Der Spiegel: Bulgaria, Greece's New Treasury

A short trip to Bulgaria is the only thing Greeks have to do to circumvent capital controls, German weekly Der Spiegel says.

"Strict controls which actually had to save Greece's banks from collapse, are leading to a mass exodus to the poorest EU member state," it reports in a Tuesday article.

Up to EUR 14 000 are successfully transferred to Bulgaria every week despite capital controls. Something not only "normal citizens" do (with thousands having opened bank accounts there), but also companies which open branch offices or move their headquarters to the country, Der Spiegel argues.

This is partly owned to the fact that one is allowed to have EUR 2000 daily (or EUR 14 000 weekly) transferred from their account for a trip abroad.

A bank employee in Bulgaria is quoted as saying that for Greek citizens it is quite easy to have accounts set up in her bank in either leva (the Bulgarian currency, BGN) or euro - all it takes is an ID document and wait for two hours. "We have many foreign clients. Of course, Greeks too," she told the author of the article.

Greeks are fearing that a return to the drachma might cost much of their wealth.

"In the months when Greece's crisis peaked they have withdrawn around EUR 45 B from their bank accounts. Now they are bringing the money abroad."

For companies, low corporate and personal taxes in Bulgaria turn out attractive, being at 10 percent compared to Greece's 29 percent of corporate tax. The latter rate was introduced to comply with the demands of international lenders. Lower minimum wage and levels of red tape add to Bulgaria's appeal, and Greek entrepreneurs are able to set up a Bulgaria-based subsidiary normally in just a week.

As a result, there were 11 500 entities with Greek participation in Bulgaria, 2500 more than the year before. Krasen Stanchev, an economist with the Institute for Market Economy, is quoted as saying that some EUR 4.5-5 B have been invested by Greek companies into Bulgaria since the crisis began.

"Until a few years ago Greece was still a beacon of hope and a role model for other countries in the Balkans. We were a developed economy, integrated into the West, part of the center of Europe... Now even Albania looks more attractive," an entrepreneur is quoted as saying.

Der Spiegel's article is available here.

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