Thanks to the steps taken by the government in the last few years, Bulgaria has become an attractive jurisdiction for setting up a business. We are talking about the opportunity for foreign investors to pay the lowest corporate tax in Europe – 10%. At the same time, the advantage of Bulgaria, that has always attracted entrepreneurs to the country, remains relevant – its geographical position on the way from Europe to Asia.

 

Registering a company in Bulgaria is a profitable prospect for a variety of businesses. If you are interested in the details, read our review below, and if you decide to proceed directly with the incorporation of a company with the support of experienced experts, please contact Lawrange Law Firm. Less talk, more useful actions for the client – this is our approach to solving the task.

 

 

Jurisdiction Characteristics

 

The country has been a member of the EU since 2007. Since 1998, the pegging of the local currency (Bulgarian lev) to the euro has contributed to a favorable business climate, low investment and foreign exchange risks. Among the leading sectors of the Bulgarian economy are tourism, agriculture, pharmaceuticals, light industry, engineering and logistics. Telecommunications, information technologies and alternative energy are developing at an active pace.

 

For your information! In 2022, Bulgaria passed a law on start-up visas, that opened the doors of the local market to foreign entrepreneurs who want to develop high-tech or innovative projects in the country. Recently, Bulgaria has also started issuing Blue Cards, that make it easier for highly qualified foreigners from outside the European Union to find employment in Bulgaria.

 

 

Benefits of registering a company in Bulgaria

 

On the international business map, Bulgaria can be marked as a country with many advantages. In particular, a foreign investor can register a company in Bulgaria in a couple of weeks. In the future, the existence of a company provides the right to acquire land and real estate in property, issue loans and use a wide range of other opportunities on an equal basis with citizens of the country.

 

Among the advantages of Bulgaria for business incorporation:

  • favorable business ownership regime for non-residents;
  • no requirements for the minimum authorized capital at the start;
  • low costs of doing business compared to other EU countries;
  • availability of agreements on avoidance of double taxation with dozens of countries;
  • access to the EU market;
  • simplified procedure for obtaining a residence permit if desired;
  • the ability to register a company remotely;
  • transport links (4 airports and 2 seaports).

 

 

Conditions for registering a company in Bulgaria

 

There are no restrictions for registration of a legal entity in Bulgaria by foreign citizens. It does not matter who opens a company – an EU citizen or not. To develop a business, the owner does not need to live in Bulgaria, understand or speak Bulgarian.

 

To open a company in Bulgaria and conduct business in the country, you must:

 

  • have at least one director (depending on the chosen organizational legal form (OLF));
  • note that some activities will require additional licenses, permits or registrations;
  • have a registered address in the country where the official correspondence will be sent – this may be the address of the legal representative in Bulgaria;
  • study and take into account the requirements of legislation on taxation, filing annual financial statements, combating money laundering, holding meetings of shareholders and directors (shareholders can participate in meetings using electronic means of communication such as videoconferencing).

 

For your information! When opening a company by a foreigner, it is important that he is aware of the content of the signed documents. This can be provided in two ways:

 

  1. Registration documents must be translated into the foreigner’s native language or another language that he/she understands. In this case, a bilingual version of the documents is prepared. If a sworn translator cannot perform the translation, then the person who performed it must indicate his/her surname, certify the correctness of the translation and sign.
  2. Documents may not be translated, but in this case, a person who speaks the relevant language must declare that he has translated the content into a language understandable to a foreigner and sign. The foreigner, for his/her part, must also declare that he/she understands the meaning of the documents and sign. 

 

 

Open a business in Bulgaria: joint stock company, limited liability company with several founders

 

You can conduct commercial activities in the country in the following organizational and legal forms:

 

  1. limited liability company with several shareholders – OOD, with sole ownership – EOOD;
  2. individual entrepreneur – sole trader (ET);
  3. joint stock company with several shareholders – AD, with sole ownership – EAD;
  4. partnership;
  5. consortium, holding;
  6. branch;
  7. representation.

 

 

Joint-Stock Company

 

This organizational and legal form is more suitable for large enterprises than for small and medium ones. A joint stock company must have one or more shareholders (individuals or companies) and at least three members of the board of directors. The minimum share capital must be 25,565 euros. Some activities (such as banking or insurance) may require higher capital.

 

The share capital of AD is represented by shares with a par value of at least 1 Bulgarian lev each. At the time of the establishment of the company, at least 25% of the par value of each share must be paid, and the remaining part is paid within two years.

 

One of the advantages of AD is the absence of legal restrictions on the transfer of shares. However, the corporate structure of a Bulgarian joint-stock company is more complex than in OOD. The Bulgarian commercial law establishes mandatory rules governing the creation of a reserve fund, the distribution of profits and the rights of minority shareholders.

