Commerciaal Security Deposits in Bulgaria: Limits and Guarantees
Understand the unregulated nature of B2B commercial deposits in Bulgaria. Learn why sophisticated landlords prefer First-Demand Bank Guarantees over cash...
Legal Disclaimer
This content is for general informational and educational purposes only. It does not constitute legal advice and should not be relied upon as such. Laws change frequently — always verify current regulations and consult a licensed attorney in your jurisdiction for advice specific to your situation. Landager is a property management platform, not a law firm.Information last verified: May 2026.
Residential lease agreements in Bulgaria are governed by the Obligations and Contracts Act (Закон за задълженията и договорите - ZZD), specifically Articles 228 to 239. The Commerce Act applies only to transactions between traders and is not the authority for residential housing.
Therefore, in Bulgaria, the lease agreement and the ZZD are the primary authorities governing the deposit.
Deposit Limits and Market Practice
Because residential deposits are not capped by a specific statutory maximum, parties are free to negotiate the amount under the principle of freedom of contract.
Standard Market Amounts
- Standard Residential: The market standard for residential leases in Bulgaria is one month's rent.
- High-End / Furnished Properties: For luxury properties or those with expensive furnishings, landlords frequently request two months' rent as security.
Deposit Management and Interest
Bulgarian law does not require residential landlords to place cash deposits into separate escrow accounts or government-backed tenancy schemes. The landlord typically receives the funds into their personal bank account.
- Interest: Under Articles 230-233 of the ZZD, there is no statutory obligation for a landlord to pay interest on a security deposit. Interest is only due if explicitly stipulated in the written lease agreement (which is rare in residential practice).
Taxation and VAT
The financial treatment of residential deposits is distinct from commercial transactions:
- VAT Exemption: According to Art. 45, para. 4 of the VAT Act (ЗДДС), the leasing of residential property to individuals is an exempt supply. Security deposits are considered a guarantee and do not trigger VAT.
- Income Tax: Landlords who are physical persons are subject to a 10% income tax on 90% of the gross rent (allowing for a 10% statutory expense deduction) under Art. 31 of the Personal Income Tax Act.
Allowable Deductions & Handover Protocols
Art. 232, para. 2 of the ZZD stipulates that the tenant must pay the costs related to the use of the property. If holding a standard cash deposit, the lease agreement should detail what the landlord can deduct. Standard residential deductions include:
- Unpaid Rent.
- Unpaid Utilities (Electricity, water, heating, building maintenance fees).
- Property Damage (Beyond "normal wear and tear").
The Essential Protocol: The Handover Protocol (Приемо-предавателен протокол) is the essential legal document for verifying the condition of the property at the start and end of the lease. It serves as the primary evidence to justify deposit retentions. If the landlord wishes to deduct funds for damages, they must have a signed Day-1 protocol to prove the condition of the property upon handover.
Back to the Bulgarian Commercial Overview.
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Frequently Asked Questions
▶What are the key landlord-tenant laws in Bulgaria?
The residential real estate market in Bulgaria is uniquely liberal and heavily favors freedom of contract. Unlike many Western European countries that boast massive, dedicated "Residential Tenancy Acts" filled with strict rent controls and heavy tenant protections, Bulgaria's rental laws are sparse. The foundational rules governing landlord-tenant relationships are embedded within the ancient, yet manage, Obligations and Contracts Act of 1951 (OCA) (Закон за задълженията и договорите). This guide covers the essential compliance requirements for property owners and landlords.
Read the complete guide▶What is the legal eviction process for landlords in Bulgaria?
The eviction process in Bulgaria requires landlords to follow formal legal procedures. Valid grounds typically include non-payment of rent, lease violations, or the landlord's personal use of the property. Landlords must provide proper written notice, allow any required cure periods, and may need to obtain a court or tribunal order. Self-help evictions are generally prohibited.
Read the complete guide▶What are the rent increase limits and caps in Bulgaria?
Bulgaria has specific rules governing when and how landlords can increase rent. These rules may include caps on the percentage of increase, minimum notice periods, and restrictions on frequency. Landlords must comply with all applicable regulations when raising rent on existing tenancies.
Read the complete guide▶What are the security deposit rules and return deadlines in Bulgaria?
Bulgaria has rules governing how much landlords can charge as a security deposit, how deposits must be held or protected, and the timeline for returning deposits after a tenancy ends. Landlords must provide itemized statements of any deductions and comply with all statutory deadlines to avoid penalties.
Read the complete guide▶What are the mandatory lease requirements in Bulgaria?
Lease agreements in Bulgaria must comply with applicable national and local laws. Required elements typically include the names of both parties, property description, rent amount and payment terms, deposit details, lease duration, and maintenance responsibility allocation. Written leases may be required for certain tenancy types or durations.
Read the complete guide▶What are the landlord maintenance and repair obligations in Bulgaria?
Landlords in Bulgaria are generally required to maintain rental properties in a habitable condition, keeping the structure, plumbing, electrical systems, and essential services in proper working order. The specific allocation of maintenance responsibilities between landlord and tenant should be clearly documented in the lease agreement.
Read the complete guide▶What are the late fee and penalty rules for rental properties in Bulgaria?
Bulgaria has specific rules regarding late fees and penalties for overdue rent. These may include mandatory grace periods, caps on late fee amounts, and restrictions on interest charges. Late fee provisions should be clearly stated in the lease agreement and must comply with local regulations to be enforceable.
Read the complete guide▶What property disclosures are landlords required to make in Bulgaria?
Landlords in Bulgaria must disclose relevant information about the property to prospective tenants before the lease is signed. Required disclosures typically include known material defects, environmental hazards, previous damage history, and any conditions that could affect the tenant's use and enjoyment of the property.
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