nominal terms for example, Bulgarian GDP (in 2003) stood at 

39% of the level of the last EU accession countries. In terms of GDP at Purchasing 

Power Parity (PPP), which takes account of differences in living costs, Bulgarian GDP 

is however 60% of the average of the last accession countries. 

Private consumption per head has risen rapidly since 1999 as income growth has recovered 

and real wage growth is expected to increase further in the short term, with 

plans by the current government to increase minimum wages by 25%. The taming of 

inflation has been a further positive boost to consumers and the main area of downside 

risk comes from the effect of a weak labor market, although unemployment is 

easing down slowly. 

Average monthly incomes increased by 6.3% to BGN 306 in 2004 but average 

household spending surged ahead by 14% in the same period. Retail spending grew 

at a rate of 13.3% on the year, with household goods and appliances seeing particularly 

strong growth (25.2%). Spending has slowed in 2005 but at over 10% remains 

very robust. 

Key indicators 2003 2004 2005 2006 2007 2008 

Real GDP growth (%) 4.3 5.6 4.5 4.7 4.5 4.3 

Consumer price inflation (avg %) 2.3 6.1 4.1 3.8 3.6 3.3 

Budget balance (% of GDP) 0 1.7 1.1 0.3 -0.3 -0.5 

Current-account balance (% of GDP) -9.3 -7.5 -7.2 -7 -6.6 -6.2 

Short-term central interest rate (avg 

%) 

2 1.9 2.3 2.7 3.5 3.8 

Exchange rate BGN: USD (avg) 1.73 1.57 1.43 1.4 1.45 1.51 

Exchange rate BGN: EUR (avg) 1.96 1.96 1.96 1.96 1.96 1.96 

Source: AEAF 

With a recent agreement for the potential adoption of the Euro in Bulgaria in 2009 or 

2010, thereby reducing exchange-rate risks, trade integration with the EU is expected 

to increase. Legislation is planned to allow parallel use of both the Euro and 



Bulgarian Lev in cash transactions as of 2008, whilst prices will be quoted in both 

currencies a year before the changeover. 

GDP per capita in Bulgaria is expected to rise by 40% in purchasing power parity 

(PPP) terms between 2002-2007 and by 70% in nominal US dollar terms. Even following 

this rise, the country will still have some way to go to get in line with Central 

& Eastern European averages. It is believed, however, that the current GDP gap is 

overstated with Bulgaria's "grey" economy suggested to be the largest in the region; it 

is currently estimated at around 30% of GDP. The share of the grey economy is expected 

to decline over time as the economy develops and tax administration improves. 

In addition to the EU accession negotiations and NATO membership from 2004, Bulgaria 

is also a member of the Central European Free Trade Agreement (CEFTA) and 

has negotiated bilateral agreements with each member state. This has significantly 

changed the trade flow from Bulgaria. However, export growth is expected to slow in 

the near term in light of the relative weakness in demand within Europe as a whole. 

Bulgaria enjoys easy access to the 132 mln-strong markets of the 10 countries of the 

Balkans Region, most of which are undergoing a dynamic transition towards being 

market economies. A population of over 60 million lies within 500 km of Sofia and 

while local road infrastructure is in urgent need of improvement, a network of international 

motorways cross the country, allowing access to Western Europe, the Adriatic, 

the Black Sea Coast, as well as Russia and Asia. 

1.3. APERTURE TO FOREIGN INVESTMENT 

Bulgaria ranks first in the world by investment to gross domestic product (GDP) ratio 

for 2005. As regards 2005 overall investments, the money has been invested in construction 

of supermarkets, hotels, industrial enterprises, power engineering, telecommunications, 

and transport. 

According to preliminary January – December 2005 data from the Bulgarian National 

Bank (BNB), the foreign direct investments (FDI) in Bulgaria amounted to EUR 

1.876 bln (8.9% of GDP) against EUR 2.278 bln (11.7% of GDP) attracted in 2004. 

Foreign direct investment in Bulgaria, EUR million 

2004 2005 Growth 

Q1 Q2 Q3 Q4 total Q1 Q2 Q3 Q4 total 

2005– 

2004 

Direct investment, 

600.8 

380. 707. - 1281. 1797. 353. 322. 

327. 1604. 

2 8 572.5 5 1 5 2 

5 0 

net 

-193.1 

Direct investment 

-4.5 -5.1 190.3 168.3 

- 

- - - - - 

12.3 

15.2 10.2 215.3 15.9 256.5 

abroad 

-446.8 

Foreign Direct 

In- 

262.1 

506.8 

392. 532. 

1091. 2278. 368. 375. 

624. 1876. 

6 3 

2 2 6 7 

9 0 

vestment 

-402.2 

Equity 105. 283. 

1080. 1579. 125. 117. 

255. 

110.8 

259.4 

capital, incl. 5 1 

0 4 6 7 

0 

757.7 -821.7 

From 

197. 

46.0 

privatisation 

1 

0.0 693.2 936.3 0.0 0.0 0.0 0.0 0.0 -936.3 

Nonprivatisation 

59.5 85.9 110.8 386.8 643.0 

259.4 

125. 117. 

255. 

6 7 

0 

flows 

757.7 114.6 



Other 

capital 

Reinvested 

earnings 

Mergers and 

acquisitions, 

net 

2004 2005 Growth 

Q1 Q2 Q3 Q4 total Q1 Q2 Q3 Q4 total 

2005– 

2004 

213. 

5 

Receipts - 

177. 

0 

77.5 -55.2 412.9 

200. 

1 

200. 

8 

175.4 

332. 

8 

909.1 496.3 

73.6 72.2 73.8 66.4 286.0 42.9 57.2 72.0 37.2 209.2 -76.7 

- 

180. 

0 

180. 

0 

Payments - - 

- 

829.5 

- 

- 

649.5 

- 

- 

43.3 

270.5 - 450.5 - - 

- 

1100. 

0 

- 

- 

1100. 

0 

- 

- 

43.3 

309.3 

1548. 

3 

- 

1239. 

0 

- 

281. 

6 

- 

- 

281. 

6 

-15.5 - 

1548. 

3 

- 

1563. 

9 

Source: BNB 

The attracted equity capital (acquisition/disposal of shares and equities in cash and 

in kind by non-residents in/from the capital and reserves of Bulgarian enterprises) 

reached EUR 757.7 million for the reporting period. Its relative share in the foreign 

direct investment for the reporting period amounted to 40.4%. It decreased by EUR 

821.7 million compared to that attracted in 2004 (EUR 1,579.4 million, of which 

EUR 936.3 million from privatization deals). 

- 

- 

(mln. Euro) 

2400 

Foreign Direct Investment 

(January - December 2005) 

2000 

1600 

1200 

800 

400 

0 

Total Equity capital Other capital Reinvested 

2004 2005 

earnings 

Source: BNB 

In January–December 2005 there was no equity capital on privatization deals with 

non-residents attracted. The attracted equity capital on non-privatization deals totaled 

EUR 757.7 million for the reporting period, increasing by EUR 114.6 million 

compared to EUR 643 million for 2004. 

Foreign direct investment in Bulgaria by years 

Privatization 

Greenfield + Expansion 

Year 

% % 

2000 36.5 63.5 

2001 2.4 97.6 

2002 15.0 85.0 

2003 16.9 83.1 



2004 47.8 52.2 

Sept 2005 0.0 100.0 

Source: InvestBulgaria Agency 

By countries, the largest investments in Bulgaria for the reporting period were those 

of Austria (36.6% of the total foreign direct investment), Great Britain (10.6%) and 

Switzerland (10%). 

FDI Flows 

Geographical Breakdown 

(January - December 

2005) 

Aus- 

36.6 

% 

U.K. 

10.6 

% 

Othe 

r 28.8 

% 

Ireland 

4.4 

% 

Greec 

e 9.6 

% 

Switzerland 

10.0 

% 

Source: BNB 

By branch, the largest investments for January - December 2005 were in Transport, 

storage and communication (EUR 519.2 million), Financial intermediation (EUR 

472.7 million), Real estate, renting and business activities (EUR 344.6 million), Construction 

(EUR 156.7 million) and Manufacturing (EUR 150.3 million). 

The total amount of the expected investment in 2006 is EUR 6.1 bln. EUR 3.8 bln 

will come from domestic and EUR 2.3 bln from foreign investors. 



Foreign Direct Investment Flows by Industry 

(January - December 2005) 

27.7% 

12.4% 

25.2% 

8.0% 

8.4% 

18.4% 

Transport, storage and communication 

Financial intermediation 

Real estate, renting and business activities 

Construction 

Manufacturing 

Other 

Source: BNB 

Source: BNB 

Some of the largest investments in 2005 include Mobiltel’s capital increase through 

Telekom Austria’s buy out of the Bulgarian company, Lukoil’s investments in Neftochim 

Bourgas, and financial institutions increasing their capital for loans to small 

and medium sized businesses. Among the largest investors were Sofia Med, Sisecam, 

Kremikovtsi, Dundee Precious Metals, Asarel Medet, and Festa hotels. 

Investments in 2005 were relatively equally spread throughout all sectors and from 

all countries, whereas last year’s bulk of investments was in the energy and bank 

sector. 

In 2005, InvestBulgaria Agency certified 10 projects as first class investments and 2 

projects as third class investments. InvestBulgaria Agency (IBA) expects the total 

volume of investments in 2006 to be EUR 6.1 bln of which EUR 3.8 bln will be domestic 

investments and EUR 2.3 bln will be foreign investments. These figures do 

not include privatization deals. According to InvestBulgaria Agency, investments in 

2006 will have emphasis on high technologies and telecommunications sectors. Estimates 

indicate that the predicted investments will be distributed in the following 

manner: 25% in manufacturing, 20% in services, 20-25% in the energy sector and 

the rest in the transportation, and mining and quarrying sectors. 

The underlying factors behind the increased level of green-field investment in Bulgaria 

include: 

♦ Political and economic stability - Bulgaria is perceived to be the most stable 

country in the Balkans; 

♦ GDP growth - commentators believe growth of circa 5% will be sustained over the 

medium term; 

♦ Strategic geographic location; 

♦ Significantly lower labor costs than the European average; 

♦ Competitive tax regime - corporate tax and VAT among the lowest in Central and 

Eastern Europe; 



♦ 

♦ 

♦ 

♦ 

♦ 

Duty-free movement of goods and services within a market of 550 million consumers. 

Bulgaria has free trade agreements with the EU, EFTA, CEFTA, Turkey, 

FYROM, Croatia and Israel; 

55 double tax agreements and 52 on the mutual protection and promotion of foreign 

investment; 

Investment by foreigners receives equal treatment to investment by Bulgarian 

residents; 

Significant potential for hi-tech and Research and Development related ventures; 

The Bulgarian Lev will remain pegged to the Euro until it can join EMU (2009 at 

the earliest). 

Looking ahead, in 2005 the Bulgarian Ministry of Economy retained Deloitte & 

Touche to prepare a report on the country’s investment strategy. Three economic 

sectors were chosen by the consultant to target attracting investment: ICT (incl. electronics), 

outsourcing, and manufacturing of machines and electrical equipment. 

Deloitte made a research among investors and determined the factors for taking a 

decision to attract investments in the three target sectors. The research indicated 

that Bulgaria has some important weaknesses and should address them as much as 

possible. It is expected that making commitments to effect these improvements and 

achieving an observable progress will be awarded with a sustainable increase of foreign 

direct investment. 

The measures to overcome the competitive shortcomings of Bulgaria can be grouped 

as follows: education and training, infrastructure, management reforms, and incentives. 

Education & training. Bulgaria’s labor force has qualities in some key areas that are 

important for outsourcing, ICT and/or engineering sectors. The improved knowledge 

and skills of the laborers (present and potential) in these sectors will make Bulgaria 

more attractive for potential investors. Stepped up and more comprehensive training 

could additionally enhance the investors’ interest in Bulgaria. Priority in the field of 

training could be given to areas such as: foreign languages (especially English and 

German), ICT (esp. IT maintenance, networks, telecommunications, and software), 

management (esp. directed towards ICT and outsourcing). 

Infrastructure has improved significantly for the last 5 years and there are plans to 

continue building it in the near future. Nevertheless, infrastructure is a main constraining 

factor for the investors in industry sectors. Both international transport 

connections and many local roads and utilities need improvement. 

Reform of the managerial / administrative environment. Investment climate in Bulgaria 

as a whole is similar or better than that of Croatia and Romania, but not as 

good as that in the five countries of Central Eastern Europe, showed the research 

among investors. Foreign investors are not satisfied with the level of administrative 

services and the level of transparency. It is necessary for the pace of administrative 

reform in Bulgaria to at least correspond to those in the neighboring countries, otherwise 

there is a danger for the country to be perceived as a difficult place to develop 

business. 

Incentives. It is recommended to develop the system of incentives in such a way as to 

achieve two comprehensive goals: “compensating the investors for shortcomings” in 

Bulgaria and encouraging investments in target sectors. “Compensating the investors 

for shortcomings” in Bulgaria supposes focusing on financial incentives. Cur- 



rently, Bulgaria has one of the lowest corporate tax tariffs in Europe. Since this is an 

area of competitive advantage, the incentives should be aimed somewhere else. They 

must be directed towards improving and ensuring the infrastructure. Subsidies, 

grants or credits under better terms could be given to companies that want to enhance 

the qualification of their employees, etc. 

The report contains also an analysis of the countries that have made substantial investments 

in Bulgaria in the past and that are potential sources of investment in the 

three target sectors. The target countries - sources of investment are: Greece, Italy, 

the USA, Germany, Belgium, Austria, Great Britain, Switzerland, and France. 



2. OVERVIEW 

2.1. DEFINITION AND DESCRIPTION OF EACH SECTOR 

Bulgaria’s Tourism Act has been in force since October 2002, with subsequent 

amendments made in December 2002, May 2004, April 2005, May 2005, Nov 2005, 

and December 2005. The law settles the public affairs connected with the implementation 

of management and control in tourism, interaction of the state and the 

municipalities, as well as the participation of non-profit corporate bodies and individuals 

in these activities. 

The state policy in tourism is determined by the Council of Ministers. The objective 

of the law is to: 

• Provide conditions for development of tourism as a priority branch; 

• Introduce unified criteria for the practices of tourism; 

• Provide protection of the users of the tourist product; 

• Determine the rights and obligations of the persons related to tourism; 

• Stipulate the control over the tourist activities and the quality of the tourist 

product. 

The law regulates tourism as a combination of specific economic activities, trips, 

participation in cultural events, forums and others, carried out on tourist sites and 

directed toward creation, offering, implementation and consumption of commodities 

and services forming the tourist product. 

Tourist activities are: 

• Tour operation activity and tour agency activity; 

• Hotel and restaurant keeping; 

• Providing additional tourist services. 

Tour operator's activity is the organizing of group or individual travels trips with 

common price and sale of travels directly and/or through tourist agent under contract 

and voucher to end user. 

Tourist agent's activity is the fulfillment of mediation in: sales of organized trips, 

passenger aviation, water and bus transportation; reservation, visa, guiding and 

other additional tourist services, as well as insurance related to the tourist trip. 

Hotel keeping is the provision of tourist services in all kinds of categorized under 



the law or with issued temporary certificate for opened procedure for categorization 

means for shelter, places for accommodation and tourist cottages. 

Restaurant keeping is the provision of tourist services in all catering and entertainment 

establishments categorized according to the law and catering establishments 

adjacent to tourist cottages. 

Additional tourist services are services, connected with travels, entertainment, 

events and other events of cultural and introductory nature, sport and animation, 

balneological and other medical services, congress and business events, using rope 

lines, renting beach installations, equipment and vehicles, schools and clubs of riding, 

yachting, surf, ski-schools, schools for water sports and other services contributing 

to the development of tourism. 

Tourist sites are: 

• Shelter places - hotels, motels, villa and tourist settlements; 

• Accommodation places - boarding houses, recreation homes, family hotels, individual 

rooms, villas, houses, bungalows and camping sites; 

• Food and entertainment establishments - restaurants, fast food establishments, 

public houses, cafes and bars; 

• Places of tour operation and tourist agency and information services; 

• Beaches – beaches at natural water sites (sea, river and lake) and beaches at artificial 

water sites (dams and at swimming pools); 

• Ski tracks – ski tracks for alpine ski and snowboard and ski tracks for ski running; 

• Centers and places for offering and using tourist services: balneological, sport, 

entertainment places, etc.; 

• Museums, reservations, cultural monuments and monuments of the historical 

heritage according to the Law on Cultural Monuments and Museums, as well as 

cultural institutes according to the Law on Protection and Development of Culture; 

• National parks, natural parks, reserves, maintained reserves, protected areas 

and natural landmarks according to the Law on Protected Territories. 

• Tourist cottages – tourist cottages, tourist training centers and tourist boarding 

houses and catering establishments adjacent to the tourist cottages – tourist 

canteens, tourist buffets and tourist canteens with waiter services. 

Categorization 

The mayor of the municipality determines the category of: 

• Places of shelter - category "one star" and adherent food and entertainment establishments; 

• Family hotels, boarding houses, houses and individual rooms, as well as adherent 

food and entertainment establishments - category "one star", "two stars" and 

"three stars"; 

• Other places of accommodation - category "one star", "two stars" and adherent 

food and entertainment establishments; 

• Independent food and entertainment establishments - category "one star" and 

"two stars". 

The Chairman of the State Tourism Agency determines the category of: 

• Places of shelter - category "two stars", "three stars", "four stars" and "five stars" 

and adherent food and entertainment establishments; 

• Places of accommodation, with exception of family hotels, boarding houses, 



houses and individual rooms - category "three stars", "four stars" and "five 

stars" and adherent food and entertainment establishments; 

• Independent food and entertainment establishments - category "three stars", 

"four stars" and "five stars"; 

• Beaches – category "A", "B" and "C"; 

• Ski-tracks – category "Green", "Blue", "Red" and "Black"; 

• Tourist cottages and catering establishments adjacent to tourist cottages – "one 

edelweiss", "two edelweiss" and "three edelweiss"; 

Tourism is: 

1. Holiday; 

2. Cultural - historic; 

3. Ecological; 

4. Health and balneological; 

5. Sport; 

6. Rural; 

7. Congress; 

8. Other. 

The state promotes financially the tourism by providing resources for: 

• National advertising in the sphere of tourism; 

• Control over the quality of the tourist product; 

• Unified system of tourist information; 

• Training and qualification of the personnel engaged in tourism; 

• Analyses and prognoses for the condition and development of tourism; 

• Sociological studies in the sphere of tourism on national level; 

• Participation in projects of international programs. 

The resources are submitted annually through the budget of the Ministry of Economy 

and Energy as follows: 

• Subsidy from the central budget; 

• Revenue from: 

• fees for registration tourist activities and for categorization of tourist sites; 

• fines and proprietary sanctions imposed by the chairman of Commission for 

Trade and Consumers’ Protection; 

• interests; 

• other resources determined by a normative act. 

Resources for development of tourism are also provided by donations and aid, as 

well as by international programs and agreements. 

Resources for development of tourism in the municipality are raised by a decision 

of the municipal council from: 

• Tourist fees determined by the Law on local taxes and fees collected on the territory 

of the municipality, paid for spending the night in shelters or in accommodation 

places; 

• Fines and proprietary sanctions imposed by the mayor of the municipality; 

• Fees for categorization of tourist sites; 

• Resources submitted for fulfillment of expedient programs and projects; 

• Donations and aid, resources of international programs and agreements; 

• Interests; 

• Other sources. 



2.2. GENERAL OVERVIEW OF TOURISM SECTOR 

Geographic map of the Republic of Bulgaria 

The tourism industry is a priority sector of the Bulgarian national economy, forming 

a significant part of the local GDP. The industry guarantees high employment and 

helps activation of the national balance of payments. The tourism business in Bulgaria 

is 100% private. 

The tourist sector has traditionally played an important role in the economic development 

of Bulgaria. The country is getting larger international popularity due to the 

combination of natural and cultural heritage and a rich and attractive network of 

natural and cultural resources. Tourism accounted for 5% of Bulgaria’s GDP reported 

in 2004. This sector has its specific social significance, as it is considered 

capable of reducing the rate of unemployment in the regions where unemployment is 

at its highest rate. In these regions, tourism is considered an alternative revenue 

source for the population, a possibility for development of the infrastructure, a rea- 



son for the increasing value of both real estate properties and labor. Investments in 

the sector are very intense: both in increasing the lodging base and diversifying the 

tourist services in the traditional for the country sea and mountain tourism, as well 

as investments in the development of new forms of attracting tourists such as rural, 

cultural and eco-tourism, development of spa. 

Directing resources into hotel construction, reconstruction of existing ones, construction 

of attraction sites, entertainment sites, etc., resulted in some problems in 

construction, especially at the big Black Sea resorts such as Sunny Beach (north of 

Burgas) and Golden Sands (north of Varna). Excessive building in some of the resorts 

has turned them into less attractive for western tourists, and has led to problems 

with the less-developed infrastructure and damaging of the ecosystem. At the 

same time, in mountain and spa-related tourism, there has been a tendency of slow 

modernization of the lodging base and the infrastructure. However, in recent years, 

in some of these resorts (Bansko, Pamporovo, Borovetz, Velingrad, Devin, Hissar) 

there are major investment programs, which will lead to a significant capacity increase 

of those resorts and an increase of the number of foreign and Bulgarian tourists. 

