NBLO Participates in BESCO Initiative to Enhance Incentives for Angel Investors

Corporate Clients, Corporate Tax, Startups

As a law firm specialising in corporate and technology law, NBLO is proud to have recently participated in an initiative of the Bulgarian Startup Association (BESCO), advocating legislative amendments and tax benefits for angel investors in Bulgaria.

The initiative aims for a more favourable environment for angel investment in Bulgaria. As part of a working group, NBLO aims to provide legal insight into the proposed reforms based  on extensive experience in advising both startups and private investors.

The initial proposal includes tax incentives for angels who are natural persons by reducing the tax due by 30% of the investment amount (up to BGN 250,000) OR by reducing the tax base by an amount equal to 30% of the amount of investments up to BGN 250,000. 

It is also proposed that the profit (the positive share price difference on disposal and acquisition) be non-taxable provided the investment is not reduced or cancelled.

The initiative, if successful, will align Bulgaria’s startup ecosystem with best practices across Europe. BESCO plans to present the consolidated recommendations to the Government in the coming months.

In comparison, several other European countries offer tax incentives to encourage angel investment in startups. 

Greece provides substantial tax benefits for angels. They can deduct 50% of their capital contributions to eligible startups, up to €900,000 per year and €300,000 per startup. 

Ireland’s Angel Investor Relief Scheme offers a reduced Capital Gains Tax (CGT) rate of 16% for individual investors on gains up to twice the value of their initial investment in innovative startups. 

Romania tax-exempts business angels who invest in small and micro-enterprises. They are exempt from dividend tax for three years and from CGT on share transfers after at least three years, subject to a cap of the total investment size. 

In Portugal, certified business angels can claim a 20% deduction on their individual income tax for investments in startups less than three years old. The deduction is capped at 15% of the investor’s income tax liability. Investors must be certified by IAPMEI, the Governmental Small and Medium Enterprise Agency. 

France offers an income tax reduction of 18% on investments in SMEs, with a maximum reduction of €50,000 for individuals (€100,000 for couples). Investments must be held for at least five years. Additionally, there are capital gains tax allowances for shares held for extended periods.

NBLO’s involvement in this Bulgarian initiative reflects its commitment to supporting innovation and entrepreneurship in Bulgaria. Income tax for Bulgarian residents is already low by European comparators (at 10%) but the tax benefits the proposed scheme offers are nevertheless important to signal to angels that there is a willingness to support their risk-taking.

At NBLO we believe that improving the regulatory and tax framework for angel investors is essential to unlocking capital for high-growth startups. As part of this, we aim to contribute to public policy making and support the innovation ecosystem.