Bulgarian Company Formation
Introduction to Bulgarian company formation
Bulgaria is the latest EU-entrant, at the crossroads of Europe and Asia. The legislation in Bulgaria is designed to be advantageous to foreign investors and the income tax regime is amongst the lowest in Europe; a 10% flat tax on all sources of income and favourable tax treaties with its European partners. Bulgaria also has one of the lowest costs of labour and services in the EU, despite having a well-qualified workforce. For more information on Bulgarian incorporation, and how to open a Bulgarian company, please contact us.
What are the benefits of a company in Bulgaria?
The main advantages of the country can be classified as follows:
- Tax benefits: Bulgaria has the lowest taxation within the EU, with Corporate Profit Tax at a flat rate of 10%. Bulgaria tax legislation is completely synchronized with EU legislation. Government policy is focused on building a favourable business climate for foreign investors.
- Less risks: Bulgaria joined the European Union in January 2007. Since 1998 the local currency rate has been fixed to the Euro: EUR/BGN = 1.95583. It is expected that Bulgaria will introduce the Euro as its official currency in 2012.
- Fast and easy procedures: It takes only several days to register a new company in Bulgaria. The minimal start-up capital has been reduced to only €1. International VAT registration takes 10 days.
- Banking facilities: The biggest European banks are represented in Bulgaria. This is perfect for the organization of banking and E-banking.
- Double tax treaties: Bulgaria has signed Double Taxation Treaties with 58 countries all over the world.
- Low business costs: Low-cost, highly-trained employees, very affordable rents, excellent value for real estate.
- Perfect location: Situated on the main road between Europe and Asia and in the centre of the Balkan Peninsular, Bulgaria is more than a good business choice. There are also 4 Pan-European transport corridors that cross the country, with 3 of them making their connection in Sofia.
What are the most common types of Bulgarian company formation?
- Limited Liability Company: Either sole-owned (EOOD) or with multiple shareholders (OOD)
- Joint-Stock Company: Either sole-owned (EAD) or with multiple shareholders (AD)
Foreign companies looking to incorporate in Bulgaria may operate either through a Subsidiary (incorporated under Bulgarian law) or as a Branch.
How much share capital is required to establish a limited liability company (EOOD / OOD)?
The minimum share capital is only 2 Bulgarian leva (BGN), which is equivalent to €1.
What are the formalities regarding Bulgaria incorporation as an EOOD / OOD?
• There should be a copy of the identity documents of all the owners of the company (if individuals) or legalised copies of the corporate documents of owners – legal entities.
• The share capital should be placed in a special capital-raising bank account opened for this purpose.
• The articles of association should be drafted and signed by all shareholders.
What other requirements are there for a EOOD / OOD?
- There needs to be at least one director, to represent the company in front of all authorities; there is no requirement for the director/s to be resident in Bulgaria.
- An audit is only required if the company exceeds certain limits for turnover, assets or employees
- Monthly VAT returns should be filed if the turnover exceeds €25,000.
- The company should have a bank account and local address for efficient communication with the authorities.
How much share capital is needed for a joint-stock company (EAD / AD)?
The minimum share capital BGN 50,000 (approx. €25,000), of which at least 25% or €6,250 must be initially paid up, the remainder to be paid up within 2 years of incorporation.
What are the other features of an EAD / AD?
- The company should have at least three board members
Shares can be easily transferred by endorsement to a new shareholder/s
An annual audit is required for all joint-stock companies
What other types of Bulgarian company formation are there?
Non-resident companies can register a Bulgarian Branch or a Representative Office in Bulgaria.
How easy is it to recruit staff?
The country has a skilled workforce, which is very much concentrated in the capital Sofia. Labour costs are low, as are national insurance contributions for both employers and employees. Bulgarian workers are noted for their IT skills and English is widely spoken. Click here for assistance with recruitment.
What is the regulatory environment like for those seeking company registration Bulgaria?
Bulgaria guarantees the freedom to set up a company and transfer capital to all foreign companies and to any foreign investor who wishes to settle in the country, in order to start a commercial or industrial operation.
No prior authorisation is needed except for certain highly-regulated businesses, such as banking, insurance, and transport.
How easy is it to close a Bulgarian company?
Please click here for further details and services on closing a company.
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