A major problem for Bulgaria, and especially for tourism as a sector of the economy, 

is the poor infrastructure. There are still no modern airports, no well-maintained and 

marked roads, few facilities at tourist sites. The Ministry of Finance has approved 

the financing of 31 projects which aim to improve the infrastructure related to cultural 

tourist sites. The sum total is BGN 2.8 million, and the approximate sum for 

each project is BGN 100 000. The projects aim to facilitate the access to those tourist 

sites and thus to improve their quality as a product. Among the sites included in 

the program for constructing modern infrastructure are the Perperikon fortress, The 

Madara Horseman, The Melnic Earth Pyramids, The Rojen Monastery, Aladja Monastery 

and others. 

The insufficient number of experienced and well-qualified personnel is another major 

problem in the tourist sector. There is a direct interdependence between the increase 

in personnel demand and the increase of the lodging base in resorts. The average 

wage in the sector is quite low. This factor further makes it difficult for hotel and restaurant 

managers to find qualified personnel. This issue is crucial in order to keep a 

growing competition ratio of Bulgarian resorts as compared to those in Greece and 

Turkey. Personnel in hotels is usually hired only for the season period, and lacks the 

appropriate qualification. The next season, managers have to look for new personnel 

which discourages them to invest in staff. At the same time, tourist expectations get 

higher. 

Competition in neighboring countries is also growing, and some of the qualified personnel 

prefer to work in Turkey and Greece, due to higher wages. 

However, tourism in Bulgaria as a whole is developing, and its significance as a 

structural determining sector increases. The trend of increasing efficiency of tourism 

in Bulgaria was strong in 2004. Revenues from tourism in the country’s payment 

balance exceeded BGN 3.4 bln, increasing by nearly BGN 560 mln or 1/5 from 2003. 

Revenues from tourism in the country’s payment balance (2000-2004), in BGN 

mln 

Index versus the previous 

year 

BGN mln 

Index versus 2000 

2000 2 285 

2001 2 120 93 93 



2002 2 253 106 99 

2003 2 856 127 125 

2004 3415 120 149 

Source: NSI 

Following the drop in 2001 and 2002, as compared with 2000, significant jumps 

were registered in 2003 and 2004. 

Growth in revenues from tourism (2001-2004) in BGN mln (base previous year) 

700 

600 

500 

400 

300 

200 

100 

0 

-100 

-200 

-300 

603 

559 

133 

-165 

2001 2002 2003 2004 

Source: NSI 

Over the review period, significant changes in tourism revenues by months were observed. 

They outline the growing role of summer tourism by the year 2003. As a result 

of this trend, its material base is currently substantially developed. 

Revenues from tourism services (2004), by months, % 

20 

18 

16 

14 

12 

10 

8 

6 

4 

2 

0 

January 

February 

March 

April 

May 

June 

July 

August 

September 

October 

November 

December 

Source: NSI 

Compared with 2000, the share of the summer months (May-October) in 2004 is 

higher by over 6 points. Until the year 2003, the share of revenues generated in the 

winter period (November-April) was down 6.1 points. Due to the active building ac- 



tivities in Bulgaria’s winter centers (hotels and facilities) in 2004, the trend of reducing 

share of revenues from this period was practically interrupted. In 2004, as compared 

to 2003, the drop is by only 0.1 points. 

Revenues from tourist services in 2004, by periods, in % 

100 

90 

80 

70 

60 

50 

40 

30 

20 

10 

0 

2000 2001 2002 2003 2004 

Summer 

Winter 

Source: Bulgarian National Bank (BNB) 

The spending made by Bulgarian citizens for travels abroad have been developing 

with an unstable, still upward trend of increase, especially in 2003 and 2004. 

Spending by Bulgarian citizens for travels abroad (2000-2004), BGN mln 

year BGN mln Index versus the previous year Index versus 2000 

2000 1 148 

2001 997 86.8 86.8 

2002 1 098 110.1 95.6 

2003 1 293 117.8 112.6 

2004 1517 117.3 132.1 

Source: NSI 

Spending by Bulgarian citizens for travels abroad have been growing at slower rates. 

In 2004, they are lower by 18 points than the revenues generated from tourism. 

As a result, the balance from tourism in the country’s payment balance is positive 

and is developing with an upward trend of increase. 



Balance from tourism in the country’s payment balance (2000-2004), BGN mln 

2 000 

1 800 

1 600 

1 400 

1 200 

1 000 

800 

600 

400 

200 

0 

1 137 

1 123 1 157 

1 563 

1 898 

2000 2001 2002 2003 2004 

Source: NSI 

The balance in 2004, as compared with 2000, was bigger by BGN 761 mln or 67 per 

cent. 

Share of the tourism services in Bulgaria’s GDP (2000-2004), in % 

year 

Share 

2000 4.25 

2001 3.78 

2002 3.88 

2003 4.54 

2004 5.00 

Source: NSI 

Following a certain drop registered in 2001 and 2002, starting from 2003, the significance 

of tourism in the forming of Bulgaria’s GDP has been increasing gradually. 

In 2003, the share of tourist services in GDP was 0.29 points bigger than in 2000. 

The growth was even more intensive in 2004, when the share of this type of services 

increased by 0.75 points up to 5%. 

Tourism has contributed greatly to the country’s economic growth. In 2004, tourism 

trade accounted for some 10% of the country’s GDP growth, as compared with 2003. 

According to 2005 preliminary data, revenues from international tourism (excluding 

transport) for the first eleven months of 2005 came up to EUR 1 806.4 million 

(8.78% more year-on-year). Expenditure of Bulgarian citizens for travelling abroad 

for the eleven months amounted to EUR 744.5 million (4.64% more year-on-year). 

Net revenues (the positive balance) from international tourism for the eleven months 

of 2005 reached EUR 1 061.9 million (up 11.9% y/y), exceeding for the first time the 

token limit of EUR 1 billion in September 2005. 



3. POLICIES AND LEGAL FRAME FOR 

FOREIGN INVESTMENT 

Legal and International Guarantees for Foreign Investment 

♦ National Treatment 

The Bulgarian Constitution and the Encouragement of Investment Act provide national 

treatment to foreign investors which means that foreign investors are entitled 

to perform economic activity in the country under the same provisions applicable to 

Bulgarian investors except where otherwise is provided by law. In particular this 

principle covers the whole range of economic and legal forms of activities for accomplishing 

entrepreneurial businesses. The national treatment to foreign investors includes 

the participation in the process of Privatization and acquisition of shares, debentures, 

treasury bonds and other kinds of securities. 

♦ Most Favored Nation Status 

Bulgaria is a signatory to a system of bilateral treaties on promotion and mutual protection 

of foreign investment which provide, further to the national treatment regime, 

for the most favored nation status of the investment made by entities and individuals 

from one of the contracting countries on the territory of the other contracting country. 

♦ Priority of International Treaties 

When international treaties to which Bulgaria is a party provide for more favorable 

terms and conditions for foreign investment, these terms have precedence over the 

local rules. This guiding principle finds expression in the treaties for protection of 

foreign investment and especially in the agreements for abstaining of double taxation 

regulations. The international treaties on mutual protection of foreign investment 

always include an extended concept of a foreign direct investment, and the application 

of this concept shall be prior to the Bulgarian legislation. 

♦ Legal Guarantees against Adverse Changes in the Law 

The Encouragement of Investment Act stipulates the principle that foreign investment 

made prior to the adoption of amendments in law imposing statutory restrictions 

only with regards to foreign investment, shall not be affected by these restrictions. 

The sense of the law provides for that foreign investment shall be guaranteed 

against subsequent legislative changes. 



♦ Protection against Expropriation 

The Bulgarian Constitution allows forcible expropriation of property in the name of 

the state or for municipal needs only if effected by virtue of a law provided that these 

needs cannot otherwise be met, and after a fair compensation has been ensured in 

advance. 

Expropriation under Bulgarian law is governed by the State Property Act and Municipal 

Property Act. 

3.1. GOVERNMENT POLICIES AND REGULATIONS FOR FOREIGN 

INVESTMENTS IN TOURISM AND RELATING SERVICES 

• Bulgaria in the process of joining the EU 

Focused on joining the EU as scheduled on 1 January 2007, Bulgaria’s currently active 

legislation, reflecting the Government policy, offers quite a large number of opportunities 

for investments in the country. 

According to the European Commission, Bulgaria is generally meeting the commitments 

and requirements arising from the accession negotiations in the areas of capital 

movements and payments and payment systems and is expected to be in a 

position to implement this acquis from accession. Some legislative alignment is still 

needed as regards the Social Insurance Code and in the area of cross-border payments 

in Euro, financial collateral arrangements and concerning the requirement for 

system operators to be established in Bulgaria. Minor adjustments are also needed 

in the field of redress procedure for the settlement of disputes between banks and 

customers. 

In order to complete preparations for membership, Bulgaria must align with the revised 

recommendations of the Financial Action Task Force on money laundering and 

terrorist financing, and notably ensure that legislation in this area is fully and effectively 

enforced and that proven cases of money laundering are prosecuted. 

Bulgaria is also generally meeting the commitments and requirements arising from 

the accession negotiations in the fields of company law and accounting, but some 

adjustments are still needed. Upon accession, Bulgaria is expected to be in a position 

to implement this acquis, as well as the Regulation replacing the Brussels Convention 

and the provisions of the Rome Convention. 

Regarding the competition policy Bulgaria is generally meeting the commitments 

and requirements arising from the accession negotiations in the fields of anti-trust 

and state aid, and is expected to be in a position to implement this acquis from accession. 

In completing preparations for membership, particular attention must be 

paid to fine-tuning and updating legislative alignment, continuing to strengthen administrative 

capacity and, most importantly, continuing the development of a track 

record of proper application and enforcement of both anti-trust and state-aid legislation. 



In a way to provide equal opportunities for all the investors Bulgaria adopted uniform 

corporate tax – 15 percent for the profits and incomes of both local and foreign 

companies. The earnings and the incomes gained from capitals invested in Bulgaria 

are considered as profits and incomes of national origin regardless of the capital 

origin. 

In the investment services sector, still important parts of the acquis remain to be 

transposed. Further alignment is needed as regards the acquis on market abuse and 

prospectuses, as well as the newly adopted acquis on securities markets (markets in 

financial instruments). The acquis on capital adequacy remains to be transposed. 

Bulgaria has been granted a transitional period until the end of 2009 as regards the 

investor compensation scheme, at the end of which it should reach the minimum 

level of coverage set out in the acquis. 

3.2. POLICIES FOR THE PROMOTION OF INVESTMENTS 

The main documents, which define government’s investment policy, are: 

♦ The new Encouragement of Investment Act / adopted on 23.04.2004/ regulates 

the terms and procedures for encouraging investment in the country, the 

activities of the state authorities in the field of investment encouragement, as well 

as the protection of investments. 

♦ The Rules and Regulations for its implementation were adopted with Decision of 

the Council of Ministers No. 213 from 11.08.2004, promulgated in the State Gazette 

No. 74, 24.08.2004, in force since 24.08.2004. 

♦ The National Investment Promotion Strategy /NIPS/, elaborated under coordination 

of the Investment Policy Directorate. The new Encouragement of Investment 

Act regulates the terms and procedures of investing in Bulgaria. 

The National Investment Promotion Strategy is a horizontal strategy, involving all 

the relevant ministries. In its elaboration participated experts from the relevant ministries 

and from institutes and NGO’s under the coordination the Investment Policy 

Directorate, within the Ministry of Economy. Although it is not a national industrialization 

strategy, it is developed in line with the major priorities from the National Plan 

for Economic Development (up to the year of 2006) and the National Plan for Development 

(2007 - 2013). 

The NIPS contains measures, which are grouped in seven lines, each of them aiming 

at improving the business climate in Bulgaria and providing better conditions for 

foreign investors 

♦ Improvement of the general administrative and legal environment; 

♦ Development of the infrastructure; 

♦ Labor quality improvement; 

♦ Regional investment promotion policy; 

♦ Support for investments in innovations and hi-technologies; 

♦ Investment marketing; 

♦ Improvement of the financial environment for the investors. 

The Encouragement of Investment Act 

Under the Encouragement of Investment Act, foreign investors are: 

♦ legal persons which are not registered in Bulgaria; 

♦ partnerships which are not legal persons and are registered abroad; 



♦ 

foreigners with permanent residence abroad. 

Foreign investment is any investment or increase of investment of foreign persons or 

their branches in: 

♦ stock or shares of trade companies; 

♦ title to buildings and limited property rights over real estates; 

♦ title and limited property rights over goods and chattels, having the nature of 

non-current tangible assets; 

♦ title to unbundled parts of commercial companies with more than 50 percent 

state or municipal interest in their capital within the meaning of the Privatization 

and Post-Privatization Control Act; 

♦ securities, including bonds and treasure bills, as well as instruments derivative 

therefrom, issued by the state, the municipalities or other Bulgarian corporate 

entities, with time remaining to due date not less than 6 months; 

♦ credits, including in the form of financial leasing for a period not shorter than 12 

months; 

♦ intellectual property – subject to copyright and its related rights, patentable inventions, 

utility models, trademarks, service marks and industrial design; 

♦ rights under concession contracts and contracts for commissioning of management. 

3.3. IMPLEMENTATION METHODS 

The Encouragement of Investment Act regulates the terms and procedures for investing 

in Bulgaria. The Minister of Economy is the leading executive authority that 

shall perform the state policy in the investment sphere. In the implementation of this 

activity the Ministry of Economy prepares a strategy for encouraging investment in 

cooperation with other authorities of the executive power. In compliance with this 

strategy and the regional development strategies regional Governors shell develop 

investment encouragement programs for the respective region and coordinate their 

implementation. 

The Encouragement of Investment Act sets forth preferential treatment measures for 

investment meeting certain criteria specified in the said law as follows: 

♦ the investment to be in fixed assets acquisition with the purpose of creating new 

or enlarging or modernizing existing production of goods and/or services; 

♦ new jobs to be created; 

♦ the investment project to be implemented within 3 years; 

The measures, however, do not apply to investment in banks, non-banking financial 

institutions, insurance companies, investment companies and companies with special 

investment purposes, managing companies, pension funds, health insurance 

companies, gambling companies and investment made under privatization agreements. 

The measures are differentiated according to the class of the investment, as the latter 

are grouped in three classes, depending on the investment project value. The 

value thresholds are set forth in the Rules on the Enforcement of the Encouragement 

of Investment Act as follows: 

♦ first class - investment over BGN 70 million. 

♦ second class - investment from BGN 40 million to BGN 70 million, and 

♦ 

third class - investment from BGN 10 million to 40 million; 



General preference applied to all classes of investment is shortening the time limits 

for provision of administrative services to certified investors for realization of their 

investment plans. On presentation of a certificate for investment class, central and 

territorial executive authorities, and local self-government authorities shall provide 

administrative services within time limits by one third shorter than the ones provided 

for in the legislation. 

For 3rd-class investment InvestBulgaria Agency provides information services to investors 

as follows: 

♦ pre-developed information materials; 

♦ 

♦ 

information about potential partners in the country; 

information about all administrative procedures concerning the implementation 

of the investment project. 

For 2nd-class investment InvestBulgaria Agency provides investors with: 

♦ information services as mentioned above; 

♦ 

individual administrative servicing with respect to all central and regional bodies 

of the Executive. 

Investors have the opportunity to authorize officials of the Agency to obtain from the 

corresponding competent bodies on investors’ behalf and on investors’ account any 

documents necessary for implementation of the particular investment project as may 

be required under the existing legislation. 

For 1st-class investment, the InvestBulgaria Agency assists investors as follows: 

• individual informational and administrative services; 

• assistance with real estate “titling” issues; 

• infrastructure building support. 

On the request of the 1st-category investor the Agency may propose to the corresponding 

authorities to transfer ownership rights or establish a limited ownership 

right over real estate (private - state or municipal property) without a tender or free 

of charge. 

Where the technical infrastructure networks and facilities of the transport, watersupply, 

sewerage, communication, and other systems are public property, their construction 

will be financed from the state budget, or by the corresponding municipality 

on a decision by the Municipal Council; in all other cases they shall be on account 

of the managing operation company. 

Tourist Sector Legislative Frame 

As a result of the ongoing negotiations for Bulgaria’s accession to the European Union, 

it was found out that the existing national regulatory framework in the field of 

tourism is not adequate to the European Union one. The implementation of the EU 

legislation called for substantial changes in the statutory regulations. Attention had 

to be paid to the leading role that the sector had gained for the last ten years and the 

priority attached to it. Therefore an entirely new Tourism Act was proposed and 

adopted in Parliament (promulgated in The State Gazette, No. 56 of 7 June 2002). 

The main emphasis in the law is laid on the introduction of uniform criteria for the 

implementation of tourist activities, the protection of tourists, the rights and obligations 

of the entities existing in the tourist sector, the regulation of control over tourist 

activities, etc. 

From the investors’ perspective, the following major aspects of the tourist law deserve 

the greatest attention: 

• The law distributes the powers of the central government (the Minister of Economy), 

regional governors, local governments and municipal administrations. 



Conditions are created for decentralized management of tourism by delegating 

rights and obligations to various tourist business associations (participation in 

the categorization of facilities, participation in the licensing of persons for tourist 

activities), while observing the professional code of ethics, maintaining the quality 

of the tourist services, and ensuring fair competition in the tourist industry. 

• A National Tourist Information Centre is established with the main tasks of implementing 

the national promotional program and coordinating the activities of 

regional and local tourist information centers. 

• Detailed provisions are included to regulate the conditions for the performance of 

tourist activities, i.e. tourist agency activities, operation of hotels and restaurants, 

tour operator activities in connection with the protection of consumers of 

tourist products. 

• New rules are introduced in connection with the issuance of licenses for tourist 

activities, the refusal to issue such licenses, their suspension and withdrawal, as 

well as the categorization of tourist facilities, the refusal to assign a category, and 

the suspension and withdrawal of the category of tourist facilities. This is a way 

to ensure clarity and transparency in the licensing process, which is in the best 

interests of both the tourist business and the government. 

• The existing licensing arrangements are liberalized. The law has expanded the 

scope of persons eligible to apply for tourist licenses. The system for categorization 

of tourist facilities has been made easier. All these features create greater incentives 

not only for the development of tourist services but also for the upgrading 

of their quality. 

• Amendments to the Act have introduced mandatory insurance of tour operators 

to cover the liability for damage occurring as a result of non-payment to counterparts, 

including cases of insolvency and bankruptcy. Thus the mandatory requirements 

set out in Directive No. 90/314 of the European Union on tourist 

travelling at a common price have been met. 

• An Integrated Tourist Information System is established and the National Tourist 

Register is incorporated in it. Entries into the Register are made administratively 

without any applications served for this purpose. The system is introduced for 

the sake of greater clarity with regard to the entities operating on the tourist 

market. 

• The Additional Provisions set out the definitions of the terms used in accordance 

with the definitions of the World Tourism Organization and the legislation of the 

EU Member States. 

Regulation for tourist sites categorization (SG 95, 2002) and Regulation for the issuance 

of licenses for tour operator and tour agent activities (SG 93, 2002) were 

adopted. 

In 2005, several main priorities were shaped within the state tourism policy – encouragement 

of local and regional initiatives, and stimulation of public-private partnerships. 

The expected result is decentralisation via the co-operation among state 

and local authorities, trade associations and the private sector. 

In end-2005, the Council for Economic Growth (an advisory body) recommended the 

creation of Bulgaria’s Advertising Strategy, aimed at attracting more foreign investment 

and more tourists. 

In November 2005, the parliament adopted at second reading some amendments in 

the Tourism Act. According to them, tourist services for Bulgarians and foreigners on 

Bulgaria’s territory must be offered at identical prices. This decision was prompted 



by EU requirements for implementation of equal standards, not discriminating on 

the basis of nationality. 

All these aspects lead to the conclusion that the Tourism Act is a serious step towards 

adjustment of the national legislation to the EC Directives, which is in full 

conformity with the interests of both foreign investors and tourists. 

3.4. RELEVANT ADMINISTRATIVE BODIES 

3.4.1. Government Organizations in the Tourism Sphere 

Council of Ministers 

The state policy in the tourism sector is set by the Council of Ministers. The state 

shall carry out its tourism policy by: 

♦ Assisting its development as a priority branch of the national economy; 

♦ Creating normative basis for its development in compliance with the international 

norms, rules and usual practice; 

♦ Providing financially and implementing national advertising of the tourist product; 

♦ Creating conditions for development of holiday, cultural – historic, ecological, 

health and balneological, sport, village, congress and other tourism; 

♦ Carrying out management and control of the quality of tourist product; 

♦ Carrying out the inter-governmental cooperation in tourism. 

