When a business outgrows a shared desk, the buy-or-rent decision is often made on instinct. In practice it has several measurable sides: how much of your own cash gets locked in, what happens to tax, how much flexibility you keep and what the lease actually protects. Below we go through them one by one — from the point of view of a company that will occupy the premises itself, not an investor.
For the market background — rents, vacancy and new supply — see our reviews of the Sofia office market and of retail space. We don't repeat those figures here.
A company loan for commercial property is not a residential mortgage. The bank assesses the business (revenue, track record, leverage), not just the property, and the required equity is usually higher than for a home loan. It is negotiated case by case — don't plan around a "typical" percentage until you have an offer.
Three more points:
The purchase price is not an expense in the year you pay it — the building is depreciated. Under Art. 55 of the Corporate Income Tax Act (ЗКПО), solid buildings are in Category I with a maximum annual tax depreciation rate of 4%, so for tax purposes a building is written off over roughly 25 years. Land — including the share of the plot that comes with an office in a larger building — is not depreciated, so the price has to be split between building and land when the asset is booked.
Example: if the building component is worth €200,000, tax depreciation is up to €8,000 a year, which at Bulgaria's 10% corporate tax rate cuts tax by up to €800 a year. With a lease, the whole rent is an expense of the period.
The rules are in Art. 45 of the VAT Act (ЗДДС):
If your company is VAT-registered and uses the premises for taxable activity, VAT charged is normally recoverable as input tax. For businesses making exempt supplies (some financial and medical services, for example), VAT is a real cost — and an older building sold without VAT can be materially cheaper.
Only the letting of a building as a home to an individual who is not a trader is VAT-exempt (Art. 45(4) ЗДДС). Renting an office or shop to a company is a taxable supply: a VAT-registered landlord adds 20% to the rent. A private landlord without VAT registration does not. State in the lease whether the rent is "plus VAT" or "VAT inclusive" to avoid a dispute later.
The statutory framework is short (Arts. 228–239 of the Obligations and Contracts Act, ЗЗД) — almost everything is left to the contract. What to look at:
Ownership locks in capital and location. If headcount could double or halve within three years, if you are still testing a location, or if the business depends on footfall that may move, renting keeps you free. Buying makes sense when you know you will stay put for a long time, the premises are specialised (a clinic, studio or showroom) and the fit-out is substantial.
Check not just the address but the use recorded in the documents — an office or shop in a residential building must be legally registered as non-residential (otherwise see our guide on change of use). Check parking — owned, leased or a paid street zone — and access for clients and deliveries. For a shop, street visibility and its own entrance are often worth more than extra square metres.
For non-residential property owned by a business, the tax base is the higher of the book value and the valuation under Annex 2 of the Local Taxes and Fees Act (Art. 21(1) ЗМДТ). Each municipality sets the rate within 0.1 to 4.5 per mille (Art. 22); in Sofia it is 1.875‰. The waste fee also works differently: in Sofia, companies with non-residential property choose by declaration between a quantity-based fee (bins) and a per-mille charge on book value, and the choice for the following year is made in the autumn. The general mechanics are in our guide to property tax and the waste fee. In a lease the tax is the owner's, but commercial leases often pass it to the tenant — check the clause.
| Buy | Rent | |
|---|---|---|
| Cash up front | Equity + fees + any VAT | Deposit + fit-out |
| Tax effect | Depreciation up to 4% a year (land excluded) | Full rent is an expense |
| VAT | New building — with VAT; older — at the seller's option | Charged if the landlord is VAT-registered |
| Flexibility | Low | High, if the lease allows it |
| Risk | Market value, repairs | Rent increases, sale of the building |
This article is general information, not legal or tax advice for a specific case — run the numbers with your accountant before deciding.
If you are looking for an office or retail unit, to buy or to rent, call us or visit our office. We'll help you compare real options and negotiate the terms. Information verified October 2026.
