Investment in Mutual Funds as route to Bulgarian Citizenship13 July 2021
On 15th March 2021, changes in both the Foreigners in the Republic of Bulgaria Act (“Foreigners Act”) and the Bulgarian Citizenship Act (“Citizenship Act”) came into effect. The former provides grounds for permanent residence, the latter regulates qualifications for citizenship. You can contact us directly to learn more via our contact form. One of the newly adopted classes allows investment in mutual funds, regulated in accordance with the Collective Investment Schemes and Other Collective Investment Undertakings Organisation Act (“CIS Act”).
To qualify for permanent residence, the applicant must:
- Invest BGN 1 million (EUR ~ 512 000)
- Invest in a Collective Investment Scheme (“CIS”), which:
a) has a net asset value of no less than BGN 5 million ( EUR ~ 2.6 million);
b) is licensed in Bulgaria
c) is strategically focused in equity and corporate bonds of Bulgarian companies, traded on the stock exchanges or on a multilateral system
Before investing, the applicant must undergo a pre-approval process, carried out by the Bulgarian Investment Agency (“BIA”). As this an entirely new step, it may be subject to refinement by means of secondary legislation and internal rules by the BIA. The purpose of the pre-approval process is believed to be to introduce best practices in citizenship by investment and a key part of this is assurance that anti money laundering (“AML”) law is applied.
Once the pre-approval and investment certification process has been completed at the BIA, the investor can apply for a Type D visa and in approximately a month and after grant, can make the first trip to Bulgaria to apply for permanent residence. The residence application ought to be reviewed within 2 months. A second trip can then be planned for the issuance of an ID card.
Bulgarian Citizenship Application
After grant of residence, Investors have the right to choose to:
- Wait for 5 years and apply for citizenship (“Standard Track”); or
- Double the investment in CIS and apply for citizenship in 1 year (“Fast Track”).
- Invest BGN 1 million in a Certified Priority Investment Project (“Fast Track”)
The choice is available at any point after the initial investment and you are not expected to make it at the outset of the process.
Various government bodies, including the State Agency for National Security and the Ministry of Interior participate in the review process, however two milestones ought to be mentioned:
- the opinion of the Citizenship Council based on which the Minister makes a recommendation to the Vice President and
- the issuance of a decree by the Vice President
Depending on the track, applicants must maintain the investment:
- 1 year if they have opted for the Standard Track
- 2 years if they have opted for the Fast Track
Collective Investment Schemes (UCITS)
By definition a CIS is an enterprise for collective investment, which may be organised as a mutual fund or as an investment company.
Currently there are over 120 CIS organised as mutual funds in Bulgaria.
The mutual fund is considered established by its entry in a register, maintained by the Financial Supervision Commission (FSC). The conditions for participation in the mutual fund, its organisation, management and termination are determined by the rules of the mutual fund.
The mutual fund is considered to be the issuer of the units into which it is divided. The units give the right to a respective part of the fund’s assets, including in case of liquidation of the mutual funds, the right of redemption, as well as other rights by law or as set in the rules of the mutual funds.