State Tourism Agency 

According to the November 2005 amendments of the Tourism Act, the specialized 

body at the Council of Ministers responsible for the management, coordination and 

control in the tourism sphere is the Tourism State Agency. The Agency is a legal entity 

at the Ministry of Economy & Energy. The chairman of the Agency is appointed 

following a decision of the Council of Ministers. Some of the activities by which the 

head of the Agency implements the government policy in the sector are: 

♦ Developing short-term concepts and programs for development of tourism and 

proposing to the Council of Ministers to accept a strategy for development of tourism; 

♦ Organizing and coordinating the control of the quality of the tourist product; implementing 

registration of tour operator or tourist agency activity and categorizing 

of tourist sites; 

♦ Developing and controlling the fulfillment of the annual program for spending of 

resources for state financial support of the development of tourism, incl. the annual 

program for national tourist advertising; 

♦ Conducting together with the competent departments the state policy with regard 

to the training and improving the qualification of the cadres in tourism; 

♦ Supporting the activity for attracting of investments and for realizing of projects 

for development of tourism at national, regional and local level; cooperating for 

the construction and the maintenance of the infrastructure connected with tourism; 

♦ Interacting with local authorities and local administration and regional governors 

to implement their authorities in the sphere of tourism; 

♦ Representing the Republic of Bulgaria before the international bodies and organizations 

in the field of tourism; 



♦ Participating in development, assessment and control of the fulfillment of programs 

and projects financed by the European Union and international organizations; 

♦ Implementing methodical guidance of the activity of the regional and the local 

tourist information centers; 

♦ Interacting with the respective departments and organizing the joint activity for 

the development and recognition of the separate kinds of tourism; 

♦ Organizing the creation and maintenance of unified system for tourist information, 

including the National tourist register; 

♦ Managing the National Tourism Council; 

In February 2006, Mario Al-Djebouri (NDSV party) was appointed for Executive Director 

of the agency, following several months of deliberations which party of the ruling 

coalition to take over this position. 

Ministry of Regional Development and Public Works (MRDPW) 

The Ministry of Regional Development and Public Works manages Directorate “Programming 

of Regional Development”. The Directorate has prepared a Regional Development 

Operational Program 2007 – 2013. 

The chapter of the Program on tourism describes the selected action priority for 

achievement of the regional development goals and represents the measures to be 

implemented in the priority intervention areas. The selection of the priority corresponds 

to the National Regional Development Strategy. 

As regards tourism, MRDPW has defined as a specific objective the following: 

♦ to enhance the tourism potential, incomes of the population and employment in 

specified inland territories for development of sustainable and diversified, territorially 

specific and higher value-added tourist product; 

♦ to increase the sector’s contribution to sustainable regional development. 

The Ministry has drafted the Black Sea Coast Act which is to regulate infrastructure 

issues, incl. construction activities, on Bulgaria’s coastal areas. In February 2006, 

the government approved the Act’s draft and will propose it for Parliament’s hearings 

and official adoption. 

Regional Governors 

The regional governors implement the state policy in tourism on the territory of the 

respective region by: 

♦ Organizing, jointly with the tourist associations, the working out of a strategy and 

programs for development of tourism and coordinating their implementation; the 

strategy and the programs shall be a part of the regional plan for regional development 

and shall be worked out on the basis of the national priorities for development 

of tourism, as well as of the local and regional tourist resources and 

needs; 

♦ Coordinating with the mayors in the region and with other regional governors the 

implementation of the National Program for development of tourism. 

National Tourism Council 

The National Tourism Council should be established as state-public consultative and 

coordinating body at the State Tourism Agency. The Council is headed by the chairman 

of the State Tourism Agency or authorized person. The National Tourism Council: 

♦ confirms the annual program for spending the state-provided funds; 

♦ coordinates the implementation of the national advertising in the tourism sphere; 



♦ discusses topics related to the construction and the maintenance of the tourism 

infrastructure and raising foreign capitals in tourism; 

♦ discusses and analyses the preparation of the tourist seasons and their results. 

Expert Commission on Registration of Tour-operators and Tour-agencies, as well as 

Expert Commission on Categorization of Tourist Facilities is established at the Tourism 

National Council. 

Participating in the Council are representatives of: 

♦ the government; 

♦ tourist associations; 

♦ associations of air, land and water carriers; 

♦ nationally represented associations of the consumers in the Republic of Bulgaria; 

♦ National Association of the Municipalities in the Republic of Bulgaria. 

Municipal Councils 

The municipal council adopts a program for development of tourism on the territory 

of the respective municipality in compliance with the priorities of the national strategy 

and in compliance with the local tourist resources and needs. 

The program for development of tourism shall provide measures for: 

♦ establishing and maintaining of the infrastructure, servicing tourism on the territory 

of the municipality; 

♦ preservation, maintenance and development of the green areas; 

♦ establishing of information tourist centres and organisation of the information 

♦ 

servicing of tourists; 

advertising in the country and abroad of tourist sites located on the territory of 

the municipality. 

The mayor of the municipality shall: 

• establish and manage a consultative council for the issues of tourism; 

• establish a municipal expert commission for categorisation of the tourist sites; 

• determine the category of the tourist sites upon proposal of the municipal expert 

commission for categorisation; 

• cerate and maintain a register of the categorised tourist sites on the territory 

of the municipality; 

• assist the advertising of the tourist product of the municipality; 

• organise the information services for tourists, including through creation of 

tourist information centres or bureaux; 

• assist the maintenance and preservation of the natural and cultural-historic 

sites on the territory of the municipality; 

• exercise control functions. 

Trade and Consumers’ Protection Commission 

It is entitled to conduct follow-up control under the Tourism Act, while preliminary 

control over local categorized sites is entrusted to municipality mayors. 

3.4.2. Non-Governmental Organizations in the Tourism Sphere 

Established in the Republic of Bulgaria can be tourist associations registered as 

non-profit corporate bodies. The associations shall be established on territorial and 

professional principle and they can be: 

• national, regional and local associations; 

• branch and product associations. 



The tourist associations, in compliance with their statutes, shall: 

• represent and defend the interests of their members before the respective bodies 

of the central and local administration and of the local independent government; 

• participate in the development of strategies and programs for development of 

tourism on national scale, on the territory of the region and of the municipality 

and assist their implementation; 

• assist the advertising of the tourist product; 

• assist the creation and functioning of tourist information centres or bureaus; 

• assist the improvement of the professional qualification of the personnel engaged 

in tourism; 

• participate in the control over the observing of the normative acts in the 

sphere of tourism; 

• stipulate the professional ethics in tourism and non-admission of disloyal 

competition between and regarding their members and approach the competent 

bodies regarding the committed offences of the legislation. 

Bulgarian Tourist Chamber (BTC) 

A non-profit association established in 1990. The Chamber has commissions set up 

for consultations in hotel and restaurant management, staff training, and economic 

problems of tourist companies. Currently it has some 800 members - individuals 

and legal entities. It has regional structures in the towns of Varna, Bourgas, Plovdiv, 

Pleven, and Veliko Tarnovo. Member of the Bulgarian Industrial Association. 

Bulgarian Association of Tourist Agencies (BATA) 

BATA was established in 1992 as a non-profit association which represents, assists, 

and protects the interests of its members. It takes part in the work of international 

tourist organizations, co-ordinates and encourages the participation of its members 

in national and international events. BATA is a member of UFTAA (World Federation 

of Associations of Tourist Agents), Russian RATA, American ASTA, Portuguese 

APAVT, Japanese JATA, Black Sea Tourism Co-operation (BSTC). It is the coordinator 

for the issuing IATA - UFTAA cards for agent discount. 

Bulgarian Hotel and Restaurant Association (BHRA) 

The Bulgarian Hotel and Restaurant Association /BHRA/ was established in 1993. 

The major task of the Association is helping the development of the hotel and restaurant 

management, as well as the tourist industry in Bulgaria. It works out programs 

on developing the activities of its members and popularizes their achievements and 

capacities in Bulgaria and abroad. It monitors the observing of professional ethics, 

the principles of loyal competition between its members, and assists for raising their 

qualifications. Today the BHRA is the union of hundreds of Bulgarian hotels and 

some of the biggest privatized tourist complexes. 

Bulgarian Association for Alternative Tourism (BAAT) 

A non-profit association which assists the development of alternative types of tourism 

- rural, agrarian, eco-, and mountain tourism; ornithology, religious, etc. It coordinates 

the interests and the actions in forming and implementing the tourist 

product of the respective alternative types of tourism. 



Bulgarian Association for Rural and Ecological Tourism (BARET) 

A non-profit association whose tasks relate to the promotion of rural and ecological 

tourism, developing the tourist supplies in towns and regions of preserved natural 

and ecological value. The Association has developed the “Bulgarian Eco-paths” national 

programme. 

♦ Regional Tourist Organisations - Pirin Tourism Forum, Bourgas Regional 

Tourist Association, “Stara Planina” Association, Varna Tourist Chamber; 

♦ Local Tourist Organisations - Tourism Board - Smolyan, Tourism Board - Veliko 

Turnovo, Tourism Board - Kazanlak, Tourism Board - Plovdiv; 

“Mountains and People” Association 

“Mountains and People” Association was settled on November 12, 1997 as a voluntary 

union of individuals and legal entities with common professional and hobby interests 

related to the mountains and nature. The aim of the Association is helping 

and encouraging the development of a stable and ecological tourism in Bulgaria, as 

well as outdoor sport. 

Bulgarian Tourist Union 

The Bulgarian Tourist Union was founded on August 27-28, 1895 following the initiative 

of the writer Aleko Konstantinov. The BTU is independent non-government 

association for social rehabilitation, sport and tourism, cultural and patriotic activity. 

The major aim of the BTU is to help developing the civil society and the democracy 

in the social tourism sphere. 

Bulgarian Convention & Visitors Bureau 

It is an independent, non-profit organization founded in 2004 with a primary mission 

to market Bulgaria as a convention, meeting and tourist destination to international 

audiences. Members include hotels, conference and exhibition venues, PCOs, 

airlines, transportation companies, restaurants, and service companies. 

3.4.3. Local and Regional Tourist Organizations 

These are non-profit organizations uniting companies and organizations of the respective 

levels interested in the development of tourism. Their activities are focused 

on marketing and advertising, IT servicing of tourists (through tourist information 

centers), development and implementation of programs on the development of tourism, 

monitoring of demand and supply, development of tourist products and training 

in tourism. This country has over 50 local and 4 regional organizations functioning 

which maintain 24 tourist information centers. 



4. PRACTICAL ASPECTS OF THE INVEST- 

MENTS 

4.1. MAIN COSTS FOR INVESTMENTS IN THE TOURISM SECTOR 

4.1.1. Labor costs 

4.1.1.1. AVERAGE MONTHLY WAGES AND SALARIES OF THE EMPLOYEES UN- 

DER LABOUR CONTRACT BY ECONOMIC ACTIVITY IN 2005 * (BGN) 

II III IV quarter 

annual bonuses 

IV quarter inc. 

Economic activity I quarter 

quarter quarter 

Total 299 314 317 326 339 

Agriculture, hunting, forestry and 

223 235 244 243 245 

fishing 

Mining and quarrying 504 520 520 537 542 

Manufacturing 275 288 292 299 305 

Electricity, gas and water supply 536 566 566 585 591 

Construction 244 268 277 278 283 

Trade, repair of motor vehicles and 

219 222 224 231 234 

personal and household goods 

Hotels and restaurants 196 203 203 202 204 


374 385 404 403 432 

Financial intermediation 696 745 716 765 826 

Real estate, renting and business 

285 294 297 306 317 

activities 

Public administration; compulsory 

430 446 453 480 558 

social security 

Education 307 346 342 350 362 

Health and social work 339 372 373 386 394 

Other community, social and personal 

service activities 

231 237 240 244 258 

Budget sector 328 352 354 366 399 

Self-financing organizations 292 304 308 316 324 

Published on 10.02.2006 

Source: NSI 



4.1.1.2. Structure of Labor Costs in 2004 (%) 

Economic activity groupings 

Total 

Wages 

and salaries 

Employers' 

imputed social 

contributions 

2004 

Employers' actual 

social contributions 

Other social 

expenses 

and benefits 

Taxes 

paid by 

the employer 

Total 100.00 69.16 1.73 24.05 4.22 0.84 

Agriculture, hunting, forestry and 

fishing 

100.00 72.98 1.28 24.09 1.38 0.27 

Mining and quarrying 100.00 60.63 2.92 27.37 7.50 1.58 

Manufacturing 100.00 69.64 2.13 24.12 3.42 0.69 

Electricity, gas and water supply 100.00 57.60 2.84 24.87 12.23 2.45 

Construction 100.00 71.55 1.66 24.61 1.82 0.36 

Trade, repair of motor vehicles and 

personal and household goods 

100.00 74.26 0.77 23.58 1.15 0.23 

Hotels and restaurants 100.00 72.20 1.23 24.14 2.05 0.38 


100.00 59.49 2.00 21.97 13.77 2.77 

Financial intermediation 100.00 69.54 1.32 21.49 6.40 1.25 

Real estate, renting and business 

activities 

100.00 72.41 1.35 22.59 3.04 0.61 

Public administration; compulsory 

social security 

100.00 71.92 1.62 25.44 0.87 0.15 

Education 100.00 71.49 1.53 25.44 1.31 0.24 

Health and social work 100.00 73.76 1.25 24.18 0.68 0.13 

Other community, social and personal 

service activities 

Source: NSI 

100.00 73.53 1.08 23.60 1.49 0.30 

4.1.2. Taxation 

The Bulgarian tax regime can be classified in two main categories: 

Direct Taxation: 

♦ Corporate income tax 

♦ Personal income tax 

♦ Withholding taxes 

Indirect Taxation: 

♦ VAT 

♦ Excise Duties 

4.1.2.1. Corporate Income Tax 

Under the Corporate Income Tax Act (CITA) all companies and partnerships (including 

non-incorporated partnerships), carrying out business in the country, are liable 

to a corporate income tax at a rate of 15%. Bulgarian resident entities are taxed on a 

worldwide basis. Foreign entities are taxed on their Bulgarian-source income. Companies 

are considered to be tax residents if they are registered in Bulgaria. Companies 

that are non-residents in Bulgaria, but operate in Bulgaria through a branch, 

office, agency or other form of a permanent establishment are only liable to tax on 

the profits generated through their Bulgarian establishment. 



Annual profit must be declared no later than 31 March of the year following the taxable 

year. Generally, the taxable profit is determined in accordance with the financial 

result reported in the Profit and Loss Account (“P&L”) adjusted for tax purposes. Depreciation 

is calculated by systematically applying the straight-line depreciation 

method. Depreciation norms should not exceed the following rates: 

Category of 

assets 

Assets description 

Annual depreciation 

norms (%) 

I 

steady buildings, facilities, communication devices, 

electricity carriers, communication lines 

4 

II 

machinery, manufacturing equipment, apparatus 

30 – 50* 

III 

transportation vehicles, excluding automobiles; 

coverage of roads and airplane runways 

10 

IV 

computers, software and right of using software 

50 

V automobiles 25 

VI all other depreciative assets 15 

*Possibility to be 50% when new investment is made and the equipment is new and 

purchased after January 1, 2005 

4.1.2.2. Personal income tax 

Under Personal Income Tax Act (PITA) tax liable persons are individuals - residents 

and non-residents, and corporate entities explicitly enumerated therein. Residents 

are considered individuals who reside in Bulgaria longer than 183 days for each 365 

days period. Residents are liable for their world-wide income. Non-residents are considered 

those individuals who do not fit the above criteria for residents. Nonresidents 

are liable only for their income derived from Bulgarian sources. 

Local entities with annual turnover for the preceding year up to BGN 50 000 are 

taxed by a final annual (patent) tax for income resulting from sources in Bulgaria. 

Incomes derived under an employment contract are taxed on a monthly basis as follows: 

Monthly income 

Tax 

up to BGN 180 

non-taxable 

from BGN 180 to BGN 250 20% on the excess over BGN 180 

BGN 14 + 22% on the excess over BGN 

from BGN 250 to BGN 600 

250 

BGN 91 + 24% on the excess over BGN 

above BGN 600 

600 

(As of 1.1.2006) 

The annual taxable base is the sum of all taxable incomes received during the calendar 

year. The total annual income is subject to some adjustments and is then taxed 

in accordance with an annual progressive scale as follows: 

Annual income 

Tax 

up to BGN 2,160 

non-taxable 

from BGN 2,160 to BGN 3000 20% on the excess over BGN 2,160 

from BGN 3,000 to BGN 7,200 BGN 168 + 22% on the excess over BGN 3,000 



above BGN 7,200 BGN 1092 + 24% on the excess over BGN 7,200 

(As of 1.1.2006) 

4.1.2.3. Withholding Taxes 

Certain types of income from sources in Bulgaria and payable to non-resident legal 

entities (if not generated through a permanent establishment) or individuals are subject 

to withholding taxes. The types of income are defined in CITA as: 

♦ dividends and liquidation quotas 

♦ interest, including such under finance leases 

♦ royalties 

♦ technical services remuneration 

♦ rents 

♦ payments under operating leases, franchising and factoring 

♦ 

♦ 

remuneration under management contracts 

capital gains from transfer of shares in local companies, securities issued by the 

State, a municipality or a local entity and local real estate 

The withholding tax rate is 7% on dividends and liquidation quotas and 15% on the 

other types of taxable income. The withholding tax rate may be reduced under an 

applicable double tax treaty. 

4.1.2.3.1 Withholding tax exemption for EU citizens 

Dividends and liquidation shares, distributed by a local person in favor of a foreign 

natural or legal person, local for an EU member-country, are not subject to withholding 

tax under the conditions that: 

1. According to the tax legislation of the respective EU member-country the person 

is considered as local of this country for tax purposes and by force of an 

agreement for avoiding the double tax levying with a third state is not considered 

as local person of a state out of the EU 

2. The person is levied with corporate tax, without having right of choice or exemption 

from levying with this tax 

3. The person is the actual possessor of the income and holds at least 20% of the 

shares/stocks of the local entity 

4. By the moment of calculating of the dividends or the liquidation shares the 

person has owned the shares/stocks of item 3 continuously for a period not 

less than one year. 

4.1.2.4. VAT 

The Value Added Tax Act (VAT Act) currently in force is effective as from 1 January 

1999. Although Bulgaria is not a member of the European Community, the VAT legislation 

in many aspects follows the provisions of the Sixth Council Directive 

77/388/EEC on the common system of VAT and the uniform basis for its assessment. 

The standard VAT rate is 20%. Zero rate of VAT applies to exports of products, certain 

eligible exports of services, as well as to some other transactions. 

4.1.2.4.1 VAT Registration 

Bulgarian and foreign businesses which carry out taxable transactions with a place 

of supply in Bulgaria and have a taxable turnover of at least BGN 50,000 during the 

preceding twelve months is obliged to register for VAT purposes. Non-residents, ex- 



cept for branch offices, are registered for VAT through a VAT representative. Voluntary 

VAT registration is limited to some specific cases such as: 

♦ if the business performs both VAT taxable transactions and zero-rated transactions 

(i.e. export) and has a turnover of at least BGN 50,001 (as of the 1-st of 

April, 2006 the required turnover drops to BGN 25,001); 

♦ if a company incorporated in Bulgaria has a registered and paid up share capital 

of at least BGN 500,000. 

There are special rules for the VAT registration in some cases of commercial companies' 

transformation and acquisition. 

4.1.2.4.2 VAT Credit Refund 

The VAT credit to be refunded can be set off against the VAT due, as well as against 

other liabilities to the state. The offsetting takes place during a 3-month term following 

the month in which the VAT credit occurred. If after this term there is still VAT to 

be refunded, the taxpayer may request a refund or continue offsetting it in the following 

months. Within three months as of the date of submitting the request for refund 

the tax authorities have to refund the remaining VAT after setting it off against 

any outstanding tax liabilities (there are indications that the second 3-month term 

may be reduced to 45 days). 

4.1.2.4.3 Special preferential VAT regime for imports 

As of 1 January 2003 VAT on the import of goods can be charged by the VAT registered 

importer if he holds a permit issued by the Minister of Finance and imports 

goods (with the exception of excise goods) according to a list approved by the Minister 

of Finance. 

The importer shall exercise his right by: 

♦ declaring in the filed customs declaration that he will use this regime; 

♦ 

declaring that at the time of the import he is registered for VAT and has no outstanding 

tax liabilities and liabilities to the obligatory social and health insurance. 

Where the importer has exercised his right, the customs authorities shall admit lifting 

the goods without effective payment or securing of the VAT. 

The above special import regime is applicable to a person who simultaneously meets 

the following requirements: 

♦ realizes an investment project approved by the Minister of Finance; 

♦ is registered for VAT; 

♦ has no outstanding tax liabilities and obligatory social and health insurance liabilities; 

♦ has obtained a permit by the Minister of Finance; 

♦ the project should be eligible for state aid for regional development. 

The investment project shall be approved by the Minister of Finance in compliance 

with the following requirements: 

♦ term of fulfillment of the project – up to two years; 

♦ size of the investment – over BGN 10 million for a period not longer than two 

♦ 

♦ 

years; 

opening of more than 50 new jobs; 

the possibilities of the person to finance the project, as well as to construct and 

maintain sites providing its fulfillment. 

