Getting started in BG
No where in the EU the combined pressure for corporate, income and dividend tax are lower than in Bulgaria. With a flat rate of 10% for corporate and income tax and a 5% dividend tax, Bulgaria is by far cheaper than any other EU country.
Combine the low taxes with a very pleasant climate, the beautiful nature and the low costs of living and it is obvious why Bulgaria is an excellent location for many entrepreneurs.
A few handy facts:
- a flat rate 10% income and corporate tax;
- a 5% dividend tax’;
- Bulgaria is part of the European Union, with all the benefits that come with EU membership;
- the Bulgarian currency is the lev. The code for lev is ‘BGN’.
- 1 EUR = 1.95583 BGN. This rate is fixed and does not fluctuate. For more info
- online banking in english is common just like else where in the EU
The good news
The good news is that for approximately 2,000 BGN (approximately 1,000 EUR) one or more natural persons can be setup with a fresh standard limited liability company and bank account. Included are:
- a decision of incorporation
- a contract of incorporation and appointment of manager
- accepting management position in front of a notary
- registration in commerce register
- power of attorney for an accountant to represent the company at the tax office.
- VAT registration1
The decision and contract of incorporation, declaration of accepting management and power of attorney will be in BG and foreign languages such as English, German, Dutch, Spanish French translated by a certified translator. It is only the manager(s) that actually has to be in Bulgaria to sign in front of the notary and authorize the accountant at the tax office. Shareholders can sign the documents on a distance.
Mind you for foreign legal entities that start or take part in a limited liability company the procedure is slightly more complicated. A foreign company’s decision has to meet the applicable regulations of the country where it is located and it’s own company statutes etc.
Limited company, public company or self-employed.
Business activities in Bulgaria are normally carried out as:
personal companies such as:
capital companies such as:
Here under we will only high light the most common or information purpose we will only highlight the most common capital companies.
|Min. capital||2 BGN||2 BGN||50,000 BGN|
|Min. share holders 7||1||2||1|
|Min. directors 8||1 person||1 person||3 persons|
|Can have employees||yes||yes||yes|
|Incorporation costs 9||2000 BGN min||2000 BGN min||on request|
The only significant difference between the eOOD and OOD is the amount of shareholders. The ‘e’ before OOD is to indicate that the eOOD only has one shareholder.
How to register a company?
Let’s start with mentioning that it is our believe that all documents regarding company decisions, company contracts etc should not only by in Bulgarian but also a language the founder(s) understand. For most languages like English, German, Russian, French, Spanish, Dutch etc that will fortunately not be a big issue.
What is needed?
- choosing an office address
- a decision to start a company10
- draft and sign a company contract11
- decision to appoint a director
- director needs to accept an appointment at a notary
- open at a Bulgarian bank a ‘capital account’ and deposit the minimum required capital 12;
- pay fees at the Commercial Register;
- submit application at Commercial Register;
- decision from the Commercial register to accept registration’
- opening of a ‘normal’ bank account;
Not required by law but kind of unavoidable in most cases are:
- a vat registration; and
- a power of attorney for accountant to represent the company at the tax office.
Unfortunately the whole procedure can not be done online but requires one or more visits to the bank, notary, commercial register etc.
A founders involvement can be reduced via a power of attorney so that the founder(s) presence is limited to setting up (online) banking, and accepting management of the company in the event no local resident is appointed as manager.
The company manager
A part of the manager’s tasks is making sure that the company complies with Bulgarian laws such as tax and social security insurance laws.
Health and Social Security insurances
Rates for 2018 year:
- health insurance is 8% (employer part 4.8% and employee part 3.2%);
- social security insurance is around 25% (employer part 14.5% and employee part 10.5%)13;
however no health insurance or social securities are owned over salary above approximately 2,600 BGN per month.
DDS (vat) registration is obligatory for companies that buy or sell within the EU or that have at minimum 50,000 BGN per year sales domestically. ↩︎
A general partnership is formed by two or more persons for the purpose of effecting commercial transactions by occupation under a common trade name. The partners shall be liable jointly and severally and their liability shall be unlimited. Comparable to the Dutch V.O.F. ↩︎
A limited partnership is formed by means of a contract between two or more persons for carrying out commercial activities under a common trade name, whereby for the partnership’s obligations one or more of the partners shall be liable jointly and severally and their liability shall be unlimited, and the remaining partners’ liability shall not exceed the amount of the agreed upon contribution. Comparable to the Dutch C.V. ↩︎
A limited liability company may be formed by one or more persons who shall be liable for the company’s obligations to the extent of their share contributions to the company’s capital. If there is only one share holder the company is not called an OOD but an eOOD. ↩︎
A joint stock company is a company the capital of which is divided into stocks. The company shall be liable before its creditors with its assets. ↩︎
A limited stock partnership shall be formed pursuant to a contract, whereby for the contributions of the limited partners are issued stocks. The limited partners shall be not less than three. ↩︎
Natural persons and legal entities are allowed to hold shares. ↩︎
Only a natural persons can be a director. They may not be declared insolvent or have been a manager or a member of a managing or controlling body of a company terminated for bankruptcy within two years before the bankruptcy decision if not all creditors have been paid. ↩︎
Mind you! These costs are an indication and by no means a final offer. Every situation has to be judged on it’s merits. ↩︎
When a foreign company decides to start a Bulgarian subsidiary it is necessary that all foreign public documents such as for instance documents that proof who are entitled to represent the company and may decide to participate in a new (foreign) company are legalized. In most countries that happens via an ‘Apostille’. This is a standard procedure that normally takes a few days. ↩︎
There is no formal requirement to sign any of the other documents at a notaries office. It is however advised that all decisions and contracts are drafted by a lawyer who knows the rules and regulations so that these doc’s meet the standards set by law. ↩︎
This account only serves to proof the required minimum capital had been deposited. It is not an account for making or receiving payments; ↩︎
The rates can be 1 or 2 percent higher or lower depending of the type of company activities; ↩︎