New year, new budget and new problems
Bulgaria's Finance Ministry has unveiled a 2025 draft budget targeting a deficit of up to 3% of GDP, featuring sharp increases in public sector wages, far outpacing inflation, paired with overly optimistic revenue projections based on uncertain measures.
Experts warn that the revenue risks could destabilize state finances, jeopardizing Bulgaria's bid to join the eurozone. Proposed one-off revenue measures create a significant gap for 2026, potentially leading to increased social security contributions-3 percentage points in 2025 and an additional 2 points in 2026-burdening businesses and workers.
The budget reflects the fallout from years of political instability, populist spending, and unfulfilled reforms, pushing state redistribution to an unprecedented 46% of GDP in 2025. If adopted, it risks unsustainable deficits and rising debt, with long-term implications for the country's financial health.
No transit for delinquent Gazprom
Bulgaria's interim energy minister, Vladimir Malinov, announced that Bulgartransgaz might halt Gazprom's gas transit through the TurkStream pipeline to Serbia if payments continue to involve the U.S.-sanctioned Gazprombank.
A solution to the issue must be reached by December 20, but Gazprom Export has yet to provide a proposal. Malinov emphasized that gas transit would not proceed if payments for December's volumes are not settled, stressing that Bulgartransgaz will strictly adhere to its contractual obligations. The situation underscores the ongoing tension surrounding energy trade and compliance with international sanctions.
Real estate VAT changes
Under new amendments to Bulgaria's VAT Act, individuals selling regulated plots (UPIs), granting construction rights, or selling properties in new buildings (up to five years after use approval) may need to register for VAT, regardless of turnover. Sellers will owe VAT on transactions but cannot claim a tax credit. The law aims to address VAT evasion in real estate by ensuring individuals selling even a single building plot or granting construction rights are subject to VAT registration.
Tax consultants emphasize the importance of clarifying who qualifies as a "taxable person," noting this could impact heirs selling inherited plots or incidental transactions. The changes align with EU anti-fraud goals, closing loopholes where individuals bypass VAT by structuring sales as private transactions.
New year, new budget and new problems
Bulgaria's Finance Ministry has unveiled a 2025 draft budget targeting a deficit of up to 3% of GDP, featuring sharp increases in public sector wages, far outpacing inflation, paired with overly optimistic revenue projections based on uncertain measures.