The permit shall be issued for a period of up to two years on the grounds of a written 

request, to which the document designates by the law are enclosed. 



4.1.2.5. Excise Duties 

Excise duties are levied on goods and services listed in the Excise Duties Tariff, 

which are: 

♦ subject to transactions performed in Bulgaria, or 

♦ subject to cross-border transactions from abroad to Bulgaria. 

Subject to excise duties are: 

♦ Spirit drinks, including beer and wine 

♦ Tobacco products 

♦ Fuels 

♦ Some types of automobiles 

♦ Gambling machines and other casino facilities 

♦ Coffee and tea 

The Excise Duties Act provides for reimbursement of excise duties upon exportation 

of goods, when excise stickers have been paid but not used by producers, etc 

Countries that have Double Taxation Treaties with Bulgaria: 

Albania; Armenia; Austria; Belarus; Belgium; Canada; China; Croatia; Cyprus; Czech 

Republic; Denmark; Egypt; Finland; France; Georgia; Germany; Greece; Hungary; 

India; Indonesia; Ireland; Italy; Israel; Japan; Kazakhstan; Korea North; Korea 

South; Kuwait; Lebanon; Luxembourg; FYROM; Malta; Moldova; Mongolia; Morocco; 

Netherlands; Poland; Norway; Portugal; Romania; Russia; Singapore; Slovakia; Slovenia; 

Spain; Sweden; Switzerland; Syria; Thailand; Turkey; Ukraine; Vietnam; 

Yugoslavia; Zimbabwe; United Kingdom. 

4.1.3. Property Taxes 

Profits from rental income are treated as taxable and are based on the gross income 

less tax-deductible, property related expenses and depreciation. Such expenses include 

repairs, maintenance, renovation and other similar costs and interest on loans 

used for the acquisition of the property or related expenses. A 10% municipal tax is 

charged on the taxable sum, which is then taxed at a flat corporate rate at 15%. 

Capital gains from the sale of property are treated as general income. 

Land is not subject to a depreciation allowance but any immovable property is, provided 

it is used for the business activities of the company and is considered a fixed 

asset. Depreciation for tax purposes is at 4% pa and is calculated using the straight 

line method. Real estate acquired and then sold is considered to be an investment 

and can not be depreciated but is subject to an annual re-valuation to market value. 

In practice however, it can be unclear when a property should be treated as an investment 

property or a fixed asset. 

4.1.4. Property Costs 

Leasing Costs 

Leasing costs associated with commercial property are usually in the range of a 

month's rent depending on whether any leasing strategy is involved in which instance 

costs are higher and subject to further negotiation. A standard level of leasing 

costs is not yet established, with deal structures and agency charges varying considerably. 

However as the market is maturing and a greater degree of professionalism is 

emerging in the leading agency firms, a more standard level of charging will soon develop. 



Management Costs 

Management costs vary significantly depending on the client's business objectives. 

Typical rates for a standard commercial management service are of the order of 5- 

10% of the annual rent but can be over 20% in some instances, particularly for residential 

schemes. 

Costs of Owning Property 

Building / land owners are obliged to pay property tax on annual basis. Where a 

building is on state / municipal land, the value of the land is also included in the tax 

base. The tax is equal to 0.15% of the book value of the property. In addition, property 

occupiers pay waste collection fee which for Sofia is currently 2.45% on the book 

value of the property. Elsewhere in the country this tax is typically 40% lower. Agricultural 

land is exempt from such taxes. 

Trading Costs 

Apart from corporate tax on profits, no other national taxes are levied on the transfer 

of property. However the transfer of property is subject to transaction fees including 

notary and municipal fees. The notary fees are paid on the higher of the market price 

or the book value of the property at varying rates, with the maximum being BGN 

3500 (EUR 1786). In addition, 2% of the market value of the property is paid to the 

municipality in which the property is situated. This tax is based on the declared 

price of the property - a matter of growing debate due to reported abuses of the system, 

whereby some buyers declare below market values. Agents charge fees of 

around 3-6%, with higher fee levels usually split between the purchaser and the 

vendor, subject to the property transaction value. Higher fee levels of up to 10% are, 

however, still charged by some agents. Commercial property transactions and leases 

are subject to 20% VAT, which is refundable if the prospective purchaser/tenant is 

VAT registered. Transactions of land and property leases for residential purposes are 

exempt from VAT. 

4.1.5. Labor and Social Security Legislation 

Employers and employees from the Sector are observing the general provisions of 

Bulgaria’s Labor Code, concerning employment, collective labor contracts, length of 

workweek and workday, rests and leaves. The Social Security Code (SSC) stipulates 

the obligation to pay social security, where the social security payments are shared 

between the securer and the secured person, as follows: 

♦ 2006 - 65 (securer):35 (secured person); 

♦ 2007 - 60:40; 

♦ 2008 - 55:45; 

♦ 2009 and the years after - 50:50. 

4.1.6. Tourism taxation 

Bulgaria’s practice of VAT taxation of tour operators and tour agencies differentiates 

from the European one in several respects. Firstly, the application of the Bulgarian 

taxation scheme is not obligatory. Secondly, the tourist agencies are entitled to offset 

65% of VAT levied on services received from other Bulgarian companies for direct 



usage by the traveler. Additionally, only 35% of the tourist agency’s margin is taxed 

with VAT. Therefore, the actual tax burden on the tourist packages that are sold in 

Bulgaria to travelers who are not Bulgarian citizens is decreased to 35% of the standard 

Bulgarian VAT of 20%, i.e. to 7%. 

Recently, the Finance Ministry announced its plan for a new VAT Act which foresees, 

as of the beginning of 2007, the preference for tourism to be dropped and to levy 

20% VAT on it, like all other sectors. Meanwhile, the main tourism organizations insist 

on keeping the present levels of VAT taxation, and levy the 7% tax not only on 

services for foreigners but also for Bulgarians. The idea is to stimulate the Bulgarians 

to spend their vacation in the country. The tourism trade organizations maintain 

that the 20% tax is one of the highest for tourism in Europe. 

4.1.7. Tourism fees 

Under the Tourism Act in order to issue licenses for tour operator and tour agency 

activities the following fees are levied: 

• For reviewing the declaration for registration to carry out 

♦ tour operator activities – BGN 1000; 

♦ tour agency activities – BGN 500. 

♦ For registering to carry out 

♦ tour operator activities – BGN 4000; 

♦ tour agency activities – BGN 2000. 

4.2. MAIN BARRIERS TO INVESTMENTS 

4.2.1. General barriers to investments 

The legal system in Bulgaria is based on the constitution of July 1991. The legislative 

and regulatory framework in general corresponds to international requirements 

and standards. However, it has been identified by the EU as an area, which needs 

further reform. Judicial decisions can be subject to delays, sometimes resulting from 

corruption and inefficiency. The government is presently in the process of reviewing 

existing permit and licensing regimes to remove these obstacles to developing new 

businesses. 

Following successive reports by the European Commission stressing the need for reform, 

some fundamental steps were taken in December 2003. The parliament passed 

important constitutional amendments which reduced the security of tenure and immunity 

from prosecution for judicial and prosecution officials. 

In addition to the slow pace of judicial reform, corruption and bureaucracy are identified 

as another problem, which could disrupt the timetable for Bulgaria's accession 

to the EU. The privatization process, including the sale of some of the state's major 

assets, has been viewed as being subject to political influence by some observers. 

Despite the fact that the government made corruption a leading issue and have 

taken visible steps to tackle it, some observers don't believe that adequate progress 

has yet been made. 

Despite this, Bulgaria has been one of the most progressive transition countries as 

defined by the EBRD. Bulgaria has been identified as a country with a high level of 

compliance in respect of international insolvency standards, for example, together 

with countries such as Romania and Croatia. 



The European Commission 2005 Report confirmed the findings of its 2004 Report 

that the business environment, in particular the efficiency of the administrative and 

judicial system as well as regulatory procedures, should be further improved to increase 

Bulgaria’s attractiveness for investment. 

Efforts to improve the business environment have continued, but many obstacles 

remain and some reforms have been delayed or still need to be fully implemented. 

Despite some improvements, business surveys indicate that procedures for market 

entry and exit as well as contract enforcement still tend to be very time-consuming, 

costly and complex. Some first steps have been taken to streamline business registration 

with the adoption of the long-awaited Law on the Bulstat registry on 27 April 

2005 and the ensuing adoption of a government strategy for the actual establishment 

of a central register of legal entities and of an electronic register of Bulgaria. 

The aim is to unify the registration of businesses with the Registry Agency under the 

Ministry of Justice, to turn business registration from a court procedure into a 

purely administrative procedure, and to introduce a single Bulstat number for tax 

and social security purposes. These measures will be important for making business 

registration simpler and more transparent, but still need to be fully implemented. 

The Tax and Social Security Procedural Code which will provide for the integration of 

the collection of taxes and social security contributions and thereby lay the basis for 

the functioning of the National Revenue Agency also still needs to be adopted in this 

context. 

The project for the modernization of the land registration system has encountered 

delays, although some progress in the functioning of the Cadastre Agency has been 

made especially at regional level. Hardly any progress has been made to improve the 

efficiency of bankruptcy procedures. Moreover, further planned amendments to the 

insolvency legislation are still only in the process of preparation. 

Further efforts have been made to improve the functioning of the administration and 

to streamline existing regulation in line with the Law on the Restriction of Administrative 

Regulation and Control on Business Activity of December 2003. The review of 

existing licensing, registration and authorization regimes with a view to alleviate or 

lift these regulations has continued, as well as the introduction of one-stop shops. A 

majority of administrative units have tried to strengthen their service-orientation by 

adopting clients’ charters and by increasing the availability of e-government services. 

The Law on Investment Promotion was also amended in April 2005 lowering the 

thresholds for potential investors to receive preferential treatment. However, the extent 

to which these measures lead to tangible improvements in the conditions for doing 

business is not always clear. A more systematic and comprehensive assessment 

of the business impact of existing as well as new legislation beyond the review of 

regulatory regimes mentioned above, including regulations at local level, would be 

important to further improve the business environment especially for SMEs. 

While the Law on the Restriction of Administrative Regulation envisages the introduction 

of regulatory impact assessments, this needs to be implemented more systematically. 

The same holds for the introduction of ‘silent consent’ as a general principle 

in administrative procedures. 



Some steps were taken to improve the functioning of the judicial system, but major 

challenges remain. Judicial reform made some progress but improving the functioning 

of the judicial system remains crucial for providing a transparent, stable and reliable 

legal framework for doing business and enforcing property rights. Delays have 

occurred in the adoption of the Administrative Procedure Code and the revision of 

the Civil Procedure Code which will be important for speeding up legal procedures, 

facilitating the review of administrative acts and providing greater clarity and legal 

certainty. A Law on Mediation as an alternative out-of-court procedure for conflict 

resolution entered into force in December 2004. The enforcement of judgements by 

private bailiffs has in principle been facilitated by a law adopted in May 2005. Both 

measures still need to be fully implemented, but should help improving the functioning 

of the judicial system and in particular the conditions for contract enforcement. 

4.2.2. Specific barriers to investments in the sector 

The National Strategy for Tourism Development was not adopted in 2005, again. 

Such a document would clarify Bulgaria’s tourism priorities, define the tourism 

product, and create better conditions for increasing its competitiveness. 

Foreign Ownership Regulations 

According to the Bulgarian Constitution, foreign nationals and foreign legal entities 

are currently prevented from direct land ownership. In instances where foreign residents 

inherit land, by law, they are required to dispose of their interest within three 

years. Ownership of buildings as opposed to land is, however, allowed. 

This restriction on land ownership does not relate to Bulgarian companies with foreign 

participation, irrespective of the level of foreign ownership and control (which 

may be up to 100%). Thus, in reality foreigners can acquire land by setting up or 

joining a company incorporated under Bulgarian legislation. Foreign companies may 

acquire ownership over land if they have at least 51% Bulgarian participation. 

With the approach of EU accession, limitations on foreign ownership will be removed 

after 2006. Ownership of arable land and forests by foreign nationals will, however, 

remain restricted until 2016. 

Restrictions on construction /Black Sea Coast Act Draft/ 

In February 2006, the government approved the draft law on the regulation of the 

Black Sea coast. It tightens the regulation of issuing permits and introduces limitations 

on construction. The small seaside municipalities get a chance to offer a high 

quality vacation product which fewer and fewer tourist find in megacomplexes like 

Sunny Beach and Golden Sands. The Minister of Regional Development and Public 

Works Assen Gagauzov acknowledged that the urbanization of the big resorts is already 

a fact but from now on no more 12-storey hotels will be built. This time, Bulgaria’s 

Black Sea Act may finally get adopted, after 12 years of preparation and in a 

considerably softened version. 

Some of the most active opponents of the act’s limitations on construction behind 

the beach are the owners of plots on first line who fear that they will face a drastic 

decrease of the value of their plots. The chairman of the Architects’ Chamber in Bulgaria 

Petko Yovchev expects that the owners will attack the act at the Constitutional 

Court with the motive that the state cannot treat different plots in different way. Ac- 



cording to Lidia Stankova from the Ministry of Regional Development and Public 

Works, the owners will not lose because the limitation on dense construction will allow 

for building more luxurious sites. Representatives of real estate companies share 

the opinion that the new construction rules introduced at this stage will not influence 

the prices of the most attractive plots in the next two years. The market is determined 

by supply and demand, and a potential price decrease is likely to happen 

because of over-construction rather than introducing future construction limitations. 

Some of the smaller municipalities have already studied the experience of Spain, 

Greece and Cyprus, and have decided what type of tourism they want to promote 

and have set construction limitations by themselves. The first and, so far, only municipality 

that has considered its general plan in view of the new requirements is 

Primorsko. The municipality has already determined two zones for building golf 

courses and a vacation settlement. Another municipality moving in this direction is 

Pomorie. 

The act introduces two zones with a special status. Within the first zone, up to 100 

m inland from the beach (or 50 m if the shore is rocky), defined as zone A, it will be 

allowed to construct buildings up to 7.5 m high (not more than 3 floors) and with at 

least 70% green space. Plots up to 2 km from the shore, or zone B, will be built up to 

30%, the allowed height is 15 m. Also, a general ban is introduced on construction in 

all seaside resorts and settlements from 1 May till 15 October. There will be a fine of 

BGN 5000 to BGN 10 000 for breaching this regulation. 

The Ministry of Regional Development and Public Works relies on stopping the practice 

of re-assigning forests and agricultural land for new construction by tightening 

the adoption of new general plans in the seaside municipalities. The plans will be 

approved by the National Experts’ Council on Territorial Planning, and will be valid 

for six years. The building of new hotels, restaurants and houses will be allowed only 

if the necessary infrastructure is in place. 

Unsupervised construction in unmapped areas is deterring investment, according to 

the National Hospitality Management Club (NHMC), and the competent authorities 

must speed up the drafting and approval of urban cadastral plans. The hospitality 

industry boom has caught some municipalities by surprise and they are struggling 

to address the discrepancy between the new tourist infrastructure and the ageing local 

infrastructure. The rapid expansion of the resorts is overtaxing the wastewater 

stations, the water mains and the sewerage systems in the respective areas. 

Requirements for tour operator, tour agency, hotel keeper 

Only legally registered persons are allowed to perform tour operator or tour agent activity. 

The tour operators (TO) and tour agents (TA) should be traders under the Act 

of Commerce. They should employ only staff with the necessary education, language 

qualification and length of service. The TO or TA should provide suitable premises for 

performing the relevant activity, and should have concluded a preliminary insurance 

contract. The TO or the TA should apply to the Expert Commission on Registration of 

Tour Operators and Tour Agencies. The registered TO should conclude an insurance 

contract annually and should provide precise, clear and comprehensive information 

on its activities. The TO is committed to the information released. 



Under the Tourism Act, for implementing tour-operator or tourist agent activity in 

the register shall be entered a person meeting the following requirements: 

♦ to be trader in the sense of the Commercial law or corporate body with right 

by the force of another law to implement economic activity; 

♦ to have staff with appropriate education, language qualification and practice; 

♦ the person, implementing the functions for management of tour-operator or 

tourist agent activity shall have appropriate education, language qualification 

and practice; 

♦ to have ensured appropriate premises for implementing tour-operator or tourist 

agent activity; 

♦ to have concluded preliminary contract for insurance; 

♦ to be not in procedure for liquidation or insolvency’ 

♦ to have not implemented tour-operator or tourist agent activity without license/registration 

during the last 12 months; 

♦ to be not with withdrawn license/deleted registration for implementing the respective 

activity during the last 12 months. 

In order to enter the register, the persons shall submit application according to a 

model, in which shall be pointed out: the kind of the tourist activity, for which registration 

is required, name and address of the person, respectively headquarters, address 

of management, tax number and BULSTAT code, when there are such, as well 

as address of the tourist site. 

At carrying out tour operator's or tourist agent's activity on the territory of the country 

the tour operator or tourist agent shall conclude contracts with registered tour 

operators or tourist agents, with licensed insurers and carriers, guides, animators, 

mountain guides, ski-teachers, persons, offering water, flying and other tourist services 

with increased risk for the consumer, with professional qualification and experience 

as well as with persons implementing tourist activity in categorized tourist 

sites. 

Hotel and restaurant managers should also be traders. They perform their activity in 

categorized facilities (hotels, motels, villas, camping sites, restaurants, bars, cafeterias, 

etc.). The person that is to perform hotel and restaurant management should 

acquire the necessary permissions from the relevant municipality, and should abide 

to the standards of the Regional Inspections for Protection and Control of the Public 

Health, the National Fire and Emergency Service. 

Hotel keeping or restaurant keeping shall be carried out by a person who: 

♦ is an entrepreneur in the context of the Commercial Law or who is a corporate 

body having the right, by virtue of another law, to carry out economic 

activity; 

♦ is not under proceedings for liquidation or bankruptcy. 

Perception of “gray” economy presence in the sector 

Some hotel owners and developers are perceived by tourism professionals and the 

general public as people who are interested in tourism only to invest money accumulated 

from activities in other sectors of the economy, sometimes with lack of transparency 

as to the origin of the funds. There are some doubts that sometimes construction 

permits are issued to specific developers for sites that have been until then 

off-limits for other applicants. However, as a rule these development projects have 

perfect documentation and it is difficult to claim any legal missteps. 

There are also doubts of corrupt practices in issuing licenses to hotel and restaurant 



owners. In summer 2005, two inspectors at the state tourism agency were apprehended 

by the police with earmarked money while receiving a bribe. The inspectors 

had reportedly requested the sum in order to issue a categorization certificate to a 

tourism entrepreneur on the Black Sea coast. 

4.3. SEARCHING FOR A PARTNER. ASPECTS TO BE CONSIDERED 

WHEN NEGOTIATING A CONTRACT 

The Bulgarian Commercial law allows for the following types of business organizations: 

♦ unlimited (general) partnership; 

♦ limited partnership; 

♦ private limited company; 

♦ public limited company (joint stock company); 

♦ public limited partnership; 

♦ sole trader; 

♦ joint venture; 

♦ branch; 

♦ holding; 

♦ co-operation; 

♦ representative office. 

The most appropriate types of companies for carrying out business in Bulgaria are: a 

private limited company, a public limited company, a single-person private limited 

company, a holding, a branch, and a representative office. All of these (with the 

exception of a representative office) have to be entered into the commercial register 

kept with the relevant district court. 

Private Limited Company (a limited liability company) - "OOD" - is a commercial 

company with share capital owned by its members whose liability is limited to the 

amount of the capital subscribed. A private limited liability company may be founded 

by one or more persons, including foreign natural or legal persons. The minimum 

foundation capital is BGN 5000 divided into shares with nominal value of BGN 10 

each and at least 70% of the capital must be paid at the company’s set up. Contributions 

to the foundation capital may be paid in cash or in kind. The statutory bodies 

of the private limited companies are the general meeting of shareholders, which must 

be held at least once a year, and the managing director or board of directors. 

A single-person private limited liability company is called "EOOD". It is owned by a 

natural or a legal person, the sole shareholder exercises the powers of the general 

meeting and the managing director or board of directors is appointed to run the 

company. A private limited company must prepare a balance sheet and financial 

statements each year. 

Below is a general explanation of what is needed to set up a private limited company 

in Bulgaria: 

♦ produce its articles of association (Memorandum of Association - in the case of a 

single-person private limited company); the Law on Commerce stipulates the 

obligatory provisions of the articles; 



♦ 

♦ 

have appointed a managing director (or board of directors); 

have paid up at least 70% of its authorized capital, including at least one-third of 

each member's contribution. 

This information together with details of the management, etc., is recorded in the 

commercial register and promulgated in the State Gazette. 

Public Limited Company (a joint stock company) - "AD" - is a commercial company 

with share capital owned by its members whose liability is limited to the amount of 

the capital they subscribe. A joint stock company can be founded by two or more 

persons, including foreign natural or legal persons. The only exception to this rule is 

when the State is the only founder and, therefore, the sole owner of the whole capital 

of the company - in this case we have a single person public limited company 

("EAD"). 

