Bulgaria's Tax Agency Plans New Air Strikes on Luxury Mansions

Finance | October 11, 2010, Monday // 18:13|  views

Bulgaria's National Revenue Agency is planning new "air strikes" on suspicious luxury properties, this time along Bulgaria's Black Sea coast.

Over the past couple of weeks, the Bulgarian tax authorities staged helicopter flights over the capital Sofia, the southern city of Plovdiv, and the Ivaylovgrad water reservoir close to the southeastern border town of Svilengrad, photographing luxury mansions and homes on the ground.

The "air strikes" have been launched as part of a campaign to document and investigate the origins of the luxury properties, which the authorities doubt might have been acquired with money generated through corruption and organized crime activities.

The photographs and footage released from the air surveillance of the tax authorities have revealed faced off and heavily guarded staggeringly luxurious mansions and homes. The images led Prime Minister Boyko Borisov – who vowed the confiscation and/or tearing down of any illegal construction – to remark that they were symbolic snapshots of Bulgaria's post-communist transition.

From its air surveillance, the National Revenue Agency has already singled out over 200 properties around Sofia, Plovdiv, and Svilengrad; the authorities are aware of who the legal owners are of only about 30% of these.

Preliminary data shows that about 70% of the top luxury properties in Bulgaria are registered to private companies, rather than to physical persons.

This allows their builders to claim that all construction spending and maintenance costs should be taxed as corporate spending. What is more, most of the builders used VAT credits from the state which they will have to return if the tax authorities prove that the homes are used for residential purposes.

Another kind of common violations that the tax inspectors suspect are blatant discrepancies between the tax income of the owners of the mansions, and the actually value of these properties.

Preliminary information from the National Revenue Agency shows that some of the owners of such real estate have declared minimum salaries as taxable income.

A number of the luxury mansions are believed to be fully illegal as they have no valid permits, and have not even been registered with the local authorities even though they do get electricity and water supply.

"We are continuing the mapping of the luxury properties. In addition to the direct benefits that this will bring to the state budget in terms of disclosing evasion of VAT, corporate tax, and income tax, I also see great potential benefits for the municipal budgets because many of these properties haven't been registered with the municipalities. We are just doing our jobs. It is high time that we restrict mass-scale tax evasion from the past 20 years, which has turned into a national sport in Bulgaria," stated Monday Krasimir Stefanov, Director of the National Revenue Agency, with respect to the tax "air strikes."

The Agency reminded in a statement that the Bulgarian legislation stipulates 8-year sentences for large-scale tax evasion plus full or partial confiscation of the properties.

On Tuesday and Wednesday, the tax inspectors will be mapping with a helicopter the suspicious luxury properties along Bulgaria's Black Sea coast.

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Tags: NAP, NRA, National Revenue Agency, Krasimir Stefanov, luxury property, Plovdiv, sofia, Simeonovgrad, Ivaylovgrad water reservoir, Black Sea coast, helicopter, tax inspectors


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