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Company registration in Bulgaria

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What are the reasons for initiating a business in Bulgaria?

Bulgaria, with its strategic location in Southeast Europe, offers several compelling reasons for businesses to open company in Bulgaria. Here are some of the main reasons for company registration in Bulgaria:

While these factors make Bulgaria an attractive location for business ventures, potential investors should also consider challenges such as bureaucratic hurdles, market size, and economic fluctuations.

What are the requirements to start a business in Bulgaria?

Company formation in Bulgaria involves several steps and requirements. While the process is relatively straightforward, it's important to follow the necessary legal and administrative procedures. Here's an overview of the main requirements:

It's important to note that Bulgaria company formation process may vary slightly depending on the type of business and specific circumstances. Additionally, foreign investors may need to provide translated and notarized documents. Consulting with local legal and accounting professionals is advisable to navigate the process and ensure compliance with all regulations.

The expenses associated with forming a company in Bulgaria

Process of company formation Bulgaria involves several types of expenses. Some are mandatory and dictated by legal requirements, while others may vary depending on the specific circumstances of your company formation. Here’s a breakdown of the typical expenses which you can incur to open a company in Bulgaria:

It's important to create a budget that accounts for all these expenses to ensure a smooth setting up a company in Bulgaria. Keep in mind that while some of these costs are one-time expenses, others like legal, accounting, and operational costs might recur as you run your business.

Reserving a business name in Bulgaria

Selecting a trading name is the initial step in the process of registering a company in Bulgaria, once the type of company has been chosen.

There are specific criteria that need to be fulfilled when choosing the company name. Prospective business owners are advised to pick a minimum of three potential names to ensure that their preferred choice is available. The most preferred name should be listed first, followed by two alternative options. The process of reserving a trading name is straightforward and facilitates the rapid establishment of a company in Bulgaria. The right to the chosen and reserved name is protected for a period of up to 6 months before registration.

Should you be unable to be present in the country for certain steps, our legal team is equipped to manage these procedures on your behalf through a power of attorney.

Guidelines for setting up a bank account in Bulgaria

Opening a bank account in Bulgaria is a necessary step if you wish to register a company in Bulgaria. This is primarily because you need to deposit the minimum required capital for the chosen type of company into a bank account before the company can be registered. Here’s how it typically works.

The opening of the bank account generally happens before the registration of the company. You will need to open a temporary bank account in the proposed name of the company.

After the bank account is opened, the required minimum share capital must be deposited into this account. The minimum capital requirement varies depending on the type of company. For example, for a Limited Liability Company (OOD/EOOD), the minimum capital is usually 2 BGN (about 1 EUR).

The bank will issue a document confirming the deposit of the capital. This document is required when registering the company with the Bulgarian Commercial Register.

With the proof of capital deposit in hand, along with other necessary documents, you can proceed to register the company at the Bulgarian Commercial Register.

Once the company is registered, the temporary account is typically converted into a permanent business bank account.

Opening a bank account is thus a foundational step in order to set up a company in Bulgaria, and it’s important to choose a bank that aligns with your business needs and offers the necessary support for your company’s financial transactions.

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FAQ

What types of companies can be formed in Bulgaria?

In Bulgaria, various company structures are available to suit different business needs. Limited Liability Companies (OOD/EOOD) are popular among small to medium-sized businesses, with EOOD being a variant for a single shareholder. For larger enterprises, Joint Stock Companies (AD) are preferable, allowing the issuance of shares but requiring higher minimum capital. Sole Proprietorships (ET) are ideal for individual entrepreneurs, although they come with personal liability. General Partnerships (SD) involve two or more individuals sharing unlimited liability, while Limited Partnerships (KD) combine general partners with unlimited liability and limited partners whose liability is restricted to their contributions. Additionally, foreign companies can establish branches in Bulgaria to conduct business activities, acting as extensions of the parent company rather than separate legal entities. Each type offers distinct legal and financial characteristics, catering to a range of business objectives and scales.

Can a non-EU person be a director or a shareholder in Bulgarian company?

Yes, a non-EU person can be both a director and a shareholder in a Bulgarian company. Bulgaria does not impose restrictions on the nationality of shareholders or managers/directors in companies. Therefore, individuals from outside the European Union can hold shares in a Bulgarian company and can also be appointed to management positions, such as a director or a manager.

Can be a one person a shareholder and director in a Bulgarian company?