The minimum capital of a joint stock company is BGN 50 000, increasing to BGN 

100 000 if the capital is raised by a public offer. A capital higher in value is required 

for the establishment of banks, insurance companies and investment companies: 

♦ banks - the minimum capital required amounts to BGN 10,000,000,000; 

♦ insurance companies - the minimum capital required amounts to: 

♦ Leva 2,000,000 for life insurance and personal accident insurance; 

♦ Leva 3,000,000 for property insurance; 

♦ Leva 4,000,000 for reinsurance; 

♦ Investment companies - the minimum amount and the structure of the required 

capital as well as its relation to the assets and liabilities as per the balance 

sheet are determined by the Securities and Stock Exchange Commission according 

to the Law on Securities, Stock Exchange and the Investment Companies. 

In the general case of a registration of a public limited company, contributions to 

foundation capital may be paid in cash or in kind, in which case an independent 

valuation is required, and at least 25% of the capital must be paid up on foundation. 

A joint stock company may issue either registered or bearer shares. The general 

meeting of shareholders is the highest body of the company, and must be held at 

least once a year. The shareholder's meeting elects a board of directors (a one-tier 

management structure) or a board of directors and a supervisory board (a two - tier 

management structure). A public limited company must prepare a balance sheet and 

financial statements each year. Special statutory instruments provide additional requirements 

to the foundation of banks, insurance companies and investment funds 

in the form of joint stock companies. 

Below is a general explanation of what is needed to set up a public limited company 

in Bulgaria: 

♦ have adopted articles of association; 

♦ have all of its authorized capital fully subscribed; 

♦ have paid up at least 25% of its authorized capital; 

♦ have elected a board of directors; and 

♦ have met any other legal requirements. 

Details of the official business name and registered office of the company, its management 

bodies, and other facts related to its incorporation, existence and windingup 

are recorded in the commercial register and promulgated in the State Gazette. 



Holding - it is a public limited company, a public limited partnership or a private 

limited company with the purpose to participate in whatever form in other companies 

or in their management. At least 25% of the capital of a holding has to be entered 

directly in subsidiaries. A subsidiary means a company in which the holding 

owns or controls directly or indirectly at least 25% of the stocks or shares, or can 

appoint directly or indirectly more than 50% of the members of the managing body. 

The Law on Commerce explicitly names the activities, which a holding is allowed, 

and those not allowed, to perform. 

Branch - foreign legal entities registered abroad, as well as foreign natural persons 

and entities that are not legal persons, can register a branch in Bulgaria provided 

they are registered as commercial entities in accordance with the relevant legislation 

in their home country. No authorized capital is required to found a branch. A branch 

is not a legal entity, it is part of the company - founder. Branches are obliged to 

maintain accounts as an independent company. A branch of a foreign company must 

prepare a balance sheet. 

Representative Office - it is regulated by the Foreign Investment Law. Foreign persons 

who are entitled to engage in business activity under the legislation of their own 

countries may set up a representative office which is registered with the Bulgarian 

Chamber of Commerce and Industry. Representative offices are not legal persons 

and may not engage in economic activity. 

Joint Venture - it is a company formed jointly by a Bulgarian and a foreign partner. 

The size of the foreign participation in a joint venture is not limited. Joint ventures 

must take one of the forms of business entities pursuant to the Bulgarian Law on 

Commerce. Establishment of a joint venture is one of the forms of investing in Bulgaria. 

Bulgarians like to do business with people, face-to-face, therefore visiting the country 

to meet and work with local partners and customers is vital. You will need to 

be prepared to visit Bulgaria regularly to maintain the relationship with your partner 

and customers. Simply sending emails or faxes, or relying on distance selling techniques 

will not work. 

Finding the suitable local business partner(s) is the most important factor for export 

success. Managing already established business relationships will require more 

time than in other countries, and regular visits to the market are vital. 

Business etiquette 

The usual office hours of business in Bulgaria are 9.00 am - 5.00 pm, Monday to 

Friday. Below are some words of advice about the ways Bulgarian people do business: 

♦ 

Appointments can take some time to arrange, depending on the seniority of 

the person you wish to meet. It is recommended to seek appointments in advance 

of a visit. 

♦ Allow sufficient time for business meetings, which can be quite protracted – 

♦ 

always allow more time than you expect. 

It is expected that visitors arrive on time for an appointment. If unexpected 



♦ 

♦ 

♦ 

♦ 

♦ 

♦ 

circumstances arise to cause a delay of more than 10-15 minutes, call to notify 

the person of the delay. 

In the public sector, Bulgarians have at least two to four weeks holiday per 

year. The annual vacation period is usually in July and August and it is advisable 

not to arrange appointments during this period or Christmas/New 

Year. 

At formal meetings surnames are used. As relationships gradually build up it 

would be natural to address your counterpart in given (first) names. Business 

cards are normally exchanged at the beginning of a meeting. 

Decision-making is usually made on a consensus basis and it is recommendable 

to include all possible decision-makers. 

A business lunch or dinner usually follows negotiations. Bulgarians are very 

hospitable, and enjoy Bulgarian food and drink. Occasionally some of these 

lunches and dinners may take longer than usual. Lunch normally starts between 

12.30pm-1.00pm, while dinner starts around 7.00pm-8.00pm. English 

is spoken in most of the big restaurants, especially in the capital, Sofia. 

There is a Bulgarian habit of toasting by clinking glasses with a 'rakia', a 

strong grape or plum brandy that comes together with a salad. The toast in 

Bulgarian is 'nazdrave' which means 'to your health'. 

Smoking is not an issue in Bulgaria, and Bulgarians can light up a cigarette 

in the middle of their salad. Nevertheless, it would be polite to ask whether it 

is accepted to smoke when visiting someone's office or home. 

4.4. FOREIGN AND SPANISH INVESTMENT IN THE SECTOR. MAIN 

SUCCESSFUL CASES OF IMPLEMENTATION IN BULGARIA 

♦ 

Spanish hotel chains RIU, Iberostar, Barcelo 

In the service sector, Spanish hotel chains have entered in the tourist sites of 

Bulgaria through management contracts or franchising of hotels located in the 

Black Sea coast. RIU has been present in Bulgaria since 1999, and after the 

opening of two more resorts in 2003, it managed seven hotels in 2004, all of them 

located on the Black Sea coast, with a total of around 2000 beds. IBEROSTAR is 

also present in Bulgaria, managing hotels with a total of over 2000 beds, including 

two opened in 2003, all of them also on the Black Sea coast, with plans to expand 

its presence with more hotels. 

Spanish hotel chain Barcelo Hotels & Resorts will be managing the new 4-star 

city hotel that opened in November 2005. Investor is the Bulgarian company 

Festa Holding with BGN 14 mln. The seven-floor building has 120 rooms, 4 

suites, 2 restaurants, 3 bars, etc. According to Jose Palou, Barcelo’s representative 

and its executive manager for Europe, the hotel chain has already held talks 

with investors who will build tourism sites in Sunny Beach. 

♦ 

Spanish company Ferry Group with golf complex project 

In a recent development, on February 3, 2006, the certificate for First Class Investor, 

issued by InvestBulgaria Agency (IBA), has been awarded by Roumen 



Ovcharov, Minister of Economy and Energy, to Sport Center Kuttina for the investment 

project Kuttina Golf Resort. Manuel Ferry Sanchez, owner and manager 

of Sport Center Kuttina, received the document at an official ceremony. 

The investment plan of the company, financed by the Spanish company Ferry 

Group, provides for a total of BGN 219 mln (EUR 112 mln) investments in the 

construction of a multifunctional modern sport and golf complex near the capital 

Sofia. IBA issues the certificate for the first phase of the project, which will start 

in 2006 and will be carried out for a period of 3 years with a total of BGN 84 mln 

(EUR 43 mln) investments. During the two phases of the project the company 

plans to construct a large sport and tourism complex, including: golf courses 

area, sport center with swimming pools and tennis courts, a club building, hotel 

complex, apartment buildings, trade center, etc. 

Additionally the company will invest in the construction of a waste water purifying 

unit, which will ensure the technical and ecological functioning of the sport 

center, as well as provide for processing of waste water of the villages of Kurilo 

and Kuttina. Sport Center Kuttina will ensure entirely the financing for the planning 

and construction of the necessary infrastructure components. The realization 

of the project will recover the nature and the area which is occupied by a 

non-functioning coal mine. The sport center project will ensure the planting of 20 

000 trees of different types, as well the maintenance of large grass areas and gardens. 

During the construction phase of the project the investor will open over 2000 

jobs. The effective exploitation and maintenance of the complex will be ensured 

by over 700 permanent employees, including 82 employees for the needs of the 

golf courses area and the club building. The investor intends to employ predominantly 

people with a Bulgarian citizenship. 

♦ 

Spanish company Magle with hotel complex project 

In another development, Spanish company Magle will invest EUR 10 mln in a 

new hotel complex in the town of Kavarna, as announced by Kavarna’s mayor 

Tsonko Tsonev in November 2005. The municipality has already granted a construction 

permit. The complex will be built on 7000 sq. m in the seaside part of 

the town. 

♦ 

TUI Nordic with hotel in Tzarevo 

In June 2006, travel company TUI Nordic will launch in Tzarevo, a resort town 70 

km south of Bourgas, a hotel designed to accommodate exclusively Swedish and 

Norwegian holiday-makers. TUI is wrapping up the construction in Tzarevo of the 

600-bed 4-star Serenity Bay hotel. In November 2005 Dieter Zemelroth, Director 

Corporate Finances TUI, announced that TUI would invest EUR 8 mln in the construction 

of the new tourist complex. 

• Thracian Rocks Golf & Spa with golf course 

The construction of a new golf course near the village of Bozhurets, in the coastal 

Kavarna region, will kick off in mid-March 2006, according to Rumen Beremski, 



chairman of Thracian Rocks Golf&Spa, the international company that will deploy 

the EUR 90 mln investment. The 18-hole golf course will have an area of 140 

ha, the biggest on Bulgaria's Northern Black Sea coast. 

The developer intends to repair the infrastructure in the area of the golf course, 

building 17 km of new roads, a 150-room five-star hotel and villas with a combined 

3,000-bed capacity. All building will have no more than three storeys. The 

course will be designed by South African golfing legend Gary Player. The building 

contractor for the golf project will be chosen on competitive basis. Player has also 

designed the golf complex built by the Black Sea Rama company near Balchik. 

According to Krasimir Gergov, co-owner of Black Sea Rama and chairman of the 

Bulgarian Golf Association, the project has absorbed EUR 100 mln in investment. 

The resource was raised through the off-plan marketing of the 350 detached 

houses that will be part of the complex. The construction of another golf resort 

near Black Sea Rama started in late 2005. The EUR 56 mln Lighthouse Golf Resorts 

is developed jointly by Balkanstroy and Barage&Co. The complex will have 

an 18-hole golf course, training and horse-back riding facilities, a spa center, 

luxury houses and a hotel. 

♦ 

Quinn Group Investment Fund with Hilton Sofia Hotel 

In mid-2005, Quinn Group Investment Fund, owned by the Irish billionaire 

Shawn Quinn, bought almost 50% in Hilton Hotel Sofia and is reportedly in talks 

with the other shareholders to acquire the majority stake. Hilton Sofia is a stateof-the-art 

facility with 245 rooms on 8 floors, including 53 Executive Rooms and 

17 Suites, equipped with all modern facilities. The guests of the 2 Executive 

Floors have access to the Clubroom, a special area for relaxation, assistance and 

business support, where they can enjoy complimentary breakfast, drinks and 

snacks throughout the day. For conferences and banquets the Hotel offers 450 

square meters, including a ballroom, which can accommodate up to 240 delegates 

and can be divided into 2 sections. 

♦ 

Equest Balkan Properties with Serdika Hotel, Sofia 

Equest Balkan Properties, property investment company focused on commercial, 

retail and industrial property in South Eastern Europe and primarily Bulgaria 

and Romania, was quoted by the London Stock Exchange (LSE) as saying in 

January 2006 that it has bought the Serdika Hotel in Sofia. The purchase price, 

payable in cash, is approximately EUR 10 mln, including transaction costs. The 

Serdika, previously owned by insurer Allianz Bulgaria, is currently operated as a 

3 star hotel with 131 rooms in a prime location in the city centre. 

Equest has entered into initial negotiations with 3 major international hotel 

chains to manage the Serdika after the current lease with a local hotel operator 

expires in May 2006, according to Equest managing director Georgi Krumov. The 

fund intends to refurbish the Serdika hotel and the adjacent Sofia Film movie 

theater, adding shops and office premises. Equest expects to generate an annual 

return of 10% from the lease of the commercial outlets on the property. Equest 

said in mid October 2005 it planned to invest via its subsidiary Immofinance a 

total of 30 mln euro in a holiday village in Sofia's upscale neighbourhood Boyana 

and in a spa complex in the village of Banya, close to popular ski resort Bansko. 

The company is also building a luxury residential community, Embassy Suites, 

near the Bulgarian capital. 



♦ 

Simply Bulgaria company with holiday village 

Bulgarian-British company Simply Bulgaria will invest 4.5 mln euro in the construction 

of a holiday community in the village of Gesha, in the Dryanovo area, 

Northern Bulgaria, news agency BTA announced. The JV will build 110 apartments 

and houses on a 5 ha site. A representative of the developer said over 30% 

of the apartments have already been sold. The development should be liveable 

next year. Simply Bulgaria plans to invest in other similar developments across 

Bulgaria in the next 8 years, bringing their number to 6. 



5. ANALYSIS OF THE MARKET OFFER 

5.1. DOMESTIC PRODUCTION AND MAIN PRODUCERS 

There are a total of 102 official resorts in Bulgaria. 34 of them are of national importance, 

and 68 – of local importance. 

5.1.1. Types of Tourism 

Seaside tourism 

Bulgarian seaside resorts and the coastline towns offer varied options for family vacationing, 

rest and pro-active sporting. Supply includes practicing of surfing, water 

ski, diving, underwater fishing, underwater archaeology, and other aquatic sport. 

The yacht ports in Balchik, Varna, Nessebar, and Burgas offer opportunities for 

yachting with the necessary servicing and customs services. Routes have been devised 

for pedestrian, biking and horseback tourism, photo- and eco-tourism, visiting 

natural, archaeological and cultural landmarks, trips in Bulgaria and abroad. 

Skiing and mountain tourism 

Convenient ski runs and facilities for skiing tourism and winter sports are on offer in 

the mountains of Rila, Pirin, Rhodope, Vitosha, and Stara Planina (or Balkan range). 

The ski-season duration in the average- and high-altitude mountain resorts is up to 

190 days. Ski runs’ total length exceeds 80 km with level differences of up to 1500 

m. Pamporovo, Borovets, Bansko and Aleko resorts have year-round functioning accommodation 

premises and a winter sports infrastructure (lifts, Alpine skiing and ski 

runs) undergoing renovation and development. In response to modern demand - new 

ski tourism centres are getting also established: Smolyan, Chepelare, Dobrinishte, 

Malyovitsa, Semkovo, etc. 

Spa tourism 

Bulgarian thermal mineral water is distinguished for its great diversity. Known in 

Bulgaria are more than 550 spots of 1,600 mineral water springs with a total debit of 

4,900 l./sec. Prevalent is the slightly mineralized water – 66.7 per cent, mineralized 

mineral water – 14.4 per cent, and gas water – 17.9 per cent. Bulgaria’s various 

mountain relief, wide frontage, proximity to the Mediterranean Sea and favorable location 

provide excellent biological and climatic conditions for complex impact on the 

human body. One of this country’s major advantages to other traditional spa tourist 

destinations on the Balkan peninsula, in Western Europe and in the region of the 



Mediterranean sea, are the weather conditions. The number of sunny days through 

the year in the country is 18-20 per cent higher than in Central, Northern and 

North-western Europe. The cloudiness in the Black Sea region is 10-30 per cent 

smaller than at the Atlantic coast and in some regions of the Mediterranean coast. 

The average rainfall here is 26.65 per cent smaller respectively for the spring and 

summer months. 

Spa and mud-curing centers in the Black Sea coast area are Albena, the Golden 

Sands, St.St. Constantine and Helen, Riviera vacation club, Sozopol, Kiten, Primorsko, 

Ahtopol, Pomorie, Balchik, Tuzlata, Varna Mud-curing Baths, etc. Spa and 

mud-curing centers in the semi-mountain and mountain regions of the country are 

Hisar, Velingrad, Sandanski, Kyustendil, Bankya, Pavel Banya, Narechen, Varshetz, 

Kostenetz, Momin Prohod, Bourgas Mineral Baths, Haskovo Mineral Baths, Separeva 

Banya, Borovetz, Pamporovo, Tryavna, Teteven, Apriltzi, Elena, Kotel, Dryanovo Govedartzi, 

etc. All facilities are specialized in the treatment and prophylactics, depending 

on the specifications of the different cases, and the programs are implemented 

under the supervision of qualified medical doctors. 

Rural tourism 

There are two clearly distinct rural tourism regions in Bulgaria – Western and Middle 

Stara Planina (the Balkan range) and the Rhodopes. In the recent years, a series of 

villages, located closely to the sea resorts, have also become centers of rural tourism. 

Traditions in this field have already been accomplished in the village of Osmar and 

village of Lozevo (Shoumen region), village of Asparuhovo (Varna region, Dulgopol 

municipality), village of Kazicheno (Pomorie municipality), village of Malka Vereya 

(Stara Zagora municipality). Currently, more than 50 villages and 30 monasteries offer 

accommodation for tourists. 

The image of Bulgaria during the period of the National Revival is still alive in a large 

number of architectural attractions from this period, moulding the spirit and look of 

whole towns or parts of them – Veliko Tarnovo, Tryavna, the Old Plovdiv, Koprivshtitza, 

Nessebar, Sozopol, etc., as well as many villages, such as Bojentzi, Arbanasi, 

Zheravna, Brushlyan, Kovachevitza, Leshten, Dolen, Momchilovtzi, Shiroka 

Luka, etc. In Bulgaria, there are also a number of ethnographical museums – the 

ethnographical open air museum Etara (town of Gabrovo), and the Old Dobrich 

(town of Dobrich), the ethnographical museums in Veliko Tarnovo, Blagoevgrad, 

Vratza, etc., as well as famous orthodox monasteries and churches. 

Specialized (ornithological) tourism 

Almost 70 per cent of all bird breeds, inhabiting Europe, could be seen in Bulgaria, 

because two transcontinental migration ornithological routes pass through the country 

– Via Pontica and Via Aristotelis. Some other conditions, favoring this rich variety 

of birds, are the humid zones in the spread of the Black Sea coastal area, the Danube 

coastal area and the divers natural conditions in the inside of the country. The 

most suitable places for observation are located around the Danube river, the Northern 

Black Sea area, the Southern Black Sea area, national park Shoumen Plateau, 

the Provadia Plateau, in the natural reserves Gorna and Dolna Topchia near the river 

of Tundja, in the Natural park “Sinite Kamani” (The Blue Stones) and in the eastern 

part of the Rhodopes. 



Hunting and fishing tourism 

The game reserve in Bulgaria consists of 18 974 royal stags, 4 200 stags of a fallow 

deer, 69 795 foes, 1 799 wild goats, 2 066 mouflons, over 41 536 wild-boars, over 

930 bears, 2386 wood-grouse capercalzies, rabbits, grouses, pheasants. The newlybred 

populations of royal stags and mouflons are also developing very well. One of 

the best specimen have been shot in this country. 

Bulgaria’s accommodation base consists of over 1100 beds in more than 110 huts 

and shooting-boxes, located in the forestry enterprises and meeting all modern requirements. 

Possibilities for business meetings, family tourism and horse tourism 

are offered by the following forestry enterprises: Apriltzi, Kormisosh and Gabrovo. International 

hunting tourism is offered by the enterprises Borima (northern slopes of 

Stara Planina, 150 km away from Sofia), Lovech (the foothills of Central Stara Planina, 

170 km away from Sofia), Nikopol (Central Northern Bulgaria, around 210 km 

away from Sofia), Teteven (northern slopes of Middle Stara Planina, 115 km away 

from Sofia), Troyan (northern slopes of Middle Stara Planina, 175 km away from 

Sofia), Svoge (southern slopes of Western Stara Planina, 40 km away from Sofia). 

These bases also provide opportunities for fishing and ecological tourism, photo safaris, 

as well as visits of natural and historical attractions in the region. 

An average of 2500 foreign tourists come hunting to Bulgaria annually, most of them 

being traditional visitors. Some of the world records among the trophies of royal 

stags and wild-bores were marked in our country. Most of the capital trophies rated 

over 250 CIC are Bulgarian. 

Ecological tourism 

Bulgaria’s nature avails exceptional capacities to diversification of the Bulgarian 

tourist product and new types of tourism. The network set up of 3 national (Pirin, 

Rila and Central Balkan) and 11 natural parks (Rousse Lom, Vratza Balkan, 

Strandja, Persina, Central Balkan, Shoumen Plateau, Golden Sands, Vitosha, the 

Blue Stones, the Rila Monastery, Rila and Pirin) , 89 reserves and 2,234 natural 

landmarks preconditions various types of specialised tourism: cognitive and naturescience 

tourism, photo-safari, observing birds and plants, rock climbing, alpinism, 

spelaeology tourism, etc. Mountains have good roadability; marked mountain paths 

total 37 000 km. 

