What has already changed in Bulgaria this year. What will happen to prices?

Summary

In this video, the speaker discusses significant changes in Bulgaria as of January 1, 2025, including Bulgaria's official entry into Schengen, an increase in the minimum wage, and a rise in the retirement age. However, the speaker points out the downsides, such as increased prices for goods, utilities, and electricity. Furthermore, new VAT regulations for real estate sales are expected to raise prices, impacting both developers and property owners. While these changes bring benefits, they also come with challenges that could affect the overall standard of living.

Takeaways

• 😀 Bulgaria officially joined Schengen on January 1, 2025, which is seen as a positive development for the country.
• 😀 As of January 1, 2025, the minimum wage in Bulgaria has increased to 1077 Lev, but this may create challenges for employers as they will have to pay higher taxes.
• 😀 The retirement age in Bulgaria has increased by 2 months for women and 1 month for men, with women now retiring at 62 years and 4 months and men at 64 years and 8 months.
• 😀 Prices for many goods in Bulgaria have risen starting from January 2, 2025, which is unusual as prices typically decrease post-New Year holidays.
• 😀 The cost of water supply and sewerage services in Bulgaria increased by an average of 4% from January 1, 2025.
• 😀 Electricity prices in Bulgaria have increased by more than 8% as of January 1, 2025, with daily and night rates rising accordingly.
• 😀 VAT rules for real estate sales have changed, meaning individuals, as well as legal entities, will now be subject to VAT when selling property, which could lead to higher real estate prices.
• 😀 Developers previously avoided buying land by building homes on private land without paying VAT, which will no longer be possible due to the new VAT rules.
• 😀 The new VAT rules will likely increase real estate prices, though it is uncertain by exactly 20% or less.
• 😀 While the Schengen entry is a positive change for Bulgaria, the rising prices and new regulations have made the cost of living higher, and the standard of living may decrease despite the wage increase.

Q & A

What significant event occurred in Bulgaria on January 1, 2025?

On January 1, 2025, Bulgaria officially joined the Schengen Area, which is a major milestone for the country.

How did the minimum wage in Bulgaria change in 2025, and how does it affect employers?

The minimum wage in Bulgaria increased to 1077 Lev starting January 1, 2025. This change is more burdensome for employers because they often set the minimum wage in employee contracts, meaning they now have to pay higher taxes on wages.

How has the retirement age changed in Bulgaria for men and women?

The retirement age for women increased by two months, now set at 62 years and 4 months. For men, the retirement age increased by one month, now set at 64 years and 8 months.

What are the new trends regarding prices in Bulgaria following the New Year?

Prices in Bulgaria have risen since the start of the year, contrary to the usual post-New Year price drop. Notable increases include grocery prices, utility costs, and the prices for water and sewerage services.

How much have water supply and sewerage prices increased in Bulgaria as of January 1, 2025?

Water supply and sewerage prices have increased by an average of 4% as of January 1, 2025. On average, a cubic meter of water now costs 5 Lev, or about 2.5 euros.

How has the electricity price in Bulgaria changed in January 2025?

Electricity prices in Bulgaria increased by more than 8% starting January 1, 2025. The average price for electricity is now approximately 24 stotinki per day during the regular rate and 14 stotinki at night.

What impact could the VAT changes have on the Bulgarian real estate market?

The introduction of new VAT rules for real estate transactions means that both individuals and legal entities will now have to pay VAT on land plots used for construction. This could lead to an increase in property prices, possibly by as much as 20%.

Why were the VAT changes on real estate transactions introduced in Bulgaria?

The VAT changes were introduced to address tax evasion by developers who often avoided paying taxes by building on land they didn’t own. The new rule ensures that VAT is applied to land transactions, preventing such evasion.

How will the new VAT regulations affect property owners in Bulgaria?

Property owners, especially those selling real estate that is less than five years old, will now have to pay VAT when selling their property. This will likely make real estate more expensive for both buyers and sellers.

What is the overall economic outlook for Bulgaria in 2025, according to the script?

The economic outlook in Bulgaria for 2025 is mixed. While joining Schengen is positive, the rise in wages, taxes, and prices are leading to a lower standard of living. Despite higher minimum wages, living costs are also increasing, affecting many people across the country.