Bloomberg News

Greek, Romanian Companies Move to Bulgarian Tax Haven

June 28, 2012

Greek and Romanian companies that registered in Bulgaria rose last year as executives sought to take advantage of low taxes and a stable currency in the neighboring Balkan country.

The number of Greek companies paying taxes in Bulgaria rose 75 percent to 3,781 from 2,199 in 2010, the National Revenue Agency in Sofia said in an e-mailed statement today. Romanian companies in Bulgaria increased 50 percent to 401 from 272 in 2010, according the agency.

Bulgaria’s corporate and personal income tax rates are at 10 percent, the lowest in the European Union. Government debt is 16 percent of gross domestic product this year, the second lowest in the 27-nation bloc after Estonia, compared with 161 percent for Greece and 33 percent of GDP for Romania, according to the European Commission.

“Fully-owned Greek and Romanian companies have shown an increased interest in Bulgaria because of lower tax and obligatory social security payments, as well as the country’s stable economy in the past few years,” the Revenue Agency said.

The European debt crisis is bringing economic growth to a standstill and weakening local currencies. Greece’s second election this year on June 17 produced a coalition government that seeks to redraw the terms of a 130 billion-euro ($161- billion) rescue package with the European Union and the International Monetary Fund.

Romanian Bickering

Political bickering between Romanian Prime Minister Victor Ponta and President Traian Basescu prompted the leu to fall to an all-time low against the euro this month in the country which changed governments twice this year.

Bulgaria, which survived the crisis without an international bailout, has its currency, the lev, pegged to the euro for more than a decade at the rate of 1.9985.

Greek companies that operate in Bulgaria include Fourlis Holdings SA, which holds the IKEA franchise for the region, and builders Ellaktor SA (ELLAKTOR) and Terna SA. Jumbo SA, Greece’s biggest toy retailer, opened four stores in Bulgaria. Romanian companies in Bulgaria include furniture retailer Mobexpert Srl.

Most of the Greek companies are registered in the southern city of Blagoevgrad, while most of the Romanian companies are in the Danube River port of Rousse, in northern Bulgaria.

Bulgaria, the EU’s poorest country as measured by per- capita GDP, ranks 59th among 183 economies on the Ease of Doing Business list compiled by the World Bank and the International Finance Corp., slipping eight places from last year. Greece moved up nine places to 100th, while Romania slid to 72nd from 65th.

To contact the reporter on this story: Elizabeth Konstantinova in Sofia at ekonstantino@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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