 

 

Limited Liability Company with Multiple Shareholders

 

The most popular OLF for small and medium businesses due to the simplicity of the management structure. The founders of the OOD can be Bulgarian and foreign individuals and legal entities. The minimum required authorized capital of the company is the equivalent of 1 euro, payment is required. At the same time, the authorized capital of OOD is not converted into shares. Instead, participants are issued Certificates of Participation, which indicate their share (corporate rights) in the business. The transfer of corporate rights from one founder to another does not require a decision of the general meeting, but this is required for the transfer of corporate rights to a third party.

 

 

Requirements for registration as an EOOD/ OOD in Bulgaria

 

To open a company in Bulgaria in the form of EOOD or OOD, it is necessary to deposit an authorized capital in the amount of two Bulgarian leva to a bank account that is specially opened for this. If there is only one founder (in EOOD), the entire authorized capital belongs only to this founder. OOD has several founders. The share of each in the authorized capital must be from one Bulgarian leva.

 

According to Bulgarian law, only an individual can be appointed director of an OOD. It can be either one of the founders or a third party. There are no restrictions for foreign persons regarding appointment as a director (manager).

 

 

Mandatory requirements for remote company registration

 

If the registration of a company for residents of Bulgaria (the usual procedure) takes about three days, then it will take more time to open it remotely. Documents for the owner, previously certified by a notary abroad, should be translated and legalized in Bulgaria. Before processing the documents, it is necessary to resolve the issue with the registered address of the company’s office. All official documentation will be sent to this address.

 

 

Registration of a company in Bulgaria: necessary documentation

 

First of all, you will need documents for the founders and managers:

 

  • copies of passports;
  • proof of address of residence (for example, recent utility bills); 
  • if the founder is a legal entity – copies of corporate documents.

 

For your information! When registering a company by a legal entity or legal entities, it is necessary to submit:

 

  • current status in the relevant commercial register of the country for foreign companies that will have a stake in a Bulgarian company;
  • the decision of partners or shareholders of foreign companies to open a company in Bulgaria, for which a certain person is authorized. In particular, the rights of an authorized person should be described in detail – register a company by signing documents, authorize other persons to submit documents, open a bank account, appoint a manager.

 

The following are prepared and submitted to the registrar:

 

  1. completed forms in which the applicant declares:
    – the truth of the declared circumstances and the acceptance of the submitted acts;
    – that he/she has not been declared bankrupt within the last two years;
    – that he/she, as a director, without the consent of the company, does not have the right to make commercial transactions on his/her own or someone else’s behalf, participate in other commercial organizations, hold managerial positions in other companies;
  2. constituent act – the charter of the company; 
  3. management assignment agreement – an agreement between an individual who will be appointed as a director (manager) and a legal entity (registered company);
  4. minutes of the founders’ meeting with the decision to establish the company.

 

Four confirmations should be added to the specified documentation package:

 

  1. about reserving the name of the company;
  2. on the presence of a registered office;
  3. on the contribution of the authorized capital;
  4. on payment of the state fee.

 

For your information! State fees for company registration for Bulgarian and foreign citizens are the same. But bank and notary fees may differ slightly. Also, when a foreigner registers a legal entity in Bulgaria, additional costs for courier services, translation and legalization of documents must be taken into account. 

 

 

Stages of registering a company in Bulgaria

 

Stage 1. Trade name reservation.

Pre-future power business owners must submit three variants of the company name to the representatives of Lawrange. The selected names are checked for uniqueness through the Trade Register. If the name is unique, it can be reserved.

 

For your information! The name of the company in Bulgaria must be in Cyrillic, may contain letters and numbers.

 

Stage 2. Opening a savings account in a Bulgarian bank.

The account is needed to deposit the authorized capital – without this step, registration of a company in Bulgaria is impossible. To open an account, you can choose a local banking institution or a branch of a foreign bank. A bank payment notice confirming the contribution of the authorized capital must be added to the package of documents for registering a company. After completing the business registration procedure, the savings account can be reorganized into a current one.

 

The opening of a savings account for the contribution of the authorized capital can be carried out both by the founders of the company and by authorized persons. To do this, a power of attorney is drawn up and notarized for the authorized person. You cannot do without notarization, even if a Bulgarian lawyer acts as a proxy.

 

Important! If the founder is located outside Bulgaria, then the power of attorney must be translated into Bulgarian by a licensed translator. Then the document must be certified in the diplomatic mission of Bulgaria or the Ministry of Foreign Affairs.

 

Stage 3. Solving the issue with the legal address (registered office).

As a legal address, you can use the address of the property owned by the applicant. You can also conclude a lease agreement for office space in a Bulgarian city or use the service of providing a legal address.

 

Stage 4. Registration in the Trade Register. 

The registrar receives a package of the above documents and completed forms, on the basis of which the company is entered into the register. A new company is assigned a SIC – a single identification code.