The ‘Bulgarian eco-paths’ National Programme of the Bulgarian Association for Rural 

and Environmental tourism (BARET) is setting up a concept for equipping hard of 

access and picturesque territories in mountainous and semi-mountainous regions 

with bridges, rails, and staircases. An interesting tourist product are the many 

marked eco-paths. A relatively new thing for Bulgaria are the eco-paths built of 

natural materials, located in mountain, semi-mountain and plain region: the Negovan(ska) 

one - off the village of Emmen (Veliko Turnovo region); the Kroushin(ska) 

one - by the village of Letnitsa, Lovech district; the Tran one - the Erma river gorge; 

the Kopren(ska) one - off the village of Kopilovtsi, Chiprovo Mouintain; the South 

Rhodopean eco-path - with a starting point in the village of Yagodina, Borino municipality; 

the Vrachanska (or Vratsa) eco-path in the ‘Vrachanski Balkan’ natural 

park; the Dryanovo eco-path - with a starting point in the Dryanovo monastery. 

Cultural tourism 

There are more than 40 000 historic monuments in Bulgaria (7 of which are included 

in the UNESCO world culture heritage list), 36 culture reserves, 160 monasteries, 

330 museums and galleries. The monuments of culture, included in the 

UNESCO list, are: 



♦ Kazanluk tomb - (IV-III c. BC); 

♦ Thracian tomb near the village of Sveshtari, close to Razgrad (dated from 

2,300 years ago); 

♦ Madara Horseman (early VIII c.) 

♦ Boyana church – frescos, dating back from 1259; 

♦ Ivanovski rock churches (near Rousse), XI-XIV c.; 

♦ Rila monastery - (X c.); 

♦ Ancient town in Nessebar. 

There is a plenitude of monuments from different historic epochs: pre-historian 

finds, Thracian tombs, finds from the Ancient Greek times, Roman fortresses, historical 

monuments from the time of the First and the Second Bulgarian Kingdom, 

architectural attractions from the National Revival period, which have shaped fully 

or partially the face of Bulgarian towns. 

Vacation homes 

In recent years, Bulgaria has become a popular destination for foreign vacation home 

buyers, especially with British ones. Bulgaria has been voted the UK's favourite holiday 

hot spot by First Choice, and the Association of British Travel Agents expects UK 

visitor numbers to have reached 200,000 this year. The cheap prices mean it is ideal 

for holiday home buyers or investors with limited budgets. But when Bulgaria joins 

the EU in 2007, second home owners can expect the value of their properties to soar. 

According to a report by real estate investment adviser Property Frontiers and 

quoted by Assetz, the group of property investment companies, Bulgaria is one of the 

most rapidly advancing nations in Europe in terms of international property investment. 

The report reveals that there was an average property price increase of 47.5 

per cent in 2004 while growth in the first quarter of 2005 continued to be strong at 

10.6 per cent. 

Specific areas of property interest include the mountain and coastal regions with ski 

resorts and traditional beach holidays becoming more popular each year. There is 

also an emphasis on golf resorts and spa health centers at the moment and Property 

Frontiers suggests that these areas can provide year-round rental potential. 

Gambling 

Although gambling has not been specifically defined as a type of tourism by the 

Tourism Act, it should be noted that in recent years many hotels in Bulgaria have 

added casinos to their offers. Most of the major hotels in Sofia and on the Black Sea 

coast have casinos, too, incl. Princess Hotel, Sheraton Sofia Hotel Balkan, Grand Hotel 

Bulgaria, Radisson SAS, and Hemus Hotel in Sofia; Astera Casino Hotel and Havana 

Hotel in Golden Sands resort; Bulgaria Hotel in Burgas; Grand Hotel Varna in 

St. Elias complex (St. St. Constantine & Helena resort); Bulgaria Hotel and Trimontium 

Princess Hotel in Plovdiv. Organized groups from Israel, Russia and some other 

countries are frequent visitors to these facilities. 



5.1.2. Hotels and Restaurants 

Top 10 companies in the branch Hotels and Restaurants by profit – 2004 

Company 

Profit' 2004 in 

thousand BGN 

1 Albena (Albena) 75 789 

2 Golden Sands (Varna) 19 672 

3 Sunny Beach (Sunny Beach) 19 438 

4 Grand-hotel Varna (Varna) 16 197 

5 Sofia Hotel Balkan (Sheraton) (Sofia) 15 786 

6 Pamporovo (Smolyan) 11 781 

7 Sunny Day (Varna) 11 407 

8 Riviera (Varna) 8 944 

9 Rodina Tourist (Sofia) 6 638 

10 Rila-Borovetz (Borovetz) 4 896 

Source: NSI 

Albena (Albena) 

75,789 

Golden Sands (Varna) 

Sunny Beach (Sunny Beach) 

Grand-hotel Varna (Varna) 

Sofia Hotel Balkan (Sheraton) (Sofia) 

Pamporovo (Smolyan) 

19,672 

19,438 

16,197 

15,786 

11,781 

Sunny Day (Varna) 

Riviera (Varna) 

Rodina-Tourist (Sofia) 

Rila-Borovetz (Borovetz) 

11,407 

8,944 

6,638 

4,896 

Source: NSI 

0 

10,000 

20,000 

30,000 

40,000 

50,000 

60,000 

70,000 

80,000 

90,000 

100,000 



The hotel sector has developed rapidly over the last few years and there are now a 

wide range of hotels catering for both business and holiday users. In Sofia, with the 

increasing number of business visitors and international conferences, the number of 

high standard hotels has increased significantly and similar trends are now being 

seen in other towns including Varna, Burgas, Veliko Turnovo, Russe, Sandanski and 

Petrich. 

Investment in the hotel sector has been directed towards both refurbishment of existing 

hotels and to green-field developments. Around 45% of all hotels fall into 

three, four or five star categories and most are now part of the major global chains 

which have opened hotels across the country, most notably in Sofia. Such hotels include 

Sheraton, Hilton, Radisson SAS, Kempinski and Princess. 

A large number of modern family-owned hotels have been developed over the course 

of the last ten years. These hotels typically located in the mountains or by the coast, 

offer high-class services and recreational comfort unseen in Bulgaria a decade ago. 

Coastal and ski resorts have been a particular magnet for development - to such an 

extent that parts of the Black Sea coast may be oversupplied once current schemes 

are completed. 

Currently the total number of hotels in Sofia is around 50, of which 20 have been 

built in the last few years. Amongst these, hotels which are centrally located, offering 

easy airport access and proximity to central places of interest and business, are 

most in demand. Significant further expansion is under way, with 20 more hotels in 

the planning stages or under construction. Among foreign investors which have set 

their sights on Sofia, are the French Accor group, Holiday Inn (who will build their 

first hotel in Business Park Sofia in 2006), Best Western (which owns Hotel City in 

Sofia, and is currently planning to expand their operations across other large towns), 

and Marriott (which has been seeking a suitable site to develop in Sofia). 

Small 3-4 star hotels with 50-100 bed capacity, such as Crystal Palace, Europe and 

Light, currently dominate the market. The larger hotels are often older properties 

which have been substantially renovated, such as the Radisson SAS Grand Hotel 

Sofia, the Sheraton Sofia Hotel Balkan, the Sofia Princess and Kempinski Zografski. 

So far, there have been only two newly built hotels with a capacity over 100 beds: the 

Grand Hotel Sofia and the Hilton Sofia. Other major hotels in Sofia include the Hotel 

Maria Luisa and Hotel Rodina. 

Overall, the trend of increasing number of hotels and beds in Bulgaria continues. In 

2004, the number of hotels with capacity exceeding 30 beds was 1016. Compared 

with 2000, their number has grown by 60 per cent. 



Number of hotels with capacity exceeding 30 beds (2000-2004) 

1 100 

1 000 

900 

800 

700 

600 

500 

400 

300 

200 

100 

0 

1 016 

849 

742 

634 

666 

2000 2001 2002 2003 2004 

Source: NSI 

In 2004, the hotels under review disposed of a total of 171 000 beds. Compared with 

2000, the number of beds has grown by 51 000 or 43 per cent. 

Beds in hotels with capacity exceeding 30 beds (2000-2004), thousands 

220 

200 

180 

160 

140 

120 

100 

80 

60 

40 

20 

0 

171 

144 

132 

120 116 

2000 2001 2002 2003 2004 

Source: NSI 

The new hotels, built after 2000, dispose of less beds. In 2004, each hotel disposed 

of an average of 168 beds. Their number, as compared with 2000, was smaller by 21 

beds or 11 per cent. 



Average number of beds in hotels with capacity exceeding 30 beds (2000-2004) 

220 

200 

180 

160 

140 

120 

100 

80 

60 

40 

20 

0 

189 

174 178 

170 168 

2000 2001 2002 2003 2004 

Source: NSI 

In 2004 a total of 366 licensed hotels operated in Bulgaria’s sea tourism regions. A 

total of 131 two-star hotels, 164 three-star hotels, 62 four-star hotels and 9 five-star 

hotels operated. 

The licensed hotels disposed of nearly 59 000 beds. The biggest number of beds were 

in three-star hotels (47 per cent), followed by two-star (29.5 per cent), four-star (20 

per cent) and five-star (3.5 per cent). 

A total of 108 licensed hotels operated in the winter tourist centers. Of them, 37 

were one- and two-star, 49 – three-star, 18 – four-star, and 4 – five-star. 

Licensed hotels disposed of around 8.6 thousand beds. The biggest number of beds 

were in three-star hotels (41 per cent), followed by four-star (32 per cent), two-star 

(23 per cent) and five-star (4 per cent). 

Due to the seasonal character of tourism, the hotel capacity is fully used in only 3-4 

months of the year. However, there is a trend of gradual increase of the hotels’ efficiency 

and profitability The level of hotel room nights grew 9 points - from 27 in 

2000 to 36 in 2004. 

Hotel usability (2000 – 2004)* 

50 

45 

40 

35 

30 

25 

20 

15 

10 

5 

0 

35 36 

29 

31 

27 

2000 2001 2002 2003 2004 

* % of hotel room nights Source: NSI 



The profitability from night stays is also growing. In 2000, it stood at BGN 190 mln 

(at current prices); in 2001 – BGN 233 mln; in 2002 – BGN 200 mln; in 2003 – BGN 

295 mln; and in 2004 – BGN 388 mln. For the period under review, it has more than 

doubled, increasing by BGN 198 mln. 

5.1.3. Tour operators 

Usually the biggest resorts and hotels or their daughter companies have a license for 

a tour operator. Complete list of licensed companies for tour operator and tour agent 

activity can be found on the web site of the Bulgarian Ministry of Culture (still under 

the former administrative arrangement; now the sector is supervised by the Ministry 

of Economy & Energy). Listed below is a sample of them: Albena AD, Balkan Holidays 

Services OOD, Balkantourist AD, Bulgaria VIP Travel OOD, Vegena OOD, DM 

Travel OOD, Odiseya In OOD, Golden Sands AD, Sunny Beach AD, Pamporovo AD. 

5.1.4. Developers 

Planex Holding 

The Varna-based construction company, announced it was building a 4.9 mln euro 

vacation complex in sea resort St. St. Konstantin & Elena, 10 km north of Varna. 

The bulk of the financing is provided by Planex with the balance borrowed from Raiffeisenbank. 

The company expects to recoup the investment in 8 years. Splendid St. 

Constantine consists of 4 residential buildings and one 51-room hotel with a gross 

area of 14,000 sq m. It is the second complex in the Splendid chain and the fifth 

property overall developed by Planex. The gated complex, due to open for business in 

June 2006, has already sold over 30% of its 55 apartments. 

Super Borovets developers 

Disagreements between the shareholders in Rila Samokov 2004, a company specially 

incorporated to implement the Super Borovets project, have halted the large-scale 

expansion of the mountain resort located 72 km south-east of Sofia. Rila Samokov 

2004 is co-owned by Contract 99 (51%), a company of late banker Emil Kyulev now 

passed on to his wife Vesela Kyuleva, construction company Glavbolgarstroy (16%), 

the Samokov municipality (25%) and Energokomplekt (7%). The Samokov municipality 

has demanded more executive powers within Rila Samokov 2004, especially when 

it comes to property transactions. The municipality has paid for its shareholder seat 

with the contribution of 200 ha of land that will be used for the purposes of the Super 

Borovets project 

The plans for 3 new vacation properties in ski resort Borovets were made public in 

the Architectural Idea competition. Businessman Nikolai Valkanov, formerly in 

charge of the energy policy of MG Corp., plans to build a complex with residential 

and hotel components on the road between Borovets and Beli Iskar. The southfacing 

development in the vicinity of the finish line of the Yastrebets-3 ski run will 

consist of 3 apartment and one 5-star hotel buildings. The home units will range 

from 56 to 85 sq m. Construction company Glavbolgarstroy intends to build a 9,000 

sq m holiday complex in the resort. The third project, developed by an unnamed investor, 

is for the construction of 10 four-storey houses on a 6,651 sq m site on the 



road to the village of Beli Iskar. The residential units will have a gross area of 7,833 

sq m. 

Meanwhile, three local environmentalist organisations have proposed an alternative 

to Super Borovets. The eco activists pointed out that the Super Borovets project will 

entail substantial deforestation and will have a detrimental impact on the environment. 

Instead of the construction-intensive development, the eco activists have proposed 

to encourage adventure tourism and rural tourism in the villages around 

Samokov. 

Dinevi Brothers 

In August 2005, construction entrepreneurs Dinevi brothers opened Diamant complex 

in Sveti Vlas, the biggest project carried out by the company until now. It was 

the fifth one opened by Dinevi in 2005. The complex covers 24 000 sq. m and includes 

200 suites and 6 houses. It has 2 swimming pools, a restaurant with 150 

seats, piano bar, two summer bars, supermarket, hairdresser’s, medical cabinet, 

beauty center, etc. The total investment of Dinevi in vacation villages is over BGN 

100 mln. 

Interlink BG 

Sofia-based Interlink BG will build a 1,200-bed hotel complex in the village of Topola, 

near Kavarna, on the Black Sea, the local government announced. The BGN 50 

mln holiday community will incorporate several low-rises, swimming pools and parking 

facilities. Work on the 2-year project will begin at the end of the winter 2005-06 

season. Interlink BG is also about to complete 2 apartment buildings - Cedar 

Heights 1 and 2, in ski resort Pamporovo. 

Prime Property BG 

Special Purpose Vehicle Prime Property BG has teamed up with the Persimon company 

to build a 3.5 mln euro holiday village in St.Vlas, a sea resort north of Bourgas, 

splitting evenly the cost of the project. The village will consist of 4 buildings containing 

a total of 106 apartments. The combined floorage of all amenities will add up to 

11,000 sq m. Construction should begin in early '06 and should be completed by 

mid-'07. Prime Property BG is currently developing a luxe apartment building in 

Sofia while wrapping up the construction of Antim 1, a 9-storey 2,600 sq m office 

building also in the center of the capital. 

Balkanstroy 

Construction company Balkanstroy has reportedly invested 3 mln euro to reconstruct 

the 3-star Razlog hotel in the high-altitude town of the same name. A regular 

transport service will be provided from the 40-room/17-suite hotel to the cable car in 

Bansko, the ski resort 6 km south of Razlog. Balkanstroy is developing another project 

in the area, the 100 mln lev Pirin Golf Holiday Club which should be completed 

by '08. 

Spa developers 

Three spa centers will be build in Strelcha, a town 60 km north-west of Plovdiv, over 

the next 5 years worth some 9.8 mln levs, according to mayor Dimcho Karaivanov. 

The Vior-Andonov company has acquired a 3,367 sq m land plot for one of the proposed 

spa centers. Forest EOOD bought sites with areas of 2,037 sq m and 2,276 sq 

m. The projects will create 104 new jobs. 



Yulen AD 

Bansko, the ski resort town located some 160 km south of Bulgaria's capital Sofia, 

could have a second gondola lift, said city mayor Alexander Kravarov. The initiative 

belongs to Yulen AD, the company that operates the resort town's skiing facilities 

under a concession arrangement. The Bansko municipality has earmarked a 3.0 ha 

land plot for the construction of the ski lift. The Project will be in development for at 

least 2 years. 

5.2. FOREIGN PRODUCTION AND MAIN SUPPLIERS 

Some of the biggest foreign tour operator operating on the Bulgarian market or having 

a long-term co-operation with the biggest Bulgarian tour-operators are: TUI, 

Thomas Cook, Iberotel, RIU, Iberostar, ITS, LTU, BG Tours, 1-2-Fly, Kur Club, My 

Travel, Apollo, Lomamatkat (Scandinavian countries), Jet Air, Arke, Sunsnacks, 

AquaTour, Prodin Tour, Starter, Plein Vent (France), Neva, Solvex, Balkanexpress 

(Russia), First Choice, BalkanHolidays, Balkan Tours Ir, JMC (U.K.), Cedok, Wicomt 

(Czech Republic), Magic Travel (Yugoslavia), Bolkan Air Travel - Bucharest (Romania), 

Robinson Tours (Hungary), Hotelplan, Imholz, Vogele, Kuoni (Switzerland). 

Thomas Cook 

Tour operator Thomas Cook has added 15 new Bulgarian hotels to its summer '06 

portfolio, announced the company's local agent, Elit Tours. That brings the number 

of partner hotels to 95. Most of the new entries are from Sunny Beach and Golden 

Sands sea resorts. Some 150,000 German holiday-makers visited Bulgaria in '05. 

Irish tour operators 

Bulgaria has been included in the destination portfolios of a dozen Irish tour operators, 

including Top Flight, Falcon, JWT, Concorde, Budget Travel, Panorama, C-I-E 

Tours Int'l, Eastern Discovery, Golden Explorer and Aegean. Some 29,000 Irish tourists 

visited the country in '05, up 100% from prevoius year. The number of Danish 

companies selling Bulgaria as a holiday destination has also increased, going from 

15 to 17 after the recent tourism bourse in Copenhagen. The number of Danish 

tourists rose from 53,000 in '04 to 72,000 last year. 

PrimaSol 

Hotel complex Sineva in the resort of Sveti Vlas, on the Black Sea, has become part 

of German hotel chain PrimaSol. The hotel is listed in the summer catalogues of 

PrimaSol and tour operator ITS, both owned by German concern Rewe. Previously, 

PrimaSol managed the Sunlight complex, comprising the Sunrise and Excelsior hotels, 

in the resort of Golden Sands, and the Ralitsa and Ralitsa Superior hotels in the 

resort of Albena. Sineva consists of the four-star 124-room Sineva Beach and the 

three-star Sineva park with 92 rooms. The hotels amenities include shops, gyms, a 

hairdresser's parlour, a tennis court and a mini golf course. 



LTI, Calimera Aktivhotels 

Two other Rewe-owned international hotel chains, LTI and Calimera Aktivhotels, also 

operate in Bulgaria. LTI has lent its brand to Neptun Beach in Sunny Beach, Berlin 

Green Park Hotel and Berlin Golden Beach Hotel in Golden Sands. Calimera made a 

comeback to this country last year and now runs the Rodopi Tsvete complex in 

Sunny Beach, taking over from PrimaSol. Two years ago, Calimera Actvihotels signed 

a franchising contract for the operation of MG Corp.-owned holiday village Paradise 

Beach which was later terminated. 

Cedok 

Cedok expects the number of Bulgarian summer holidays sold to Czechs to increase 

by 15-20% in '06, announced Sun Tours, the local partner of the Czech travel company. 

A total of 15,000 tourists booked vacations at Bulgaria's Black Sea coast 

through Cedok last year, up 22% over '04. Cedok offers charter flights from Prague, 

Brno and Ostrava to Bourgas and Varna, on the Black Sea. 

5.3. GEOGRAPHIC DATA 

According to NSI data, 1 306 public and private accommodation establishments – 

hotels, motels, mountain chalets, camping sites and other establishments for shortterm 

accommodation with more than 30 bed places - functioned in the country in 

2004. The number of rooms in them is 86 thousand and that of the bed places 190 

thousand. The number of the accommodation establishments has increased by 247 

(23.3%) in comparison with 2003, the greatest share of which are hotels (78%). 

The main part of the hotels in the country (53.7%) are situated on the coast Black 

sea and 73.8% of bed places are situated in them. Out of the total number of hotels 

in the country – 1 016, there are 269 in Varna district, 191 in Burgas district and 86 

in Dobrich district. 



Number of the bed places by type of resorts in 2004 

Number 

16000 

14000 

12000 

10000 

8000 

6000 

4000 

2000 

0 

14406 

5696 

Seaside Mountain Balneological 

1219 

SSoouur rccee: :: NNSS II I 

Duurri inngg tthhee 11999988 –– 22000044 ppeerri ioodd aa tteennddeennccyy ttoowaarrddss aa ddeeccrreeaassee oof f tthhee nnuumbbeerr oof f rreesstt 

hhoouusseess iss i oobbsseerrvveedd. . AA ggrreeaatteerr ppaarrtt oof f tthheem hhaavvee bbeeccoomee hhootteel lss aanndd fuunncctti f ioonn aass ssuucchh. . 

