July 2025 – An important regulatory development concerning foreign direct investments ("FDI") in Bulgaria is now in place. As of 22 July 2025, the Bulgarian FDI regime became fully applicable. With the publication and entry into effect of the final implementing act - the amendments to the Regulations on the Application of the Investments Promotion Act - the transitional exemption for filings under the Investments Promotion Act ("IPA") no longer applies.
All transactions that fall within the scope of the FDI regime and that commenced after the entry into force of the IPA in February 2024 but were not completed before 22 July 2025 must now be notified and obtain authorisation before being implemented.
While the current news is the activation of the new FDI regime, the deeper story is its broad scope and uncertainty.
Who is subject to the regime?
A foreign investor under Bulgarian law is a broad concept. It includes:
- non-EU entities/nationals;
- EU-seated entities controlled by non-EU entities/nationals;
- investors making investments that by virtue of a contract or internal rules are influenced directly or indirectly by a non-EU entity/national;
- investors making investments on their own name but to the account of a non-EU entity/national.
What is foreign direct investment?
The definition of FDI used by the IPA is also broad. It extends beyond the establishment of a new company or the effective participation in the management or control of a company and includes the expansion of an existing investment.
What economic activities are relevant for FDI screening?
Unlike certain other regimes, Bulgarian law does not list specific economic sectors for FDI. Instead, it refers to the broad categories under Art. 4 (1) of the FDI Regulation (e.g., critical infrastructure, critical technologies, supply of critical inputs, access to sensitive information, the freedom and pluralism of the media, etc.), which are not tied to specific economic activities or transaction types. Such a broad approach results in uncertainty regarding the potential triggers for screening and makes it harder for businesses to assess if an investment falls under scrutiny.
What are the thresholds?
The thresholds under Bulgarian law are rather low:
- acquisition of 10% of a company's capital or an investment value exceeding EUR 2 million;
- acquisition of 10% of the capital of a company carrying out high-tech activities; or
- new investment exceeding the threshold of EUR 2 million.
Exceptional cases and ex officio screening
Bulgarian law provides for mandatory screening scenarios for certain high-risk investors as well as for ex officio screening. Such cases include:
- FDI made by investors from Russia or Belarus;
- FDI of investors that have a non-EU state as a shareholder or that have been provided with significant financing by a non-EU state; and
- ex officio screening, following a proposal by a member of the FDI authority with competence in the relevant sector or where the FDI authority has received an opinion from the European Commission or a notification from an EU Member State;
In addition, Bulgarian law leaves the option for potential ex-post screening of FDI that has been commenced or made after entry into force of the law.
What are the steps for obtaining authorisation?
As of today, the organisational framework of the Bulgarian FDI screening process is in place. The authority responsible for carrying out the screening is the Interinstitutional FDI Screening Council, with applications to be submitted through the Bulgarian Investment Agency. The persons to be designated as members of the Interinstitutional FDI Screening Council have yet to be appointed. However, the IPA does not provide for a statutory rule that would further delay the obligation of foreign investors to obtain authorisation if the Interinstitutional FDI Screening Council is not functioning.
The process ends with one of the following outcomes:
- approval of the investment and issuance of an FDI permit;
- rejection of the application, which effectively prohibits the transaction; or
- in cases where concerns are raised, the investor will be notified and invited to negotiate commitments. If those negotiations result in agreement, a conditional FDI permit will be issued. If no agreement is reached, the application will be rejected.
The statutory review period is 45 days, with the possibility for a 30-day extension.
Bulgaria's FDI regime is now live, but the combination of its broad scope and unclear provisions creates compliance challenges. Until practice develops and the institutions involved start functioning smoothly, caution is advised.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