 

Important! If errors and inaccuracies were made during the preparation of documents, the applicant is informed about this using the contact details that he left when submitting the application. It is safer to check for comments from the registrar judge on the website of the Trade Register. Only three days are given to eliminate errors. If the errors are not corrected within this period, you will have to pay the state duty (fee) again and re-submit the application. It follows from this that it is better not to take risks, but to entrust the preparation of documents and filling out forms to experts. 

 

Stage 5. Obtaining a taxpayer number.

After registering a legal entity, you must obtain an individual tax number from the National Revenue Agency of Bulgaria. If the company’s turnover is expected to exceed BGN 100,000 per year, then you should also register as a VAT payer.

 

For your information! Some activities may require a license. The document is issued by municipalities or other authorized bodies.

 

Also, after registration of a legal entity, registration is carried out in institutions such as the Labor Inspectorate, the National Insurance Institute, the Commission for the Protection of Personal Data, and so on.

 

 

Taxes and reporting

 

The taxation system in Bulgaria is based on principles common to the EU. The main rates are as follows:

 

  • corporate tax – 10%;
  • tax on payment of dividends – 5%;
  • basic VAT – 20%.

 

For your information! If dividends are paid to a parent company in the EU, then the tax on the payment of dividends can be 5%. If the company operates in the field of international cargo transportation or supplies that are related to international transport, the value added tax rate will be 0%.

 

From January 1, 2023, the threshold for mandatory registration as a VAT payer has changed from BGN 50,000 to BGN 100,000. For the whole of last year, a threshold of BGN 50,000 was applied for mandatory VAT registration. In case of exceeding the threshold or voluntary registration as a VAT payer, an obligation arises to submit a monthly VAT return.

 

Companies in Bulgaria must keep accounting records, file financial and tax reports. In this case, both local and international financial reporting standards (IFRS) can be applied. Medium and large enterprises in the country (joint stock companies) are required to undergo an annual audit.

 

 

The cost of registering a company in Bulgaria

 

To find out exactly how much it will cost to register a company in Bulgaria, send us a request. In general, the price will depend on:

 

  • on the number of documents that need to be translated, legalized at the Ministry of Foreign Affairs, coordinated with the bank and the Trade Register;
  • on who will be the founder and director, as well as where they are located.

 

The cost is the least if the founders (shareholders) and directors are individuals and are located in Bulgaria, the most – if there is a foreign legal entity among the owners.

 

The basic cost of registering a company in Bulgaria from Lawrange is 2990 EUR and includes:

 

  • payment of state fees for company registration
  • assistance with opening a savings account in a bank to deposit the authorized capital
  • preparation and submission to the registrar of the necessary statutory documents for the company
  • obtaining an extract from the register of company registration
  • assistance with the selection of one of the banks in Bulgaria to open an account

 

 

Opening a bank account in Bulgaria

 

For a business to work successfully, you cannot do without a corporate account. Earlier we mentioned that a savings account is opened to deposit the authorized capital. However, it is impossible to use this account for settlement transactions already in the process of doing business. There are two ways out of the situation: 1) reorganize the account into a settlement account (not all bnks go for this); 2) open a new account.

 

Opening an account in Bulgaria with the support of Lawrange is a comfortable solution under any circumstances. The paperwork process usually takes 5-8 days. Priority options are being considered for opening an account with DSK Bank (OTP Group), Postbank, International Asset Bank, Unicreditbulbank. However, other options can be implemented at the request of the client. Often, for the convenience of clients, we recommend using a package of services: open a business in Bulgaria + open a corporate account in a local bank.

 

 

Conclusions

 

If you are faced with the choice of jurisdiction in the European Union for establishing a business, Bulgaria deserves attention in many respects, both for opening a company and, if necessary, registering a cryptocurrency company. Loyal tax legislation in the country is combined with minimal company maintenance costs, and the availability of both transport and information technology infrastructure allows the development of a large list of business areas.

 

Opening a business in Bulgaria is suitable for solving a number of problems: diversifying assets, entering new markets in Europe and Asia, optimizing taxation. Legal support from Lawrange experts provides an opportunity to avoid mistakes and loss of time at the stage of paperwork, and in the future, at the request of the client, can become a factor that increases business stability.

 

 

FAQ

 

How long does it take to register a company in Bulgaria?

 

If we are talking about registration remotely, then the procedure takes about two weeks. You can determine the time more precisely after finding out your individual circumstances (who will be the founder and so on).

 

Can a foreign person register a company in Bulgaria?

 

Yes. Both foreign citizens and foreign legal entities are allowed to establish and own businesses in Bulgaria. The only form of doing business that is available only to residents is individual entrepreneurship.

 

Is it possible to register companies in Bulgaria without my presence?

 

Yes. You can issue a power of attorney to a representative of Lawrange to register a company in Bulgaria remotely (without your visit to the country). Based on our practice, this service is provided entirely successfully.

 

 

 

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