Register an ET in Bulgaria

Starting your own business is a profitable initiative for anyone striving to gain independence from an employer and personally influence their income. Often, the first step on this path is the registration of a sole proprietorship. This type of self-employment is defined by a quick registration process, simplified tax system, and additional benefits.

Lately, opening an ET in Bulgaria has been gaining increasing popularity among entrepreneurs.

From this material, you will learn how to register as a self-employed person in this jurisdiction, who is eligible to do so, and most importantly – what you can expect when starting a business in a developing country in Southeastern Europe.   

What Is a Sole Proprietorship in Bulgaria?

Bulgarian sole proprietorship – one of the most common forms of business organization in this jurisdiction. Other its names – ET and едноличен търговец, which can be translated as sole trader.

These terms refer to a business that is owned and operated by an individual, who assumes full personal liability for all losses and debts of the ET.

Other characteristics of this form of employment in Bulgaria include:

• the owner is one natural person, meeting certain requirements (we will talk about them later);
• ET is not a separate legal entity – the business and its owner are actually indivisible;
• received profit is taxed as personal income of the individual;
• for legal activity, registration in the Bulgarian Commercial Register is required;
• there is a possibility to hire employees, but the owner is not considered one;
• accounting rules are simpler than for more complex legal-organizational forms of enterprises.

We will now examine most of these points in greater detail. Now let us stop at the requirements for the person wishing registration of sole trader in Bulgaria.

Who Can Open a Sole Trader Company?

To register an ET in Bulgaria is relatively simple. However, there is one “but”: not everyone can do it.

Below, we will outline the key requirements entrepreneurs must meet to start a business.

Citizens of EU Countries

Residents of Bulgaria can without problems open Bulgarian sole proprietorship. However, they must comply with certain conditions:

1. Age restrictions. A sole proprietorship can be opened only after reaching 18 years of age.
2. Legal capacity. The entrepreneur must not be under guardianship and must not be declared legally incapable.
3. Absence of restrictions on engaging in entrepreneurial activity. This implies that you must not have been declared bankrupt and must not be legally restricted from conducting business.

As for citizens of other EU countries, they are eligible for registration of individual entrepreneur in Bulgaria only if they have permanent residence in this country.

Non-residents and Foreigners

Foreigners receive the right to register ET only if they have permanent residence permit in Bulgaria.

Such strictness is explained by the fact that this form of employment is strictly linked to the legal identity of the business owner. According to local legislation, he must necessarily have permanent residence on the territory of the country.

Benefits of Registering a Sole Proprietorship in Bulgaria

Creating an ET in Bulgaria is the optimal option for those who have chosen small business. This form of employment has the following advantages:

1. Low initial costs. The cost of registration of ET in this country is more than acceptable. Moreover, there are no requirements for minimum starting capital, as in the case of other forms of business organization.
2. Fast registration process. First, you will need a minimal package of documents, which significantly speeds up the preparation of registration. Second, the registration procedure in the Bulgarian trade register usually takes only a few days.
3. Full control over the business. In Bulgaria, the activity of a sole proprietor is closely connected to the person of its owner. This means that you will directly make all decisions and keep all profit.

Another advantage is the absence of the need to appoint directors and shareholders.

1. Simplified accounting and reporting. In this country, simple requirements are in place for accounting and preparation of business reports.
2. Favorable tax climate. Tax legislation of Bulgaria is very loyal to individual entrepreneurs. Their profit is taxed here as income of natural persons. This can be much more profitable than corporate tax.
3. Good reputation at the local level. ETs in Bulgaria are serviced without issues by local banks and are trusted by clients and government authorities.

The main thing to consider is that the entrepreneur bears full liability for all obligations of the enterprise. Therefore, this form of self-employment is not the best option if your activity carries a high level of risk.

Required Documents

To register as a self-employed person in Bulgaria, prepare the following package of documents:

• Application form (A1). This is a standard document submitted to the Bulgarian Trade Register. Typically, it is required to specify the company name in it. However, if applicable, it must also include the required licenses, qualification certificates, etc.
• Copy of identification document. For Bulgarian citizens, a copy of the national identity card is suitable. For foreigners – a copy of the permanent residence permit and passport.
• Sample signature. This document must be created in the presence of a notary. It confirms the signature that the entrepreneur will use on legal documents.
• Declaration of compliance with Bulgarian commercial law. It will serve as confirmation of the entrepreneur’s legal capacity and financial solvency.
• Declaration verifying the correctness of the information submitted.
• Receipt of payment of state fees. In Bulgaria, you will need to pay a registration fee.

For prompt and seamless document preparation, we recommend contacting professional lawyers.

