Company formation in Bulgaria

Before deciding to set up a new company in Bulgaria, read the information below to understand the characteristics 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.

• 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%.

• 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.

• 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.

Double taxation avoidance agreements in Bulgaria: Albania, Austria, Belarus, Belgium, Croatia, Cyprus ,Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Moldova, Montenegro, Netherlands, North Macedonia, Norway, Poland, Portugal, Romania, Russia, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, Ukraine, United Kingdom, Bahrain, Egypt, Iran, Israel, Jordan, Kuwait, Lebanon, Qatar, Saudi Arabia, Syria, United Arab Emirates, Algeria, Egypt, Morocco, South Africa, Armenia, Azerbaijan, China, Georgia, India, Indonesia, Japan, Kazakhstan, Korea, Mongolia, North Korea, Pakistan, Singapore, Thailand, Uzbekistan, Vietnam.