Bulgaria is an attractive destination for entrepreneurs due to its low corporate tax rate (10%), strategic location in the EU, and business-friendly regulations. Setting up a company in Bulgaria is a straightforward process, whether you are a local or a foreign investor. This guide will walk you through the key steps, legal requirements, and costs involved in opening a business in Bulgaria.
1. Choosing the Right Business Structure
Before registering a company in Bulgaria, you must decide on the legal structure. The most common types of companies include:
1.1. Limited Liability Company (OOD)
- Most popular choice for small and medium enterprises (SMEs).
- Requires a minimum share capital of 2 BGN (~1 EUR).
- Can have one or multiple shareholders.
- Limited liability—owners are responsible only up to their capital contribution.
1.2. Sole-Owned Limited Liability Company (EOOD)
- Similar to OOD but owned by a single shareholder.
- Ideal for individual entrepreneurs who want limited liability protection.
1.3. Joint Stock Company (AD)
- Suitable for large businesses that require substantial capital.
- Minimum share capital: 50,000 BGN (~25,500 EUR).
- Shares can be publicly traded.
1.4. Sole Proprietorship (ET)
- Owned and operated by a single individual.
- No separate legal entity—the owner is personally liable for debts.
- Suitable for freelancers and small traders.
1.5. Branch of a Foreign Company
- Allows an international company to operate in Bulgaria without creating a separate legal entity.
- The parent company remains fully liable for the branch’s obligations.
1.6. Variable Capital Company (VCC)
- A flexible business structure with no fixed minimum capital requirement.
- Shareholders can adjust their contributions over time without complex formalities.
- Suitable for startups and investment firms needing scalability.
- Limited liability protection for shareholders.
2. Steps to Register a Company in Bulgaria
Once you choose the appropriate business structure, follow these steps to officially register your company in Bulgaria.
Step 1: Choose a Unique Company Name
- The name must be unique and not already registered with the Bulgarian Commercial Register.
- Verify name availability on the Bulgarian Trade Register website.
Step 2: Prepare the Company Documents
- Articles of Association (for OOD/AD) or Sole Ownership Declaration (for EOOD).
- A notarized specimen signature of the company director.
- Proof of registered office address in Bulgaria.
- Bank certificate confirming the deposit of the minimum share capital.
Step 3: Open a Corporate Bank Account
- A Bulgarian bank account is required to deposit the share capital.
- Banks may request proof of identity, business activity description, and initial deposit.
Step 4: Register with the Bulgarian Commercial Register
- Submit the required documents to the Bulgarian Registry Agency.
- Registration is usually completed within 1-5 business days.
Step 5: Obtain a VAT Number (If Required)
- Mandatory for businesses with annual turnover exceeding 100,000 BGN (~51,000 EUR).
- Voluntary VAT registration is available for international transactions.
Step 6: Register with the National Revenue Agency
- Required for social security and tax purposes.
- Employers must register employees within 7 days of hiring.
Step 7: Obtain Necessary Business Licenses (If Applicable)
- Some industries (e.g., financial services, tourism, healthcare) require special permits.
- Verify licensing requirements with the Bulgarian Chamber of Commerce.
3. Costs of Setting Up a Company in Bulgaria
3.1. Government Fees
- Company registration fee: 110 BGN (~56 EUR) (standard processing) or 55 BGN (~28 EUR) (expedited processing).
- Notary fees: Vary based on documents.
- VAT registration fee: Free, but may require additional accounting fees.
3.2. Legal and Administrative Costs
- Lawyer/accountant assistance: 300-1,000 EUR (optional but recommended for foreign investors).
- Virtual office rental (if needed): 100-200 EUR per month.
- Business bank account setup: Some banks charge a one-time setup fee (~50-200 EUR).
4. Taxes and Accounting in Bulgaria
4.1. Corporate Taxes
- Corporate Income Tax (CIT): 10% flat rate (one of the lowest in the EU).
- Dividend Tax: 5% on distributed profits.
4.2. VAT (Value Added Tax)
- Standard VAT rate: 20%.
- Reduced VAT rates: 9% (tourism industry), 0% (exports within the EU).
- Mandatory VAT registration threshold: 100,000 BGN (~51,000 EUR) annual turnover.
4.3. Payroll Taxes and Social Security
- Employers must pay social security contributions (~18-20% of gross salary).
- Employees pay 9% in social security contributions.
5. Opening a Company as a Foreigner in Bulgaria
Bulgaria allows foreign investors to fully own and operate a business without residency requirements. However, additional steps may be required:
- Power of Attorney (if registering remotely through a representative).
- Certified translations of foreign documents.
- Opening a Bulgarian bank account (some banks require local presence).
6. Benefits of Opening a Company in Bulgaria
✅ Low Corporate Tax Rate – Only 10% corporate tax (one of the lowest in Europe).
✅ Access to the EU Market – Full access to the European Single Market.
✅ Affordable Business Costs – Low wages and operational expenses.
✅ No Residency Requirement – Foreigners can own and manage businesses without living in Bulgaria.
✅ Double Tax Treaties – Over 70 tax treaties to prevent double taxation.
Opening a company in Bulgaria is a simple and cost-effective process that offers numerous advantages to both local and international entrepreneurs. By following the steps outlined in this guide, you can successfully establish and run a business in Bulgaria with ease.
If you need legal assistance with company formation, tax planning, or business operations in Bulgaria, contact our Law Office at LegalFrame.bg for expert guidance.