Taxation for Sole Proprietorships in Bulgaria

In Bulgaria, self-employed individuals benefit from advantageous tax conditions. Let’s look in detail at which payments to the state budget you will need to make:

• Personal income tax. The sole proprietor is taxed at a rate of 15%. It is calculated based on the annual income from business activities minus allowable expenses.
• Social Contributions. This category of expenses includes pension and health insurance, as well as contributions to the unemployment fund and additional pension funds.
• VAT. VAT registration is mandatory for the entrepreneur if their annual income exceeds 100,000 BGN. A common rate of 20% is applied to the majority of sectors. Consult a lawyer regarding exceptions.

Please note: tax returns must be submitted annually by March 31.

Step-by-Step Registration Process

Setting up a business in Bulgaria is a straightforward process. To create a Bulgarian sole proprietorship, you need to complete only 4 steps.

#1. Choose a Company Name

In Bulgaria, there are specific requirements for a company name. First, it must include the name of its owner and the abbreviation ET.

Second, it must be unique. To check if this condition is met, perform a search on the Trade Register website.

#2. Prepare Required Documents

The next step is to prepare the necessary package of documents. We described in detail above what exactly you will need.

In short, you will need to fill out the A1 form, provide identification, a receipt for payment of fees, and several additional statements confirming your compliance with the established requirements.

#3. File with the Bulgarian Trade Register

When the package of documents is assembled, you can apply to the Bulgarian Trade Register. 

You have two options. You can submit the documents in person at the local Registry Agency office, or online via the portal of the same Registry Agency. However, if you choose the second option, be prepared that you will need a qualified electronic signature (QES).

Open a Bank Account and Register for Taxes

Registration of sole trader in Bulgaria does not require starting capital. However, this does not imply that opening an account in Bulgaria can be avoided. This step will allow you to separate personal and corporate finances. This way, you will make accounting easier.

In addition, you will have to register with the National Revenue Agency (NRA). This is necessary for financial compliance – for the purposes of social security and income tax payment.

We would like to remind you that VAT registration is necessary only if your annual income exceeds 100,000 BGN.

Can a Non-Resident Open a Sole Proprietorship in Bulgaria?

If you are choosing the appropriate legal form for non-resident business, ET is not what you need. This contradicts the legal norms in the sphere of company registration in Bulgaria. Let’s take a closer look at what lies at the heart of such restrictions.

Legal Conditions

According to the Bulgarian Commercial Law, only persons who have permanent residence in Bulgaria can open sole proprietorship in the country. That is, ET is directly connected to the civil status and legal address of the person.

Residency and Business Visa Connection

Although a business visa alone is not sufficient for ET registration, its presence can be the first step toward obtaining a residence permit. Let us explain how it works.

Since the type D visa allows for an extended stay in the country (up to six months, and sometimes up to a year), it is often used to apply for long-term residence. And later – for permanent residence.

Pricing and Timeline

How quickly can you open ET in Bulgaria and what costs should you be prepared for? Let’s figure it out below.

How Much Does It Cost to Register?

To register in Bulgaria as self-employed, you will have to pay a registration fee. The amount will differ based on the submission method. If you do it online, the procedure will cost 15 BGN. When applying in person at the Registry Agency office, the cost increases to 35 BGN.

In addition, you will incur additional expenses:

• notary fee for verifying the authenticity of a sample signature.
• payment for document translation or legalization;
• payment for the services of qualified accountants and legal professionals.

How Long Does the Process Take?

Registration of individual entrepreneur in Bulgaria is a fast procedure. If you apply to the Registry Agency online, it will take no more than 1–2 working days. When submitting documents in person, the process may take up to a maximum of 4 days.

Also note that qualified legal support can further accelerate the registration.

Why You Should Choose Lawrange

Planning to register Bulgarian sole proprietorship? Contact the experts of AA Lawrange. We know all the nuances of working in this country and will make this procedure as fast and simple as possible.

Enlist the support of AA Lawrange attorneys and you will receive:

• Expert services thanks to significant experience – for more than 10 years, we have been helping entrepreneurs conquer foreign markets.
• Full support in all aspects of starting and running a business – we specialize in legal, tax, and accounting matters.
• Individual approach to each client – we will advise you on opening ET or help choose another form of business organization.

Contact our manager and start conquering the promising Bulgarian market today!

Conclusions

Registration of sole trader in Bulgaria is an excellent choice for residents of the country. By opening ET, you can develop a business in a promising European country, taking advantage of a simplified taxation and accounting system.

Want to go through the registration procedure quickly and without unnecessary problems? Get in touch with the attorneys at AA Lawrange for complete assistance. We will be with you from the moment of preparing the necessary documents to assistance in further business operations.

FAQ

ORDER A REGISTER AN ET IN BULGARIA