Inn I 22000044 tthheerree weerree 339977 rreesstt hhoouusseess inn i ooppeerraatti ioonn, , 3355 (88. ( .88%) ) leessss l inn i ccoomppaarri issoonn witthh 

22000033 aanndd 333333 (4455. ( .66%) ) leessss l inn i ccoomppaarri issoonn witthh 11999988. . 

The number of bed places in the rest houses in the seaside and balneological resorts 

continues to decrease. In comparison with the previous year, in 2004 the greatest 

decrease is that in bed places in the seaside resorts – by 23.5%. The number of bed 

places in the rest houses in the balneological resorts decrease by 1% and in mountain 

resorts increase by 5.2%. In 2004 the distribution of the bed places by type of 

resorts is the following: 14 406 (67.6%) of all the bed places are in seaside resorts, 5 

696 (26.7%) in mountain resorts and 1 219 (5.7%) in balneological resorts. 

In 2005, hectic construction in the big Bulgarian resorts continued. In practice, in 

some areas of the Bulgarian Black Sea coast the material assets were doubled. Currently, 

Bulgaria has over 190,000 beds in more than 1,300 sites (source: Centre for 

Economic Development). 

Winter resorts continued to develop very dynamically, especially the town of Bansko 

in Pirin Mountain where investment in specialised infrastructure in recent months 

only exceeded EUR 50 mln. Now Bansko has over 6,200 beds, mostly in 2- and 3- 

star hotels. In 2005, the first 5-star hotel opened there. The town has ten 4-star hotels. 

There are also many family hotels and lodgings. The resort makes efforts to attract 

bigger popularity internationally. Bansko is being portrayed as one of the most 

dynamically developing winter resorts in Europe, able to compete with ski resorts in 

Austria and Italy. The ski runs in Bansko are four, with a total length of 65 km, protective 

nets, opportunity for night skiing, etc. There are plans to construct a second 

cabin lift. 

The realisation of the project to modernise the Borovets resort was scheduled to start 

in January 2006. The project’s total value is BGN 300 mln. Currently, Borovets has 

around 6,000 beds in 40 categorised hotels and villas. The total carrying capacity of 

the ski devices is around 10 000 people per hour. Considerable investment is going 

into Pamporovo resort, too. Persenk Hotel is being modernised. The focus is on the 



town of Smolyan region where expectations are to improve significantly the tourist 

infrastructure – construction of new ski lifts, etc. 

According to opinion of both experts and tourists, Albena is still the most harmoniously 

developed sea resort in this country. It is well built, with retained green areas 

and spaces between the hotels. The resort has been striving to start the season earlier 

and make it longer. The inflow of Bulgarian tourists has increased due to the 

various offers – “all inclusive”, “last minute”, etc. In mid-2005, Albena announced it 

was completing the construction of a small-aircraft airport at the town of Primorsko. 

The planned investment amounts to around BGN 1.2 mln. 

According to NSI data, the number of tourists in Sunny Beach resort last year has 

doubled compared to 2001. Season 2005 witnessed substantially enhanced material 

assets – over 42 000 beds in 145 hotels in the eastern part only. Active construction 

is going on in the western part. The adjacent settlements of Ravda and Saint Vlas 

have been developing with hectic pace, too, and have merged into Sunny Beach. 

Golden Sands resort has 32 000 beds currently, and experts forecast their number 

can reach 50 000 in near future. Investment in the specialised infrastructure on the 

Black Sea coast is a fact. Simultaneously, specific problems emerge, e.g. now around 

80% of the specialised infrastructure is concentrated in 20 municipalities that occupy 

just 9% of the country’s territory. 

The specialised infrastructure is being developed in the inner parts of Bulgaria, too. 

The tourism material assets are being gradually renovated in regions like Tryavna, 

Koprivshtitsa, Melnik, Troyan, Gabrovo, etc., thanks to the pro-active stance of some 

local authorities to attract funds under different programs and the establishment of 

public-private partnerships. 



6. ANALYSIS OF THE MARKET DEMAND 

6.1. GENERAL CONSUMPTION TRENDS 

The role of tourism in Bulgaria’s economic development continued to grow in 2004. 

The number of foreigners who visited Bulgaria in the year reached 6.982 million. 

Foreign tourist visits to Bulgaria (2000 – 2004) 

year 

Thousand people 

Previous year=100 2000=100 

Indexes 

2000 4 922 

2001 5 104 103.70 103.70 

2002 5 563 108.99 113.02 

2003 6 241 112.19 126.80 

2004 6 982 111.87 141.85 

The absolute growth is biggest in 2004, and the growth rate is fastest in 2003. 

Source: NSI 

Growth of the number of foreign tourist visits to Bulgaria (2001-2004) versus 

2000 – in thousand people 

2 500 

2 000 

2060 

1 500 

1319 

1 000 

500 

0 

182 

641 

2001 2002 2003 2004 

Source: NSI 



TThhee nnuumbbeerr oof f foorreei f iggnn ttrraannssi itt ttrraavveel leerrss tthhrroouugghh Buul lggaarri iaa iss i ccoonnssttaannttl lyy ddeeccrreeaassi inngg inn i 

tteerrmss oof f ppeerrcceennttaaggee sshhaarree. . 

. 

Number of transit travelers (2000 – 2004) in thousand people 

year 

number 

Share in the total number of foreign 

visits in Bulgaria, % 

2000 2 137 43 

2001 1 918 38 

2002 2 129 38 

2003 2 193 35 

2004 2 352 34 

Source: NSI 

In 2000, their number is 2 137 000 or 43 per cent of the total number of foreigners 

who visited Bulgaria. In 2004, the number of transit travelers was 2 352 000. Their 

share was down 9 points to 34 per cent compared with 2000. 

2005 Preliminary data 

A total of 4 837 150 foreign citizens (excluding transit travellers) visited Bulgaria in 

January–December 2005. These are ‘tourists’ according to the definition of the World 

Tourism Organization and the European Travel Commission. Their number increased 

by 4.5 percent compared with 2004. 

In December 2005, 251 275 tourists visited Bulgaria, down by 14 930 tourists or 5.6 

percent from December 2004. The decrease resulted chiefly from the drop in the 

number of tourists from Greece (12,085 tourists less, or by 15.1 percent), FYROM 

(13,105 tourists less, or by 23.9 percent) and Serbia and Montenegro (4,312 tourists 

less, or by 9.2 percent). 

The number of tourists that visited the country for rest and relaxation in January– 

December 2005 was 4 090 421 (up 2.0 percent from 2004). 

Tourist arrivals (2005) 

Border statistics (excluding children without own passports)** 

Countries Tourists 2005/2004 % 

Total 4 837 150 +4.48% 

1 Greece 665 894 -11.34% 

2 Germany 582 315 -2.43% 

3 FYROM* 581 139 -14.79% 

4 Serbia and Montenegro* 534 474 -10.53% 

5 United Kingdom 374 494 +36.11% 

6 Turkey 271 160 +36.73% 

7 Romania* 187 311 +46.78% 

8 Russia 175 295 +17.39% 

9 Czech Republic 126 666 +13.46% 

10 Poland 113 544 +4.37% 

11 Israel 103 523 +23.85% 

12 Sweden 101 332 +2.42% 

13 Slovakia 89 226 +7.69% 

14 Ukraine 83 746 +12.06% 

15 Finland 83 056 +39.35% 

16 France 74 019 +24.69% 



17 Denmark 72 094 +31.88% 

18 USA 60 405 +12.76% 

19 Italy 59 912 +13.79% 

20 Austria 57 909 +24.00% 

21 Netherlands 48 450 +47.63% 

22 Hungary 44 520 -0.54% 

23 Norway 39 764 +76.96% 

24 Belgium 32 583 -3.71% 

25 Ireland 29 176 +123.91% 

26 Moldova 22 837 +48.74% 

27 Switzerland 21 018 -8.27% 

28 Spain 18 510 +38.14% 

29 Belarus 17 120 +22.49% 

30 Cyprus 15 841 -8.51% 

31 Slovenia 12 841 -7.44% 

32 Japan 10818 +16.83% 

33 Croatia 10 570 +28.39% 

34 Philippines 9 132 +8.75% 

35 Canada 8 846 +19.52% 

36 Australia 8 075 +24.15% 

37 Lithuania 5 667 +57.11% 

38 Albania 5 650 -2.52% 

39 Syria 5 279 +9.27% 

40 Portugal 4 683 +38.84% 

41 South Korea 4 330 +3.12% 

42 China 4 013 -1.74% 

43 Lebanon 3 594 +6.14% 

44 Bosnia and Herzegovina 3 327 +3.68% 

45 Latvia 3 255 +29.32% 

46 Georgia 3 163 +16.63% 

47 Luxembourg 3 012 +2.97% 

48 India 2740 +17.90% 

49 Kazakhstan 2 534 +73.92% 

50 Iran 2 492 -5.18% 

* Incl. "Shuttle Traders" 

** (Tourist Arrivals at Frontier - as per classification of WTO-OMT and ETC-EU) 

Source: NSI 

The number of tourists from the EU to Bulgaria increased at a higher rate than the 

rest of the world. While the total number of foreign tourists to Bulgaria in January – 

December 2005 grew by 4.48 percent, the number of tourists from the EU member 

states increased by 5.65 percent, as tourists from the old EU-15 member states increased 

by 5.40 percent and from the 10 new ones – by 6.99 percent. The EU market 

continues to be the main market for Bulgaria’s tourist industry. 

Tourist Arrivals to Bulgaria from EU 

Year 2004* 2005* 

2005/2004 

% change 

Total number of tourists** 4 629 854 4 837 150 +4.48% 



Year 2004* 2005* 

2005/2004 

% change 

Total from EU 2 483 540 2 623 880 +5.65% 

Share of EU (%) 53.64% 54.24% +0.60 

EU-15 (before May 2004) 2 094 294 2 207 439 +5.40% 

Austria 46 700 57 909 +24.00% 

Belgium 33 837 32 583 -3.71% 

United Kingdom 275 138 374 494 +36.11% 

Germany 596 826 582 315 -2.43% 

Greece 751 027 665 894 -11.34% 

Denmark 54 666 72 094 +31.88% 

Spain 13 399 18 510 +38.14% 

Italy 52 653 59 912 +13.79% 

Ireland 13 030 29 176 +123.91% 

Luxembourg 2 925 3 012 +2.97% 

Netherlands 32 818 48 450 +47.63% 

Portugal 3 373 4 683 +38.84% 

Finland 59 604 83 056 +39.35% 

France 59 361 74 019 +24.69% 

Sweden 98 937 101 332 +2.42% 

EU – New member states 389 246 416 441 +6.99% 

Estonia 2 094 2 455 +17.24% 

Cyprus 17 315 15 841 -8.51% 

Latvia 2 517 3 255 +29.32% 

Lithuania 3 607 5 667 +57.11% 

Malta 1 797 2 426 +35.00% 

Poland 108 789 113 544 +4.37% 

Slovak Republic 82 855 89 226 +7.69% 

Slovenia 13 873 12 841 -7.44% 

Hungary 44 761 44 520 -0.54% 

Czech Republic 111 638 126 666 +13.46% 

* Excluding children without own passports 

** Excluding same-day (transit) visitors 

Source: NSI 

Tourist Arrivals to Bulgaria from Other Countries 

Year 2004* 2005* 

2005/2004 

% change 

Russian Federation 149324 175295 +17.39% 

Ukraine 74730 83746 +12.06% 

Serbia and Montenegro* 597356 534474 -10.53% 

FYROM* 682017 581139 -14.79% 

Romania* 127612 187311 +46.78% 

Turkey* 198322 271160 +36.73% 

USA 53569 60405 +12.76% 

Israel 83590 103523 +23.85% 

* Incl. "Shuttle Traders" 

** Business travels, visits of friends and relatives, others and transits are not included 

Source: NSI 



Principal international tourist markets of Bulgaria in 2005 

Despite the unstable development and the problems caused chiefly by the transport 

infrastructure partially destroyed by the disasters and floods and the effects of the 

unrestricted construction of accommodation facilities at the Black Sea coast, data 

show that the Bulgarian tourist industry has managed to overcome most of the problems 

and has preserved its passable growth rate. August and September brought 

back international demand for Bulgarian tourist services. October, November and 

December were slow on decrease in visits from some neighboring countries (Greece, 

FYROM, Serbia and Montenegro), which requires prompt marketing steps for rebound 

of travelling. Decline in the German market in the summer was mitigated to 

2.4 percent for the full year by the increase of 2.6 percent in October, 36.3 percent in 

November, and 9.7 percent in December. All other main markets as the UK, Russia, 

Ukraine, the Scandinavian countries, Turkey, Central Europe, the USA, etc. grew 

significantly. The total number of tourists rose 4.5 percent and revenues climbed 

about 8-9 percent for the full-year period. 

6.2. CONSUMER PROFILE 

Purpose of the visits 

Most of the foreigners who came to our country over the review period came as tourists 

or holiday-makers. Their number has been growing constantly. In 2003, they accounted 

for 87.3 per cent of the total number of visitors to Bulgaria (excluding transit 

travelers), versus 84.5 per cent in 2000. Some drop (by 0.7 points) down to 86.6 

per cent was observed in 2004. 

Structure of the visits (2000 – 2004), % 

year Tourism or holidays Guests Business Other 

2000 84.5 1.3 6.4 7.8 

2001 86.5 0.8 5.8 6.9 

2002 87.2 0.7 5.2 6.9 

2003 87.3 0.7 5.3 6.7 

2004 86.6 0.9 5.9 6.6 

Source: NSI 

The share of guests shrank almost in half by 2003. In 2004, however, it grew 0.2 

points up to 0.9 per cent. 

The same trend is observed in business visits, but their drop is not so dynamic – 

from 6.4 per cent in 2000 to 5.3 per cent in 2003. In 2004 they registered an increase 

of 0.6 points up to 5.9 per cent. 

Tourist and holiday visits 

Over the review period, the absolute and relative growth in the number of tourist visits 

was biggest in 2003, when it grew 18 per cent (or by 539 000 people) from 2002. 

Foreign tourist and holiday visits (2000 – 2004) 


Previous year=100 

Indexes 

year 

2000=100 



year 


Previous year=100 2000=100 

Indexes 

2000 2 354 

2001 2 756 117.08 117.08 

2002 2 993 108.60 127.15 

2003 3 532 118.01 150.04 

2004 4 010 113.53 170.35 

Source: NSI 

In 2004, as compared with 2003, the growth is also high – by 478 000 people or 14 

per cent. Compared with 2000, the increase reached 1 656 000 people or 1.7 times. 

Growth in the number of foreign tourist and holiday visits in Bulgaria (2001- 

2004) – in thousand people 

1 800 

1 600 

1 400 

1 200 

1 000 

800 

600 

400 

200 

0 

402 

639 

1 178 

1 656 

2001 2002 2003 2004 

Source: NSI 

Duration of tourist and holiday visits 

The average duration of tourist visits in hotels with bed capacity exceeding 30 beds 

per visitor is relatively short. Although tourist and holiday visits from the neighbouring 

countries such as Greece, FYROM, Serbia and Montenegro, and Romania are 

generally developing with a trend of slower increase, in 2004 their share continued to 

be quite large – 47 per cent. Visits by tourists from these countries are usually with 

short duration. 

Night stays by foreigners in hotels with bed capacity exceeding 30 beds (2000 

– 2004) 

2000 2001 2002 2003 2004 

Night stays – in thousands 5 101 6 118 6 985 8 987 10 303 

Average per tourist/holiday taker 

2.167 

– number of people 

2.220 2.334 2.544 2.569 

Source: NSI 

Gradual increase of the average number of night stays is observed. From 2 167 in 

2000, they reached 2 569 in 2004, registering an increase of 19 per cent. 

Tourists from Germany booked the biggest number of night stays in 2004 – about 41 

per cent. 

In 2003, visitors from the seven countries (Germany, Great Britain, Russia, Sweden, 

Finland, Denmark, Belgium) accounted for about 77 per cent. In 2004, the share of 

visitors from these countries shrank by about 3 points down to 74 per cent. 



The longest duration of night stays in 2003 and 2004 was registered by visitors from 

the following countries: 

♦ Germany – respectively 7.81 and 7.43 

♦ Belgium – respectively 7.37 and 7.10 

♦ Great Britain – respectively 6.61 and 5.90 

♦ Russia – respectively 5.89 and 5.89 

♦ Sweden – respectively 5.72 and 4.82 

♦ France – respectively 4.68 and 4.22 

♦ Austria – respectively 4.28 and 3.50 

The longer duration of night stays by visitors from the countries listed above is due 

to tourist visits in Bulgaria organized by tour operators. 

The shortest duration of night stays in 2003 and 2004 were registered by visitors 

from the following countries: 

♦ Greece – respectively 0.21 and 0.24 

♦ Serbia and Montenegro – respectively 0.23 and 0.26 

♦ FYROM – respectively 0.15 and 0.11 

♦ Romania – respectively 0.43 and 0.40 

The shorter visits by tourists from neighbouring countries have greater significance 

for retail mainly in the border regions. They have smaller impact on the development 

of local tourism industry. 

The number of foreigners who stayed in three-star hotels with bed capacity exceeding 

30 beds is also bigger in 2004. 

Night stays by foreigners by hotel categories – thousands 

2003 2004 Index 

Total 8 987 10 304 114.7 

1 and 2 stars 2 384 2 004 84.1 

3 stars 3 743 4 164 111.2 

4 stars 2 308 3 322 143.9 

5 stars and "special" 552 814 147.5 

Source: NSI 

Compared with 2003, the number of night stays in one- and two-star hotels is 

smaller by 380 000 or 16 per cent. The greatest absolute increase was registered by 

the number of night stays in four-star hotels – 1 014 000 or 11 per cent higher. 

The most rapid growth was registered by the number of night stays in five-star and 

“special” hotels – 262 000 or by 48 per cent. 

Some significant changes occurred in the structure of night stays by hotel categories, 

due to the modernization of the existing tourism base. In 2004, the biggest growth 

was registered in four-star, five-star and “special” hotels. This trend additionally contributed 

to the efficiency of international tourism. 



Night stays by foreigners by hotel categories (2003-2004), in % 

5-star and "special" 

6,1 

7,9 

4-star 

25,7 

32,2 

3-star 

41,6 

40,4 

1 and 2-star 

19,4 

26,5 

2004 2003 

0 5 10 15 20 25 30 35 40 45 

Source: NSI 

In 2004, the share of night stays in four-star hotels reached almost 1/3, growing by 

6.5 points. The share of night stays in five-star and “special” hotels was also bigger, 

increasing by 1.8 points. 

In 2004, the share of night stays in one- and two-star hotels was under 20 per cent, 

shrinking 7.1 points from 2003. The share of night stays in three-star hotels was 

about 40 per cent, going down by 1.2 points. 

The share of night stays by visitors from Germany is biggest in all hotel categories. 

a) 5-star and “special” hotels 

About 1/3 of the visitors who stayed in hotels of this category came from Germany. 

Visits by foreigners in 5-star and “special” hotels (2003-2004), by countries in 

% 

Country 2003 2004 

Germany 34.26 33.01 

Israel 15.93 10.69 

Great Britain 8.62 15.89 

USA 4.50 3.30 

Russia 4.25 5.37 

Greece 3.65 3.52 

Italy 2.64 2.52 

France 1.80 1.65 

Sweden 1.78 0.76 

Austria 1.67 1.67 

Turkey 1.31 1.11 

Switzerland 1.11 1.34 

Finland 1.09 0.99 

The Netherlands 1.07 1.19 

Norway 1.07 0.20 



In 2004, the most significant change which took place was the increase of the share 

of visitors from Great Britain (7.3 points). The share of visitors from Russia also grew 

by around 1 points. The share of visitors from Israel shrank by 5.2 points; from 

Germany – 1.3 points, USA – 1.2 points. 

b) 4-star hotels 

In this category, the share of visitors from Germany is biggest – about 50 per cent. 

Visits by foreigners in 4-star hotels (2003-2004), by counties in % 

Country 2003 2004 

Germany 50.42 48.71 


Russia 4.92 3.91 

Israel 4.66 4.14 

Belgium 2.97 2.48 

Greece 2.34 2.66 

Austria 2.24 1.71 

France 1.97 2.35 

Sweden 1.42 2.15 

Denmark 1.38 1.76 

USA 1.37 0.90 

Turkey 1.35 0.72 

Finland 1.24 1.30 

Switzerland 1.18 1.69 

The Netherlands 1.09 1.11 

Italy 1.08 1.17 

Source: NSI 

Compared with 2003, the share of visitors from Great Britain is bigger by about 2.7 

points. The shares of visitors from Germany and Russia shrank by respectively 1.7 

and 1 points. 

c) 3-star hotels 

The greatest number of visitors in three-star hotels again came from Germany, but 

their share is developing with a distinct trend of decrease. 

