Company registration in Bulgaria: Legal aspects and advice

If you are thinking about setting up a successful business in Europe, but want to start as soon as possible and with a minimum authorized capital, we recommend you consider registering a company in Bulgaria. The country is attractive for its moderate operating costs, ease of registration and administration, and comfortable tax system.

The Manimama team has conducted in-depth research, analyzed the main subtleties of registering a company in Bulgaria, and is ready to share its results and help you choose the right jurisdiction. 

What are the main advantages of incorporating a company (business) in Bulgaria?

1. Promising location:

Bulgaria boasts one of the most favorable locations for doing business, at the crossroads of trade routes between Europe and Asia. It makes the country strategically important for trade and logistics, enabling companies to operate efficiently across multiple destinations. And makes it an ideal location for companies planning to develop in international trade. In general, this location opens up wide opportunities for business development, searching for new markets, and establishing partnerships with companies from different countries.

2. Developed economic system:

Bulgaria has shown strong GDP growth over the past five years, making it one of the finest places to start a new business.

3. Highly developed port infrastructure:

Bulgaria has a developed port infrastructure that plays an important role in the country’s economy. The ports provide access to the Black Sea, which allows for trade with other parts of Bulgaria and countries in Europe, Asia and the Middle East. All ports are equipped with modern facilities and can accommodate vessels of various tonnages.

4. Favorable tax system:

Corporate tax is only 10%, making the country one of the lowest taxed in the European Union. Personal income tax (PIT) also has a flat rate of only 10%. As for the Value-added tax (VAT), there is a possibility of applying preferential tax rates. In addition, the country has entered into numerous double taxation treaties, which minimizes tax liabilities for international companies. 

5. Supporting and encouraging the development of entrepreneurial activity:

Bulgaria offers relatively low wage and rental costs for commercial real estate compared to other EU countries, which allows for lower operating costs and higher profitability. The labor laws are quite flexible, which makes it easier to hire and manage staff. Its moderate operating costs and access to qualified workforce make Bulgaria attractive to foreign investors.

 6. Ease of registration and administration:

Company registration in Bulgaria requires only a few days and a minimum authorized capital, which is a significant advantage if you plan to start your business as soon as possible and with a relatively small initial investment.There are electronic registration systems that reduce bureaucratic obstacles and shorten the time for registration, where it is possible to register a company completely online.

7. Strong international cooperation:

Bulgaria is a member of the European Union, which provides companies with access to EU markets. In addition, Bulgaria has been granted NATO membership, which serves as a guarantee of security and stability. The country is also a member of the Organization of the Black Sea Economic Cooperation, where Bulgaria operates with other Black Sea countries on issues such as trade, tourism, transportation, environment, and fisheries. This provides Bulgarian companies with access to international trade agreements and markets and contributes to the establishment of favorable conditions for international trade. 

How to register a company in Bulgaria and what are the main requirements for such registration?

Step 1. Initial Setup

• Initiating a preliminary project assessment, assessing risks, choosing the type of company, preparing the necessary documents and obtaining the necessary permits, determining the time frame, budget, and resources required to complete the process;
• Preparation and filing of the package of documents.

Step 2. Company registration

• Verification and reservation of the company name at the Bulgarian Commercial Register;
• Facilitating the notarial process for the company’s official registration;
• Opening a bank account in the owner’s name and depositing a minimum of €1 of the share capital;
• Incorporating the company’s data into the Bulgarian Commercial Register;
• Obtaining the Certificate of incorporation issued by the Bulgarian Commercial Register, Memorandum and Articles of Association;
• Obtain a business license (if applicable);
• Register for VAT – If the company is expected to have a turnover of more than BGN 100,000 per year, it must register for VAT.

Requirements for registering a company in Belgium on the example of a Limited Liability Company (LLC) / Druzhestvo s Ogranichena Otgovornost (OOD):

• Shareholders: single-member LLC or EOOD (Ednolichno Druzhestvo s Ogranichena Otgovornost) must have only one shareholder, while OOD (Druzhestvo s Ogranichena Otgovornost) is required to have two or more shareholders (in general, a shareholder can be a natural or legal person and there are no residency requirements).
• Director: the company must have a minimum one director (there are no residency requirements for a director and it can only be an individual).
• Company secretary: not required.
• Minimum share capital: LLC must be registered with a minimum capital of BGN 2 (approx. €1), paid before incorporation.
• Legal address: the company must have a registered legal address in Bulgaria (it can be its own premises or a rented one).
• Liability: the liability of the shareholders in an LLC is limited to the amount of capital they have invested in the company.
• Accounting: the company will be required to file its annual financial statements with the Bulgarian Trade Register every year, before March 31st.

What do you have to know about taxes when registering a company in Bulgaria?

Corporate income tax (CIT):

• This tax regime is regulated in the Corporate Income Tax Act.
• The flat rate is 10%.
• Bulgarian companies are taxed by corporate tax on their worldwide income. Foreign companies are subject to tax in Bulgaria on profits derived from activities performed through a permanent establishment in the country and on income from Bulgarian sources.
• The tax period for the assessment of the tax will be the calendar year. In respect of any newly incorporated taxable persons, the tax period shall cover the period from the date of registration thereof until the end of the year.
• Tax incentives: newly established companies investing in undeveloped regions (available for 5 years) – exempt from CIT is 10%; production companies investing in municipalities with unemployment higher than 25% from national average rate – exempt from CIT is up to 100%; licensed real estate investment trusts and collective investment schemes – exempt from CIT is 100%; manufacturing companies investing in undeveloped regions – exempt from CIT is 100%.

Personal income tax (PIT):

• This tax regime is governed by the provisions of the Personal Income Tax Act.
• The flat tax rate is 10%.
• Resident individuals are taxed on their worldwide income, while non-residents are taxed on their income derived from sources in Bulgaria.
• The tax period for personal income taxation is the calendar year, with the exception of income taxed subject to a final tax.

Value-added tax (VAT):

• The VAT regime is regulated in the Value Added Tax Law.
• The standard tax rate is 20%
• The reduced VAT rate is 9% (applicable for hotel accommodation; camping or caravan for tourist groups; books and periodicals; foods for babies) and 0% (intra-community passenger travel by air and sea; exports and intra-community supplies of goods; gold to central banks; services related to vessels and aircraft).
• In the case of mandatory VAT registration (exceeding the prescribed threshold), an application for registration with the tax authorities must be submitted within 14 days after the end of the tax period in which the amount was exceeded.

For readers

Manimama provides services to help you choose the right jurisdiction for your company’s incorporation, as well as to register your business in Bulgaria and create a strategic framework for its successful operation and development in the long term. We have a good understanding of the tax and legal peculiarities of specific jurisdictions, which helps our clients make an informed choice based on their unique needs and development strategies. In our work, we take into account factors affecting the business environment, such as the level of competition, access to financial and human resources, as well as opportunities for further growth and development in different jurisdictions. 

By choosing our company formation service in Bulgaria, you are working with a law firm that values integrity, competence, and client satisfaction. Let us help you set up a company in Bulgaria and pave the way for your business success!

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The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.