Is preliminary approval required for making an investment and coordination with the State Agency for National Security for obtaining a Bulgarian Golden Visa?
In this article, we will analyse the Bulgarian Foreigners Law and its implementing regulations. We will answer the question of whether the law actually requires prior approval for investments made for the purpose of obtaining a Golden Visa. We will then analyse whether coordination with the State Agency for National Security is necessary if such prior approval is deemed necessary.
Golden Visa
The Bulgarian Golden Visa is essentially a permanent residence permit obtained through investment in Bulgaria (Art. 25, par. 1, p. 6 of the Foreigners Law). This residence program is attracting more and more foreign investors, who thus gain visa-free access to other countries in the Schengen area. The Golden Visa offers a unique opportunity for long-term settlement in Bulgaria and stable legal status in the EU. Unfortunately, however, both the Foreigners Law and the Regulations for its implementation create insurmountable obstacles for many foreigners. We will analyse exactly these obstacles in this article.
Hostile environment for investments in Bulgaria
As a result, foreign investors choose other countries, such as Greece, Cyprus, and Portugal, where they invest their funds and, accordingly, obtain a Golden Visa without such problems. Unfortunately, the main loser in this situation is the Bulgarian budget and, accordingly, all Bulgarians. The irony is that, apart from these ridiculous problems, the Bulgarian Golden Visa program is far superior to all other EU alternatives!
Preliminary approval for investment – necessary or not?
In order to obtain a Golden Visa, the administrative authorities require applicants to obtain “preliminary approval” from the Bulgarian Investment Agency. This “preliminary approval,” according to immigration authorities, is necessary for foreigners to make their investment (most often in Bulgarian collective investment schemes – ETFs), on the basis of which they can obtain a Golden Visa. However, let us examine what the Foreigners Law actually requires.
The Bulgarian foreigners law – is a “preliminary approval” really required for the investment?
The first question we will answer in this analysis is:
Should foreigners applying for a Golden Visa under art. 25, par. 1, p. 6 of the Bulgarian Foreigners Law be required to obtain a preliminary approval for the investment?
Checking and evaluation
In Art. 25, par. 7 of the Foreigners Law, the legislator has provided that in order to obtain a Golden Visa (permanent residence permit under par. 1, p. 6 of the Foreigners Law), the foreigner shall make the investment after checking and evaluating by the Bulgarian Investment Agency of the documents submitted by him/her:
- which identify the person beyond doubt;
- for available funds in an amount not less than the minimum threshold for the relevant investment, deposited into his payment account;
- which show the clear origin of the funds for the investment;
- which indicate whether the foreigner is a prominent political figure pursuant to Article 36 of the Anti-Money Laundering Act;
- for labour, professional, and investment activity;
- a criminal record certificate from the country of origin or country of permanent residence.
The key words here are “checking” and “evaluating.” Neither the check nor the evaluation is equivalent to approval (see Art. 25, par. 10 of the Foreigners Law below). Checking is the process of “verifying” the Golden Visa applicant against the six criteria listed in Art. 25, par. 7 of the Foreigners Law. Evaluating is the result of this check, but evaluation doesn’t mean approval (or disapproval) either. Moreover, the Foreigners Law does not provide for any methodology for evaluation.
Preliminary approval?
Elsewhere in the Foreign Law, namely in Art. 25, par. 2 and par. 10, it is stated that:
The procedure for establishing the circumstances and conditions under par. 1, as well as the conditions and procedure for performing the check and evaluation under par. 7 and for the preliminary approval for making investments, shall be determined by the regulations for the implementation of the law.
art. 25, par. 2 of the Foreigners Law
The preliminary approval for investment issued by the Bulgarian Investment Agency on the basis of the check and evaluation under par. 7 shall not constitute grounds for issuing a visa under Art. 15, par. 1, or for granting a right of residence.
art. 25, par. 10 of the Foreigners Law
Here, the term “preliminary approval” suddenly appears. Moreover, in the law, this “preliminary approval” is written as “The preliminary approval” (especially clear in Bulgarian), which suggests that this term has already been used in the text of the law. However, nowhere in the Foreigners Law is stipulated (written) that a “preliminary approval” is required to make an investment – nowhere!
Conclusion from the reading of the Foreigners Law
In order to make an investment for a Golden Visa under Art. 25, par. 1, p. 6 of the Bulgaria Foreigners Law, a check and evaluation by the Bulgarian Investment Agency is required. This is clearly stipulated in Art. 25, par. 7 of the Foreigners Law.
Other provisions of the Foreigners Law (Art. 25(2) and 25(10)) use the term “preliminary approval” (written as “the preliminary approval”). However, such “preliminary approval” is not provided for anywhere in the Foreigners Law as a condition for obtaining a Golden Visa. The necessary check and evaluation should in no way be equated with “preliminary approval.” This “preliminary approval,” according to Art. 25, par. 10 of the Foreigners Law, is issued “on the basis of the check and evaluation” and is therefore not equivalent to either of these two terms.
The Regulations to the Foreigners Law and preliminary approval for investments
For the sake of completeness, it should be noted that Article 39(6) of the Regulations defines the procedure for issuing “preliminary approval.” The provision of the Regulations states that “In order to obtain preliminary approval for investments under Art. 25, par. 1, p. 6 of the Foreigners Law, a foreigner shall submit an application to the Bulgarian Investment Agency…”. It is striking that the Regulations refer specifically to Art. 25, par. 1, p. 6 of the Foreigners Law, which is the provision of the law concerning the actual making of investments. The Regulations (logically) do not refer to the legal provision requiring “preliminary approval” because there is no such provision in the Foreigners Law.