Visits by foreigners in 3-star hotels (2003-2004), by countries in % 

Country 2003 2004 

Germany 53.79 44.31 


Sweden 5.20 5.50 

Russia 4.66 5.53 

Belgium 3.94 2.73 

Finland 2.92 3.61 

France 2.67 2.42 

Denmark 2.18 2.20 

Norway 1.20 1.54 

Source: NSI 



Compared with 2003, the share of visitors from Great Britain grew by 4.7 points. The 

share of visitors from Russia, Finland and Norway, who stayed in hotels of this category, 

also grew. 

The share of visitors from Germany went down by 9.5 points - from 53.8 per cent in 

2003 to 44.3 per cent in 2004. 

d) 1- and 2-star hotels 

The share of visitors from Germany in this hotel category is smaller, registering a 

significant drop. 

Visits by foreigners in 1- and 2-star hotels (2003-2004), by countries in % 

Country 2003 2004 

Germany 31.16 23.35 

Russia 16.19 15.26 


Sweden 6.61 7.81 

Finland 4.10 3.70 

Serbia and Montenegro 3.67 4.36 

Denmark 3.65 4.75 

Czech Republic 2.88 3.11 

FYROM 2.68 1.48 

Poland 2.14 5.75 

Slovakia 2.13 2.77 

Ukraine 1.63 1.53 

Norway 1.38 1.71 

Source: NSI 

The share of visitors from Poland grew 3.6 points compared with 2003. The share of 

visitors from the United Kingdom, Sweden, Serbia and Montenegro, Denmark, the 

Slovak Republic and Norway also grew. 

The share of visitors from Germany was down 7.8 points – from 31.2 per cent to 23.4 

per cent in 2004. 



6.3. GEOGRAPHIC LOCATION OF MAIN MARKETS 

Tourist visits by countries 

Most of the foreigners who visited our country as tourists or holiday-makers came 

from EU member-states (Germany, Greece, Great Britain, Czech Republic, Poland), 

as well as from FYROM, Serbia and Montenegro, Russia, Romania. In 2000, the 

number of visitors from these countries was 1 868 000 people or 80 per cent of the 

total number of visitors. In the next years until 2003, their share was moving between 

80 and 89 per cent. In 2004, the number of visitors from these countries 

reached 3 179 000 people. Compared with 2000, their number was up by 1 311 000 

people or 70 per cent. 

Tourist and holiday visits (2000-2004) from the countries with the biggest 

relative share in the total number of visits – in thousand people 

2000 2001 2002 2003 2004 

Index 2000=100 

2001 2002 2003 2004 

Germany 260 374 480 537 565 143.8 184.6 206.5 217.3 

Greece 322 345 391 548 707 107.1 121.4 170.2 219.6 

Great Britain 52 69 111 159 259 132.7 213.5 305.8 498.1 

Czech Republic 29 37 48 78 102 127.6 165.5 269.0 351.7 

Poland 19 31 49 62 100 163.2 257.9 326.3 526.3 

FYROM 658 643 622 672 656 97.7 94.5 102.1 99.7 

Serbia and Montenegro 

218 359 535 892 577 164.7 245.4 409.2 264.7 

Russia 106 131 99 121 121 123.6 93.4 114.2 114.2 

Romania 204 227 93 77 92 111.3 45.6 37.7 45.1 

Source: NSI 

Over the review period, the highest growth rate was registered in the number of visits 

from Poland – 5.3 times, as well as Great Britain – 5 times. 

In the absolute growth (2004 versus 2000), Greece occupies the largest share. 

Growth in the number of tourist and holiday visits (2000-2004) by countries 

country Thousand people Share, % 

Total 1656 100 

Incl. Greece 385 23.2 

Serbia and Montenegro 359 21.7 

Germany 305 18.4 

Great Britain 207 12.5 

Poland 81 4.9 

Czech Republic 73 4.4 

Russia 15 0.9 

Source: NSI 

The number of visitors from Romania in 2004 dropped by 112 000 people, as compared 

with 2000, and from FYROM – by 2 000. 



Significant changes occurred in the shares of the countries in the total number of 

tourist and holiday visits to Bulgaria. The share of the nine countries with biggest 

relative share was 79.4 per cent in 2000, and 79.3 per cent in 2004. The biggest increase 

was registered in the number of visitors from Great Britain – 4.3 points, Serbia 

and Montenegro – 5.1 points, Greece – 3.9 points, Germany – 3.1 points. 

Share of the countries with biggest number of tourist and holiday visits (2000- 

2004), % 

Country 2000 2001 2002 2003 2004 

Total 2354 2756 2993 3532 4010 

Germany 11.0 13.6 16.0 15.2 14.1 

Greece 13.7 12.5 13.1 15.5 17.6 

Great Britain 2.2 2.5 3.7 4.5 6.5 

Czech Republic 1.2 1.3 1.6 2.2 2.5 

Poland 0.8 1.1 1.6 1.8 2.5 

FYROM 28.0 23.3 20.8 19.0 16.4 

Serbia and Montenegro 9.3 13.0 17.9 25.3 14.4 

Russia 4.5 4.8 3.3 3.4 3.0 

Romania 8.7 8.2 3.1 2.2 2.3 

Source: NSI 

The share of visits from FYROM is smaller by 11.6 points, and from Romania – by 

6.4 points. Despite the absolute increase in the number of visitors from Russia, their 

share in 2004 as compared with 2000, is 1.5 points smaller. 

Share of the night stays by foreigners (2003-2004), by countries 

Germany 

Great Britain 

Russia 

Sweden 

Finland 

Denmark 

Belgium 

11.50 

14.84 

7.80 

6.89 

4.40 

4.49 

2.70 

2.68 

2.30 

2.42 

2.60 

2.07 

45.60 

40.76 

2003 20040 5 10 15 20 25 30 35 40 45 50 

Source: NSI 

The share of visitors from Germany in 2004 is smaller by 4.8 points, and from Russia 

– by 0.9 points. The share of visitors from Great Britain is larger by 3.3 points, 

and the share of countries with smaller share is bigger by around 2 points. 



6.4. PERCEPTION OF SPANISH PRODUCTS 

Spanish hotel chain Barcelo Hotels & Resorts will be managing the new 4-star city 

hotel that opened in November 2005. Investor is the Bulgarian company Festa Holding 

with BGN 14 mln. The seven-floor building has 120 rooms, 4 suites, 2 restaurants, 

3 bars, etc. According to Jose Palou, Barcelo’s representative and its executive 

manager for Europe, the hotel chain has already held talks with investors who 

will build tourism sites in Sunny Beach. 

TThhee Buul lggaarri iaann ttoouurri issm sseeccttoorr hhaass rreeaacctteedd ppoossi itti ivveel lyy ttoo tthhee eennttrraannccee oof f aa nneew ppl laayyeerr 

ssuucchh aass Baarrcceel loo, , aanndd hhaass weel lccoomeedd tthhee inntteerreesstt i oof f bbi igg inntteerrnnaatti i ioonnaal l cchhaai innss aanndd ttoouurr 

ooppeerraattoorrss inn i ggeenneerraal l. . TThhee bbi igg ccoomppaanni ieess aarree eexxppeecctteedd ttoo aattttrraacctt moorree vvi issi ittoorrss aal lssoo bbee-- 

ccaauussee tthheei irr nnaameess gguuaarraanntteeee tthhee eexxtteenntt aanndd tthhee qquuaal littyy oof f tthhee sseerrvvi icceess tthheeyy oof ffeerr. 

. 

TThheerree aarree vveerryy ggoooodd rreessuul lttss frroom f tthhee ooppeerraatti ioonn oof f ootthheerr ttwoo SSppaanni isshh hhootteel l cchhaai innss –– 

RIU aanndd Ibbeerroossttaarr. I . TThheessee ccoomppaanni ieess hhaavvee maannaaggeedd ttoo pprroovvi iddee vveerryy ggoooodd pprroodduuccttss oonn 

tthhee Buul lggaarri iaann maarrkkeett. . TThheeyy aal lssoo hhaavvee bbi igg nnuumbbeerr oof f ttrraaddi itti ioonnaal l ccl lieennttss whhoo fuul f llyy rreel lyy 

oonn tthhee qquuaal littyy oof f tthhee pprroovvi iddeedd sseerrvvi icceess. . 

In Bulgaria’s leading business print media (Dnevnik Daily, 27 January 2007), the 

Spanish tourism exchange is portrayed as one of the most significant international 

events in the sector, and currently is being the second largest, outpacing the London 

exchange. At the exhibition in Spain in January 2006, over 130 countries were presented. 

The Bulgarian participants were nine, among them Bulgaria Air, Sofia Municipality, 

and tour operators Aerotravel, DM Travel, Alexander Tours, Gloria Tours 

and others. 

At the exhibition, the then interim head of Bulgaria’s State Tourism Agency Valeri 

Petrov announced that the Spanish tourists expected to visit this country in 2006 

would be twice the number in 2005. The main contribution to the growth of Spanish 

tourists in Bulgaria is that of Bulgaria Air’s new programs. The air carrier intends to 

increase its direct flights to Bulgaria planning the following destinations: Madrid – 

Sofia; Madrid – Burgas; Barcelona – Sofia; Malaga – Sofia; and Palma de Mallorca – 

Sofia. The air carrier plans to start these flights in June 2006. The Spanish tourists 

will stay mainly in Sunny Beach and the town of Nessebur. 

Another program is planned to take the guests from Spain on country tours. They 

will include visits to cultural monuments, incl. those under UNESCO protection, 

monasteries, etc. Another option is organizing visits around various traditional festivals 

such as the picking of roses. There is also interest in corporate incentive trips 

which companies organize for their employees. 



7. OPPORTUNITIES AND RISKS FOR SPAN- 

ISH COMPANIES 

The expected accession of Bulgaria to EU, scheduled for 1 January 2007, will entail 

a stream of EU funds to the country. This development presents an opportunity for 

both Bulgarian and Spanish companies to jointly participate in tenders and projects 

supported by EU funding. 

In February 2006, Finance Minister Plamen Oresharski announced that it would be 

a big success if Bulgaria manages to implement 35% of EU funds in 2007 during a 

discussion of the National Development Plan 2007 - 2013. Within these seven years 

Bulgaria will be implementing over EUR 11 bln from European funds. The money 

from the Cohesion Fund which is around EUR 2.8 bln will be evenly distributed between 

the Environment and Transport programs. The percentage share will be determined 

by Bulgaria. The EU structural funds are the fund for regional development 

and the social one. Around EUR 4.5 bln are expected to come from these funds. The 

most money is allocated to agriculture and rural areas because they will be financed 

by the structural funds and by the specific funds – the agricultural and fishing ones. 

The Competitiveness program is geared to the development of small and medium enterprises. 

The personnel, who will be preparing the projects to apply for the other 

programs, will be trained with funds from the Administrative Capacity program. 

Distribution of EU funds (the expected budget is EUR 11 bln for 2007 – 2013, 

and without the money for agriculture and fishing) 

SMEs Competitiveness 22.6% 

Human resources (education, training) 22.6% 

Transport (airports, railroad freight, road rehabilitation, ports) 8.3% 

Environment 8.3% 

Regional development (municipalities, tourism) 34.6% 

Administrative capacity 3.5% 

Source: Finance Ministry 



Below is a brief SWOT analysis of Bulgaria’s tourism. Certainly, the perceived 

strengths present opportunities for both domestic and incoming tourism, incl. from 

Spain, and Spanish tour operators and tour agents, respectively. More interestingly, 

most of the weaknesses present specific investment opportunities, e.g. Spanish companies 

could participate in projects to improve the infrastructure, quality of facilities, 

etc. 

Among the opportunities, there is potential for high ROI as the Bulgarian tourism 

market is far from (over)saturation. Forming joint ventures with local companies or 

establishing other forms of co-operation may allow Spanish companies to apply for 

some forms of EU funds. 

Money from the grey economy may pose serious competition to foreign companies. 

Also, the peculiarities of the local bureaucracy / administration still allow for corruption 

practices, e.g. in issuing licenses. 

Strengths 

Weaknesses 

♦ Picturesque scenery; 

♦ Poor infrastructure; 

♦ Rich cultural and historical heritage; ♦ Low quality of many hotels and other 

♦ Generator of employment; 

facilities; 

♦ Dominant and increasing share of 

private ownership; 

♦ Scanty diversity of product and services; 

♦ Tax and other incentives. 

♦ Low qualification of the labor force; 

♦ Lack of appropriate marketing policy; 

♦ Poor architectural and engineering 

solutions; 

♦ Deterioration of ecological balance 

(pollution, neglect for the environment 

when developing tourist facilities). 

Opportunities 

Threats 

♦ Potential for high return on investment 

in short terms; 

♦ Grey economy accounts for most of 

the investments; 

♦ Bulgaria’s forthcoming EU membership 

and implementation of EU best 

practices; 

♦ Corruption in licensing; 

♦ Opportunities for financing from 

structural, pre-accession and cohesion 

funds directly related to infrastructure 

development. 

Further below, there is a short description of major Bulgarian resorts that appear to 

provide investment opportunities. 

The town of Bansko in Pirin Mountain 

Despite the progress made, there are some problems related to the infrastructure – 

sewerage and water supply systems, the road and street network. In 2006, the local 

municipality is ready to invest BGN 10 mln in infrastructure improvement but this is 

just 1/5 of the needed amount. 



The realisation of the project to modernise the Borovets resort in Rila Mountain was 

scheduled to start in January 2006. The project’s total value is BGN 300 mln. The 

project has three phases – upper, middle and lower Borovets – and the first one is 

expected to be completed in 2007. In the upper part, new ski runs and ski devices 

will be built, together with hotels and small family houses. 

Pamporovo resort in Rhodopi Mouintain. 

Bulgarian companies in the area are trying to attract investment from Western 

Europe and Russia. The focus is on the town of Smolyan region where expectations 

are to improve significantly the tourist infrastructure – construction of new ski lifts, 

etc. 

Golden Sands resort 

To successfully develop the resort, it is necessary to improve the transport infrastructure, 

i.e. the panoramic road and the Varna airport. The insufficient capacity of 

the water treatment station is also a problem. There are no specific plans for a new 

station, and the capacity of the present one has been exceeded long ago. 

North of Varna 

Several settlements north of Varna offer some good and still under-utilised opportunities. 

In the next two years, new hotels with around 15 000 beds are expected to be 

built in Kranevo. Prior to that, it is necessary to rehabilitate and expand the existing 

infrastructure. Kavarna also looms as a town with good investment opportunities 

and development prospects, incl. As a cultural hub, provided the moderate pace of 

construction prevails. Another attractive area could become Shkorpilovtsi. In summer 

2005, the municipal authorities announced an ambitious plan to build a resort 

area with 25 000 - 30 000 beds. There are thermal springs around, which may allow 

for a whole-year season, incl. Spa tourism. There are plans to build a yacht port and 

a golf course, too. 

Sunny Beach resort 

There are some serious problems stemming from insufficient carrying capacity of the 

resort’s overall infrastructure - it is necessary to build a water treatment station, 

sewerage and water supply installation, electricity networks and roads. At the moment, 

Sunny Beach is exclusively a summer resort and does not have the infrastructure 

for year-round tourism like conference rooms, parking lots and indoor swimming 

pools. There is also no housing capacity for the service staff that a year-round 

operation as a tourist destination would require. The increase in the bed capacity of 

the resort has far outstripped that of tourist visits. The number of hotel beds has 

risen tenfold in the past 8 years while that of holiday-makers is up only 50%. 

South of Burgas 

More often, investors look to the areas south of the city of Burgas. In mid-term perspective, 

the resorts there will become more attractive. Currently, low construction 

prevails there, together with more greenery. Settlements like Tsarevo, Sozopol, Primorsko 

have the potential and offer not only new construction but also various cultural, 

folk and musical events. 



Spa centers 

In recent years, there is some evidence of a shift in the investors’ interest from seaside 

and ski resorts towards spa centres, esp. those with mineral springs that have 

healing properties. For example, the newly built spa complex in Katarino (near the 

town of Raglog, in the area between Rila and Pirin mountains) was awarded “Best 

vacation complex” for 2005. 



BIBLIOGRAPHY 

1. Official data of the National Statistical Institute (NSI). 

2. Official data of Ministry of Economy & Energy. 

3. Official data of Bulgarian National Bank (BNB). 

4. Official data of Bulgarian Industrial Association (BIA). 

5. The Bulgarian Enterprises Information System (BEIS) maintained by BIC Capital 

Market Ltd. (http://www.bic.bia-bg.com). 

6. Deloitte Investment Marketing Report, 2005. Summary. 

7. European Commission 2005 Monitoring Report 

8. Center for Economic Development. Bulgaria’s Economy Report, October 2005. 

9. Agency for Economic Analysis and Forecasting (www.aeaf.minfin.bg). National 

Development Plan 2007 – 2013, December 2005 Draft. 

10. Dnevnik Daily (April 2005 – January 2006) 

11. Capital Weekly (April 2005 – January 2006) 



ANNEXES 

LEGISLATIVE FRAMEWORK IN THE TOURISM AREA: 

• Tourism Act; 

• Ordinance for Licensing of Tourism Activities; 

• Ordinance for Classification of Tourist Objects. 

GOVERNMENT ORGANIZATIONS ON THE INTERNET 

Council of Ministers 

Ministry of Economy & Energy 

Ministry of Culture 

Ministry of Environment and Waters 

Ministry of Regional Development and Public 

Works 

www.government.bg 

www.mi.government.bg 

www.mc.government.bg 

www.moew.government.bg 

www.mrrb.bg 

NON-GOVERNMENTAL ORGANIZATIONS ON THE INTERNET 

Bulgarian Tourist Chamber 

Bulgarian Tourist Union 

Bulgarian Hotels and Restaurants Association /BHRA/ 

Bulgarian Association of Travel Agents 

“Mountains and People” Association 

Bulgarian Association for Alternative Tourism 

Bulgarian Association for Cultural, Ecological and Rural 

Tourism 

Bulgarian Association of Spa Tourism 

Bulgarian Convention & Visitors Bureau 

www.btch.org/index.ht 

m 

www.btsbg.org 

www.bhra-bg.org 

www.batabg.org 

www.planini.com 

www.alternativetourism.org 

www.cometobulgaria.or 

g 

www.bab-bg.org 

www.bcvb.bg 



TOURISM EXPOS IN BULGARIA: 

Vacation & Spa Expo 2006 - Sofia February 2006 

Organized by: Touristreklama 

www.holidayfair-sofia.com 

Tourism & Leisure Fair - Varna March 2006 & November 2006 

Organized by: Varna Tourism Chamber, 

Tourexpo Varna EOOD 

http://www.tourexpo.bg 

Your Vacation - Burgas April 2006 

Organized by: Burgas Regional Tourism 

Association 

e-mail: brta@abv.bg 

Regional Tourist Exchange - Smolyan October 2006 

Organized by: Regional Tourist Association 

“Rhodopi” 

e-mail: rhodopes_as@rodopibg.com 

Contact Exchange – Gabrovo October 2006 

Organized by: Regional Tourist Association 

“Stara Planina” 

www.staraplanina.org 

National Exchange on Cultural Tourism 

– Veliko Turnovo 

April 2006 

Organized by: BHRA, Tzarevgrad – 

Turnov EOOD, Veliko Turnovo municipality 

e-mail: tic_vt@mobikom.com 

TOP 10 HOTEL COMPANIES 2004 

Company 

1 Albena (Albena) www.albena.bg 

2 Golden Sands (Varna) www.goldensands.bg 

3 Sunny Beach (Sunny Beach) www.sunny-beach.com 

4 Grand-hotel Varna (Varna) www.saintelias.bg 

5 Sofia Hotel Balkan (Sheraton) (Sofia) www.luxurycollection.com/sofia 

6 Pamporovo (Smolyan) www.travel- 

7 Sunny Day (Varna) www.travel-bulgaria/sunnyday 

8 Riviera (Varna) www.rivierabulgaria.com 

9 Rodina Tourist (Sofia) Sofia 1000, 8 Genral Totleben St. 

10 Rila-Borovetz (Borovetz) www.balkantourist.bg 



MAIN TOUR OPERATORS 

Albena AD 

Balkan Holidays Services OOD 

Balkantourist AD 

Bulgaria VIP Travel OOD 

Vegena OOD 

DM Travel OOD 

Odiseya In OOD 

Golden Sands AD 

Sunny Beach AD 

Pamporovo AD 

Albena 9620, Balchik municipality 

Sofia 1000, 5-B Triaditza St. 

Sofia 1000, 4 Tsar Osvoboditel Blvd. 

Sofia 1057, 36 D. Tzankov Blvd. 

Sofia 1463, 62A Vitosha Blvd. 

Sofia 1000, 24 A. Stamboliiski Blvd. 

Sofia 1000, 20 A. Stamboliiski Blvd. 

Varna 9007, Golden Sands resort 

Sunny Beach 8240, Nessebar municipality 

Chepelare 4870, Pamporovo resort

Informes Sectoriales OP - Icex

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