Investing in ETF and AIF from Bulgaria will guarantee speed of processing and positive outcome. Investing in these instruments from abroad may have serious consequences. Please read below to find out why.
Why is it better to buy your ETFs and AIFs from Bulgaria
With the old Bulgarian CIP, we have been often advising our clients to make the Eurobond investment through their own bank from abroad. The reasoning for such recommendation was that the clients usually prefer dealing with their own banker, rather than having to open bank account in Bulgaria. But now, with the new Bulgarian CIP, is there a change in our position? For the investments in Exchange Traded Funds (ETF) and Alternative Investment Funds (AIF), there certainly is.
With the NEW 2021 Citizenship by investment program, we recommend that the client makes the investment through Bulgarian bank or financial agent!
The preliminary assessment by the Investment Agency as per the new 2021 legislation
The amendments in the Bulgarian law for the foreigners of March 2021, now foresee one additional step during the residence/citizenship application. This is namely a requirement for preliminary approval of the chosen investment by the Investment Agency.
Art.25, par.7 from the Foreigners Law
A foreigner who applies for permanent residence permit under par. 1, item 6, can make the investment after inspection and evaluation by the Bulgarian Investment Agency of the submitted by the applicant documents:
- that identify the person in an indisputable manner;
- for available funds in an amount not less than the minimum threshold for the respective investment;
- which show a clear origin of the funds for the investment;
- which show whether the foreigner is a prominent political figure according to art. 36 of the Law on Measures against Money Laundering;
- for labor, professional and investment activity;
- a criminal record certificate from a country of origin or a country of permanent residence.
Art.25, par.10 from the Foreigners Law
The preliminary approval for making investments, issued by the Bulgarian Investment Agency on the basis of the inspection and assessment under par. 7, is not a ground for issuing a visa under Art. 15 (visa type D), par. 1 or for granting of residence permit.
As you can see, the preliminary approval by the Investment Agency is now an important step. And it better be completed successfully. Without it, the application will be stalled and the applicant will be not allowed to proceed further. Worth noting is that the successful completion of the preliminary approval is by no means sufficient to obtain permanent residence permit.
Let us also not forget about the recent change in power in the Investment Agency. The “new old” director will certainly make sure that all legal norms are applied without any compromises in terms of compliance.
So why not investing (in ETFs and AIFs) from abroad?
By no means we are trying to imply that our clients should not make the investment through their own bank or financial broker from abroad. On the contrary, it is completely legal and feasible, although it has some serious drawbacks.
Opting to buy the ETF/AIF from abroad may turn out to be a very bad idea. Not only the residence/citizenship application may be delayed, but eventual negative preliminary assessment by the Investment Agency may put the whole application to an end.
At the same time however, if the client wants to have his application processed without any delays, we strongly recommend opening an account in Bulgaria. In this way, we will be able to obtain the preliminary approval without unnecessary delays. If the client opts to use his foreign broker or banker, the preliminary approval can take a lot longer than expected. It will be extremely difficult to provide all required documents to the Investment Agency in order to get the approval.
Translation and legalization
All documents will need to be dully legalized and translated, which is another time consuming procedure. On the contrary, using trusted banker or broker in Bulgaria will ensure smooth processing and swift preliminary approval. The Bulgarian financial body (bank, broker, etc.), with our assistance of course, will be able to convince the Investment Agency much faster about the eligibility of your planned investment. Definitely not the case with any foreign financial entity.
What if you still want to use your own (non-Bulgarian) bank or financial broker
If you just can’t miss the peace of mind that your trusted banker can offer you, then please get in touch with us. We will evaluate all the risks and advantages of using foreign vs Bulgarian bank or broker and will provide you with professional advice as to how it is best for you to proceed with your investment citizenship application.