Is a coordination necessary with the State Agency for National Security?
For the purposes of this analysis, let us assume that there is indeed a legitimate requirement for a “preliminary approval” for a Golden Visa investment. After all, this is also the current practice. Foreigners without a “preliminary approval” are not currently issued a Golden Visa. This, of course, will be challenged by our team in court.
The Regulations and the “preliminary approval”
The provisions of the Regulations stipulate that:
The Bulgarian Investment Agency shall decide on the request (for preliminary approval) within 40 days after consultation with the State Agency for National Security and the Ministry of Interior, which shall provide their opinions under Art. 25, par. 9 of the Foreigners Law within 25 days…
art. 39, par. 7 of the Regulations
But is this requirement in the Regulations legal? It is important to remember that the Regulations are a subordinate legislative act to the Foreigners Law? According to the Law on Normative Acts, the regulations cannot contradict the law (Foreigners Law). To this end, let us see what Art. 25, par. 9 of the Foreigners Law states, to which the Regulations refer:
The Ministry of the Interior and the State Agency for National Security shall, upon request, provide the Bulgarian Investment Agency with an opinion based on the information referred to in Art. 10, in accordance with their competence.
art. 25, par. 9 of the Foreigners Law
Upon request
The key term here is “upon request.” It should also be noted that nowhere in the Foreigners law is it stipulated that “preliminary approval” must be issued after (mandatory) consultation with the Ministry of Interior and the State Agency for National Security. This undoubtedly means that the Foreigners Law (the law) only provides that the Bulgarian Investment Agency may (has the right to) request (but is not obliged to) the Ministry of Interior and the State Agency for National Security to provide an opinion on the investment candidate.
Does the Regulation contradict the Law?
On the other hand however, the Regulations indeed impose an obligation on the Investment Agency to coordinate the issuance of “preliminary approval” with the Ministry of Interior and the State Agency for National Security. However, this obligation under the Regulations contradicts the Law, which does not provide for such an obligation. Obligation and right (option) are two completely different legal concepts. This means that, pursuant to Art. 15 of the Law, the provision of the Regulations should not be applied:
If a decree, regulation, ordinance, or instruction contradicts a higher-level normative act, the judicial authorities shall apply the higher-level act.
art. 15, par. 3 of the Law on Normative Acts
Duplication of existing legal control mechanisms
It should be noted that there is no legal logic in requiring mandatory coordination with the State Agency for National Security and the Ministry of Interior for the issuance of “preliminary approval.” This is because, according to Art. 22, par. 4 of the Foreigners Law:
The permit under par. 1, p. 4 (a permit from the administrative control services for foreigners) shall be issued after a written opinion from the State Agency for National Security, which shall be binding on the Migration Directorate and the Migration Department/Sector/Group at the regional directorates of the Ministry of the Interior.
art. 22, par. 4 of the Foreigners Law
In other words, the State Agency for National Security always has the obligation (and the right) to give an opinion, which, if negative, will prevent the issuance of a Golden Visa, even after the foreigner has made the investment. Why then should the Agency prevent the investment from being made and thereby harm the state budget, since the issuance of the visa can always be refused under Art. 22, par. 4 of the Foreigners Law?
Conclusion from reading the Regulations
No mandatory coordination with the State Agency for National Security and the Ministry of Interior is required for making an investment for a Golden Visa under Art. 25, par. 1, p. 6 of the Foreigners Law. Even if it is assumed that preliminary approval is required for the investment, the Bulgarian Investment Agency may, upon request (without being obliged to do so), obtain opinions from the Ministry of Interior and the State Agency for National Security.
The provision of Art. 39, par. 7 of the Regulations, which imposes an obligation on the Investment Agency to coordinate the issuance of “preliminary approval” with the Ministry of Interior and the State Agency for National Security, contradicts the Foreigners Law, which does not provide for such mandatory coordination.
What is the outcome of this legal mess?
The important question is what can be done? If the court confirms our position that preliminary approval (and coordination with the State Agency for National Security/Ministry of Interior) is not required for making a Golden Visa investment, what will be the consequences?
The problem that remains is that, according to Art. 25, par. 7 of the Foreigners Law, the investment is made after a check and evaluation by the Bulgarian Investment Agency. However, the procedure for this check and evaluation is not regulated, neither in the Foreigners Law nor in the Regulations.
Afterword
In fact, if we are to be completely honest, the provisions of the Regulations regarding investments for a Golden Visa seem to have been written with a single purpose in mind – to prevent foreigners from investing in Bulgaria. Here is another example of how the Regulations further restrict the rights of foreigners delegated to them by the Law. The table below shows the requirements of the Law and the Regulations regarding the necessary document certifying that the foreigner has the necessary funds for the investment:
| The Law (art. 25, par. 7, p. 2) | The Regulations (art. 39, par. 6, p. 2) |
| (Document) for available funds in an amount not less than the minimum threshold for the relevant investment, deposited in his payment account; | Bank reference for an account opened in the name of the foreigner with a credit institution in the Republic of Bulgaria, from another EU Member State, or from a country that is a party to the Agreement on the European Economic Area, or from the Swiss Confederation, or from a third country under Art. 27, third sentence, of the Measures Against Money Laundering Law, containing information on available funds in euros in an amount not less than the minimum threshold for the relevant investment; |
In other words, the Law requires foreigners to prove that they have the necessary funds for the investment deposited in an account in any country. However, the Regulations impose an obligation that the account be opened only in certain countries. Let us recall that, according to Art. 15 of the Law on Normative Acts, a subordinate normative act cannot contradict a normative act of a higher degree.
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