Unlocking Bulgaria’s Investment Potential: Key Reforms and Incentives for Promoting Strategic Investment Projects

With the recent changes to the Investment Promotion Act, Bulgaria is taking a bold step forward to attract more investments and to further position the country as a prime destination for investors seeking efficiency, support, and long-term growth.

Key Incentives to Facilitate Investment and Growth

Focused on boosting investments in high value-added manufacturing and knowledge-based services, as well as creating new high-productivity jobs, the certification procedure aims to foster a more favorable business environment, enhance competitiveness, and support investors in the successful implementation of their projects.

Investors who direct their initial investments to Bulgaria can benefit from a range of incentive measures after successfully applying for certification and obtaining an investment certificate. To determine the type of certificate—Class “A,” “B,” or Priority Investment Project—and the scope of the incentive measures, the InvestBulgaria Agency (IBA) evaluates a combination of key factors relevant to the investment. Among the most important are the amount invested in long-term tangible and intangible assets and/or the number of created jobs within the project. The investment is also assessed based on criteria such as the economic sector, the region where it is implemented, and the size of the investor’s company. The economic sector must be part of legally predefined eligible activities, with priority given to high-tech manufacturing industries such as automotive industry, manufacturing of computer, electronic and optical products, pharmaceutical products, electrical products and equipment, machinery, critical raw materials as well as knowledge-intensive services sectors such as IT, financial services, healthcare, and others.

Incentives include both non-financial support and direct and indirect financial aid:

• Direct financial support includes full reimbursement of social and health insurance contributions for newly hired employees for up to two years, depending on investment implementation location.
• Cash grants for priority projects in the manufacturing sector.
• Funding for training of recently hired employees in priority sectors.
• Indirect financial support through funding infrastructure development, typically covering construction or repair of public road infrastructure leading to the investment site.
• Non-financial incentives include the opportunity to acquire land or limited real estate rights from state or municipal ownership without a public tender.
• Individual administrative support, enabling shorter processing times for permits, zoning plans, and other necessary administrative procedures.

Investment Certification (2008–2024): 359 Projects, €7.7 Billion investments, 48,000+ Jobs

For the period 2008-2024, a total of 359 investment projects, valued at €7.7 billion (15,1 billion BGN), have successfully completed the certification process outlined in the Investment Promotion Act (IPA). As a result of these projects, more than 48,000 jobs have been created.

Source: Ministry of Innovation and Growth

Despite the positive outcomes achieved through the implementation of the investment promotion procedure, various challenges have emerged over the years in the field of investment promotion in Bulgaria. These challenges, including administrative burdens, procedural complexity, and the need for greater alignment with modern economic priorities, have highlighted the necessity for legislative adjustments. As a result, amendments to the Investment Promotion Act have been adopted.

Addressing Challenges and Enhancing Investment Promotion in Bulgaria

The primary objective of the adopted changes is to streamline and simplify the certification process, making it more accessible and efficient for investors. Additionally, the amendments seek to enhance the institutional support mechanisms available to investors throughout the lifecycle of their projects. By improving the legal and administrative framework, the reforms aim to foster a more predictable and investor-friendly environment, better aligned with the strategic goal of attracting sustainable, high value-added investments and promoting economic growth.

Cash grants for key investments in high-tech and knowledge-based sectors

The most significant reform is the explicit introduction of provision of cash grants for priority investment projects not only in the manufacturing sector, but also in the fields of education and R&D. Until now, this option was available solely for priority projects in the manufacturing industry.

Investors implementing priority investment projects in Bulgaria's manufacturing sector may receive cash grant of up to 60% of the investment in tanglible/intangible assets, depending on the region of the implementation of the investment. For projects in education and R&D sectors, the maximum csh grant is 50%, regardless of location.

The Methodology for determining the cash grant introduces transparent, multi-criteria scoring to rank project proposals based on:

1. Regional Economic Development – prioritizing lagging regions.
2. Job Creation & Quality – emphasizing both quantity and value of jobs.
3. Economic Added Value – favoring high-productivity sectors.
4. Fiscal Impact – encouraging high-return investments.
5. Export Orientation – rewarding globally competitive enterprises.
6. Technological Advancement – prioritizing industries with medium to high technological intensity.
7. Global Value Chain Integration – Promoting know-how and technology transfer.
8. New Investment Activity – Supporting greenfield over expansion projects.
9. Green Transition Contribution – Prioritizing investments in RES, energy efficiency, and ESG.

Placing a stronger focus on priority investment projects in high-tech and knowledge-based sectors (automotive industry, manufacturing of computer, electronic and optical products, pharmaceutical products, electrical products and equipment, machinery, critical raw materials IT, financial services, R&D, education) will stimulate the specialization of the Bulgarian economy in areas with high added value and strong development potential. This is expected to lead to the creation of competitive, highly skilled, and well-paid jobs, as well as to long-term and sustainable employment.