Yes, in Bulgaria, a single person can be both the sole shareholder and the director of a company. This is particularly common in the case of a Single-Member Limited Liability Company (EOOD), where one individual (or legal entity) holds all the shares of the company and can also act as the company's director or manager.

This arrangement allows for simplicity and flexibility, making it a popular choice for small business owners and entrepreneurs who wish to operate their businesses individually. However, even in this structure, the individual must comply with all legal obligations, including those related to company management, reporting, and taxation.

Is it necessary to travel to Bulgaria to open a company here?

No, it is not necessary to physically travel to Bulgaria to open a company there. The company formation process can typically be handled remotely.

How does the process of forming a Bulgarian company function?

If you want to set up company in Bulgaria, the process of forming involves deciding on the business structure, reserving a unique company name, preparing and notarizing incorporation documents, opening a corporate bank account to deposit the minimum capital, registering the company with the Bulgarian Commercial Register, obtaining a Tax Identification Number, and registering for social security and health insurance if hiring employees. Depending on the business type, additional steps like VAT registration and acquiring industry-specific licenses may be required. The process is relatively straightforward and can often be facilitated by legal professionals, especially for foreign investors.

How long does it typically take to complete company registration in Bulgaria?

The duration for completing company registration in Bulgaria can vary depending on several factors such as the type of company being established, the completeness and accuracy of the submitted documents, and the efficiency of the Bulgarian Commercial Register at the time of application.

Generally, the process of registering a company in Bulgaria can take anywhere from a few days to a couple of weeks.

This includes reserving the company name, preparing and notarizing documents, opening a bank account, and completing the registration with the Commercial Register. It's important to note that additional time may be required for tasks such as obtaining necessary licenses or permits, especially if the business is in a regulated industry. For foreign investors or those unfamiliar with the Bulgarian system, the process may take longer, and seeking assistance from legal professionals is advisable to ensure a smooth and timely registration.

What are the costs associated with company registration in Bulgaria?

The costs associated with company formation in Bulgaria include fees for reserving the company name, minimum capital deposits (varies by company type), registration fees with the Bulgarian Commercial Register, notary fees for legal documents, legal and professional fees if you hire experts, and potentially bank account opening fees. Additional costs might arise from translation and legalization of documents for foreign investors, as well as licenses or permits depending on your business. While some costs are fixed, others like legal and professional fees can vary widely.

What is the minimum capital of the company in Bulgaria?

The minimum capital required is 2 BGN (Bulgarian Lev), which is approximately 1 EUR, for the standard limited liability company (OOD).

Is a registered business address in Bulgaria required for a company?

Yes, having a registered business address in Bulgaria is required when forming a company. This address serves as the official domicile of the company and is used for legal and administrative purposes, such as receiving official correspondence and government notifications. It must be a physical address within Bulgaria, not a P.O. Box.

For some entrepreneurs, especially those based outside of Bulgaria or without a physical office, a common solution is to use a virtual office service. These services provide a legitimate business address, along with additional services like mail handling, and can fulfill the requirement for a registered business address.

It's important to ensure that the address is kept up-to-date in the Commercial Register and other official records. Any changes to the company’s registered address must be reported and registered accordingly.

Are there any tax benefits for companies in Bulgaria?

Yes, Bulgaria offers several tax benefits that make it an attractive location for forming a company. The country is known for having one of the lowest corporate income tax rates in the European Union, which is set at a flat rate of 10%. This low corporate tax rate is beneficial for businesses looking to maximize their profit.

Additionally, Bulgaria has a favorable outgoing dividend tax rate, set at 5%, which is appealing to foreign investors and business owners. For companies engaged in certain activities or operating in specific regions, there might be additional tax incentives or reductions.

Moreover, Bulgaria has a wide network of double taxation treaties with numerous countries, which can help prevent double taxation of income for businesses operating internationally.

Is it necessary to register as VAT payer for a company in Bulgaria?

In Bulgaria, not all companies are required to register as VAT (Value Added Tax) payers immediately upon incorporation. Whether or not a company must register for VAT depends on its taxable turnover and the nature of its transactions. Under general rule, a company must register for VAT if its taxable turnover exceeds or is expected to exceed BGN 100 000 over a 12-month period. This is roughly equivalent to about EUR 51 130. Also, the company will need to register as a VAT payer in case it carries out taxable supplies to other EU countries.

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Legal Due Diligence

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