Amendments to the Regulations for the Implementation of the Investment Promotion Act („RIIPA“) were published in the State Gazette No. 59 dated 22.07.2025, which practically initiate the application of a new screening regime applicable to foreign direct investments in Bulgaria. The amendments entered into force on 22.07.2025.
The amendments in the RIIPA are mostly related to a permit granted to a foreign investor to carry out a foreign direct investment and represent continuation of the amendments to the Investment Promotion Act (“IPA”) adopted in 2024.
1. Concept of foreign investor
A foreign investor, in general, is:
a) a person who is not a citizen of a Member State of the European Union, or whose registered office is not located in a Member State, who has made or intends to make an investment in Bulgaria;
b) a legal entity whose registered office is in a Member State of the European Union, which has made or intends to make an investment in Bulgaria, in which control is exercised directly or indirectly by natural or legal persons, outside the European Union.
2. What is Foreign Direct Investment?
The legal concept is broad and covers an investment of any kind by a foreign investor with the purpose of establishing or maintaining lasting and direct links between the foreign investor and the undertaking to whom the capital has been granted in order to carry out economic activities in Bulgaria, including an investment that enables effective participation in the management or control of a company, carrying out economic activity. Foreign direct investment is also the expansion of an existing investment, including the expansion of the capacity of an existing enterprise, the diversification of the production of an enterprise with products that have not been previously manufactured, as well as the creation of a new place of business or the increase in the capital of the investee, provided that the shares/stocks are acquired by the foreign investor. A portfolio (passive) investment is not a foreign direct investment.
The screening regime for foreign direct investments is permitting and covers both new foreign investments and planned expansion of an already made investment in the country.
The screening will be carried out by a special body – the Interdepartmental Screening Council at the Council of Ministers. It will examine applications and refuse/authorize foreign direct investment.
3. Investments subject to screening
Foreign direct investment must focus on areas of activity referred to in Regulation (EU) 2019/452, such as critical infrastructure, i.e. essential for the maintenance of vital public functions, health, safety, economic and social well-being (including water, energy, healthcare, communications, media, data processing or storage, aviation, defence, etc.); critical technologies and products; delivery of critical resources; access to sensitive information; media freedom and pluralism.
It must also meet one of the following conditions specified in the IPA:
1) through the implementation of the investment, the ownership of at least 10 per cent of the capital of an enterprise operating in the country is acquired, or the value of the investment exceeds the threshold of EUR 2,000,000 or their equivalent; or
2) through the implementation of the investment, the ownership of at least 10 per cent of the capital of an enterprise operating in the country and carrying out high-tech activities is acquired; or
3) the new investment exceeds the threshold of EUR 2,000,000.
Foreign direct investments made by an investor from Russia or the Republic of Belarus are subject to mandatory screening even if they do not meet the above conditions.
The Act expressly provides that the rules for screening investments from European Union member states shall also apply to investments from certain countries included in a list approved by the National Assembly, as well as from the United States of America, the United Kingdom of Great Britain, Canada, Australia, New Zealand, Japan, the Republic of Korea, the United Arab Emirates, a country party to the Agreement on the European Economic Area, the Swiss Confederation, and the Kingdom of Saudi Arabia.
4. Prior authorisation
With the amendments to the RIIPA, a template application has been introduced, accompanied by a request for authorization. The application is submitted by the foreign investor through the Bulgarian Investment Agency to the Interdepartmental Screening Council, which considers it within 45 days.
The Interdepartmental Screening Council may: (i) admit the investment without due diligence; (ii) order due diligence, or (iii) deny authorisation.
5. Sanctions
According to the IPA, a foreign investor can be sanctioned with an amount of up to 5% of the value of the investment, but not less than BGN 50,000 (about 25,000 euros) for non-compliance with the regime.
In addition to the sanction, the Interdepartmental Screening Council of the direct foreign investments may impose on the foreign investor restrictive measures necessary to ensure security or public order, including change of control, modification and/or cessation of activities, termination of foreign direct investment and other appropriate measures.