Bulgarian Parliament voted on January 11 to accept the veto imposed last month by President Rossen Plevneliev on certain provisions of the Investment Promotion Act affecting residence and citizenship. The veto was accepted earlier this week by Parliament’s economic affairs committee.
Under Bulgarian law, after a presidential veto, Parliament is required to vote on the law again – should it pass with an absolute majority (121 MPs out of 240 in Bulgarian Parliament), the veto is overturned and the president has to sign the bill into law. If the law is rejected, the vetoed provisions have to be redrafted.
At the time, Plevneliev objected to the changes to the rules for granting permanent residence and citizenship, saying that they contained contradictions and set requirements for obtaining permanent residence through investment that were incomparably high compared to other European Union countries.
The new rules envisioned permanent residence being granted to individual who had invested at least four million leva in a Bulgarian company, as well as opening and maintaining, for the duration of their resident status, at least 50 jobs.
However, after residing in Bulgaria for a year and having invested at least one million leva in a Bulgarian company, third-country nationals (EU citizens are exempt from residence requirements under freedom of movement clauses in EU treaties) could apply for Bulgarian citizenship, according to another of the law’s provisions vetoed by Plevneliev.
Earlier this week, Finance Minister Simeon Dyankov proposed that the investment threshold for permanent residence (for a period of five years) be lowered to 500 000 leva, with the option for third-party nationals to apply for Bulgarian citizenship after that five-year period.
Plevneliev’s veto did not touch on the other provisions of the bill that stirred controversy in Parliament, namely incentives given to creative industries – or as the bill put it, companies creating “non-material assets representing items of intellectual copyright” (it was interpreted mainly as a boost to the film industry, but under that vague definition, other creative industries could potentially apply for state funding).
The law did not stipulate what shape those incentives will take – this is to be clarified in regulations that would be drafted jointly by the finance and culture ministries. Companies will be eligible to receive state aid if they spend more than 400 000 leva in Bulgaria.
The biggest boost given investors, however, and the main departure from the previous practice, is the provision that will offer partial reimbursements of social security payments, for a period of up to two years, for new employees hired by new investors.
The bill also allows municipal mayors to issue certificates for B class investments and to come up with other incentives. This measure is in line with the policy of Bulgaria’s current centre-right government to decentralise the country’s administration, including by increasing the powers of municipalities.
Currently, investment in the acquisition of assets to the value of at least 20 million leva means a Class A investment certificate and 10 million leva means a Class B certificate. These thresholds are lowered in cases where investments are made in areas where unemployment is high.
A new criterion for certification of an investment is created by the proposed bill, in the services sector – especially in regard to outsourcing – where the amount of the investment is not particularly high but the number of jobs created is significant.
(Bulgarian Parliament Photo: Clive Leviev-Sawyer)