Expanded Definition of Priority Investment Projects

A separate provision has been introduced to refine the scope of priority investment projects. Priority investment projects may now also include the development of industrial zones or industrial parks, registered in the Industrial Parks Registry, with the necessary technical infrastructure to attract investments, under conditions and procedures defined in the implementing regulations of the law. They may also involve the construction of technology parks with the required infrastructure to attract investment in research and development, education, and/or information technologies—including innovation activities aimed at technological modernization of products and production processes—again, as governed by the implementing regulations. Additionally, the scope includes the construction or expansion of manufacturing and logistics facilities with the necessary infrastructure when these are strategic assets of national security importance.

Flexibility in Industrial Zone Management and Development

In addition, provisions have been included to address practical issues related to the management and development of industrial zones and parks. Specifically, there is now an option to suspend and/or extend the deadline — which serves as grounds for contract termination with the investor — for the period required to finalize the detailed spatial development plan (DSP), provided the delay is not due to the investor’s fault. Correspondingly, the investor is required to provide documentary evidence confirming the initiation of the DSP preparation process until the approval order for the plan comes into effect.

Simplified Land Purchase Criteria to Encourage Investment

The new amendment also reduces the required ratio between the investment cost in assets and the price of land purchased without auction or competition for the implementation of a certified priority investment project, lowering it from 5:1 to 3:1. This change is based on practical experience and responds to the significant increase in real estate prices in Bulgaria. By lowering this ratio, the amendment better reflects current market conditions and makes it easier for investors who acquire land without a tender to qualify for certification. The expected outcome of this amendment is to encourage more investment projects, to lower financial barriers related to land purchases, and to provide greater flexibility in investment planning, ultimately supporting economic growth.

Incentives Extended to Joint Investment Projects

Another key amendment introduces an explicit provision allowing incentive measures to be applied to joint investment projects carried out by two or more legal entities, expanding the current framework which limits such support to subsidiaries. This change reflects the need to encourage collaboration among investors in the development of large-scale, high value-added projects that can make a substantial contribution to Bulgaria’s socio-economic development.

Decreased Investor Co-Funding Threshold

Among the significant revisions is the reduction of the minimum investor co-financing requirement from 40% to 25%, applicable to both personal funds and other private capital sources. This reduction is a positive development as it lowers the financial barrier for investors, making it easier for a broader range of businesses to qualify for support. With a lower minimum investment threshold, the amendment promotes increased engagement in investment initiatives, which can drive economic expansion, stimulate innovation, and attract a more diverse array of investors to the country.

Expanded Eligibility for Training Support

The amendments to the law also reform the incentive measure for financial support for training by expanding the range of eligible training activities beyond professional qualification, which is currently stipulated by the Investment Promotion Act. This creates an opportunity for broader skills development and capacity building among employees, enhancing workforce adaptability and supporting the competitiveness of businesses.

Set Deadline for Application Review

A fixed 14-day deadline has been set for the InvestBulgaria Agency (IBA) and municipal mayors to review the submitted applications and accompanying documents for any inconsistencies or omissions. Previously, no specific deadline was set for this stage of the process, which often led to delays and uncertainty for investors. The introduction of a fixed review period ensures greater predictability, transparency, and administrative efficiency, ultimately improving the investor experience.

Shortened Deadlines for Administrative Services to Investors

The amendments also further shorten the deadlines for administrative services provided to investors. Previously, after receiving an investment class certificate, central and regional government authorities had to deliver administrative services within timeframes that were one-third shorter than standard legal deadlines. Under the new rules, these deadlines will now be cut in half than the standard ones. This change will help ensure faster implementation of investment projects, quicker launch of business operations, and earlier hiring of new employees.

Enhanced Coordination and Support for Priority Investment Projects

Pre-investment, investment and post-investment services for priority investment projects are being introduced, along with the option to sign memoranda of understanding with potential investors. To ensure high-quality and timely investor support, the InvestBulgaria Agency (IBA) will be authorized to coordinate with various government institutions. Each institution will designate at least one liaison officer responsible for providing IBA with information relevant to that institution’s area of competence.

The amendments to the Investment Promotion Act represent a comprehensive reform aimed at creating a more efficient, transparent, and predictable investment environment in Bulgaria. They address key challenges related to the investment climate and establish a stable foundation for attracting strategic investors and developing high value-added sectors – an essential factor for the country’s future economic growth.

Within four months of their entry into force, the amendments to the Investment Promotion Act will be detailed through corresponding amendments to the Implementing Regulations of the Investment Promotion Act, in compliance with Regulation (EU) No 651/2014.

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