Company Formation in Bulgaria

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Why Choose Company formation in Bulgaria?

Bulgaria is a Southeastern European country that shares borders with Romania, Serbia, North Macedonia, and Turkey, which provides easy access to various markets and makes Bulgaria a hub for business expansion. The Bulgaria business setup will help you to get a skilled workforce to contribute to business growth and foster innovation and competitiveness, creating a favourable business environment. The factors that make Bulgaria a most favourable country for Company Formation in Bulgaria are low corporate tax rates, well-developed infrastructure and a supportive legal framework for your businesses.

Company Formation in Bulgaria: Synopsis of Business Environment

If you are new to doing business in Bulgaria or looking for the expansion of your business, then Bulgaria is among one of the best low-tax rate countries in Europe for doing business in Bulgaria to unlock the growth of your business and maximize the profit rate with our seamless services of Company Formation in Bulgaria. Our service of Company Formation in Bulgaria helps increase the credibility and authenticity of the business by complying with the legal aspects of its functioning. Doing business in Bulgaria boosts a highly favourable business environment that attracts investors due to the strategic location in Europe, offers political stability, and offers a supportive regulatory framework for business setup. The country’s low tax rates make it more attractive for Bulgaria for business setups seeking to optimize their fiscal efficiency. The Company Formation in Bulgaria will help you foster a business-friendly environment due to the growth of the market, cost-effective skilled labour force, access to the international market, etc., contribute to the overall ease of doing business in Bulgaria and help in expanding business in Bulgaria.

Market Analysis for Bulgaria Company Registration

Bulgaria has made progress in terms of economic and political reforms due to stability in the financial system and business climate. In 2021, Bulgaria made after the COVID-19 some policy measures, due to which the global commodity prices gradually recovered and trade strengthened. The GDP growth in 2021 increased between 3.0% to 4.7%. In 2019, the population of Bulgaria consisted of 1.6% of the population of the European Union, and the literacy rate increased to 98%, which ultimately affected the low cost of labour and made Bulgaria an attractive destination for foreign investment. The BMI report of 2019 assured that Bulgaria has a promising growth potential over the next decade due to its cost-effective labour, growing political stability and increase in productive capacity. The combination of the lowest market labour cost and corporate rate tax attracts foreign investors and has made considerable progress in the last 25 years by reforming the economy. The Foreign Direct Investment, European Union Funds and digital transformation will contribute to the future growth of the local economy. Bulgaria Company registration in industry sectors has a strong industrial basis and increased the industry share in the total share of manufacturing in GDP and the industries in following sectors such as energy, mining, agriculture, tourism, IT, telecommunication, and pharmaceuticals, which boost competitiveness, sustainable growth and job opportunities. According to Oxford Economics, the fastest-growing sector of industry over the next decade will be rubber and plastic, high-tech goods, and wood products.

Advantages of Company Formation in Bulgaria

Business Opportunities

Bulgaria business registration will help you take advantage of business opportunities such as helping the business succeed in a diverse range of sectors, getting a gateway to emerging markets in both eastern and western Europe, fostering international trade, and attracting investors. Also, Bulgaria's economic growth provides opportunities in sectors such as information technology, manufacturing and renewable energy.

Easy Bulgaria Business Setup

Bulgarian Company registration is an east setup for forming a company in Bulgaria. The competitive advantage of lower operational costs, business-friendly policies, etc., helps in setting up the incorporation of a business in Bulgaria, which is an easy process. The minimum requirement of capital is one euro, and it is less expensive in comparison with other EU and even non-European Union countries. The Company Formation in Bulgaria is an easy step because any company will only require one owner, and the owner can be a foreigner. Also, there is a need for at least one director to represent the company, which means there is no such requirement for local directors.

Low Tax Rate

Company Formation in Bulgaria has one of the lowest corporate tax rates in the European Union, which is 10%, which states the benefits of doing business in Bulgaria for individuals and corporations to enable businesses to maximize profits. Due to the business-friendly tax system, foreign investors attract more investment in the company.  The company formation in Bulgaria helps your company after its initial incorporation, and it generates profit. The company will pay corporate income tax on an annual basis.

Strategic Location

Bulgaria company registration helps you to incorporate a business in Southeast Europe, which has a strategic location and provides businesses with easy access to markets in both Eastern and Western Europe to make it an ideal hub for trade.

Stability of Economy

The company formation in Bulgaria helps you to enjoy maintained economic stability, and its currency, the Bulgarian Lev (BGN), is fixed to the Euro, which reduces currency exchange risks for businesses. Bulgaria has an open and market-based economy with low public debt and a stable economy due to its diversified business sectors.

Skilled Workforce

Bulgaria company registration helps you with a well-educated and skilled workforce at competitive labour costs, making it an attractive destination for businesses seeking quality talent.

Double Taxation Treaties

The company formation in Bulgaria will help you to provide an extensive network of double taxation treaties to prevent double taxation of income for businesses engaged in cross-border activities. Bulgaria has signed agreements with different countries to avoid double taxation in the world.

Why Choose Enterslice for Company Formation in Bulgaria?

Legal Compliance

Enterslice helps in company formation in Bulgaria by ensuring the registration or the functioning of the company complies with the law, and the business must be registered with the Bulgarian Commercial Register and adhere to corporate governance principles to ensure compliance with internal rules and regulations. Our incorporation services in Bulgaria ensure legal compliance with labour law, environmental law, General Data Protection (GDPR) in the European Union and other regulated laws.

Preparation of necessary papers

Enterslice assists in drafting and preparing the Memorandum and Article of Association, coordinating and handling notarization of relevant necessary papers, and preparing or ensuring the accounting statements, agreements or contracts, etc., for your company.

Tax Implication

Our Company Formation service in Bulgaria assists the experts in corporate tax services, structuring of tax, compliance with tax laws, indirect tax services such as VAT, and evaluation on which tax structure aligns with your financial goals and with the concept of social contribution. Our service helps in registering for tax purposes, including a unique identification number, VAT number, and EIK if required, and ensures the filing of annual returns and financial statements for your company.

Advisory

Our service will help you assist with specific business considerations, such as opening a corporate bank account or addressing unique challenges your business may face and mitigating the risk of losses. Guide legal requirements and provide expert advice on the most suitable business structure and support in providing work permits and visas for non-residents of the European Union. Also, it provides business strategies and helps in promoting business operations and ensuring financial protection. We also help you stay updated about the latest regulations for business aspects.

Types of Business Entities with their Tax Implication for Company Formation in Bulgaria

Limited Liability Company (OOD)

Our company formation service in Bulgaria as a Limited Liability Company helps small and medium enterprises and provides limited liability to the shareholders, such as a limited contribution to the company's capital. It is considered to be the most adopted business entity because there is no need to submit a minimum share capital for company formation in Bulgaria. There is a requirement of a minimum of one shareholder and director at the time of the formation of the company in Bulgaria as an LLC.

The tax implication rate in LLC is 10% of the corporate tax rate on the company's annual profits. Companies with annual turnover exceeding a certain threshold, that is, 50,000 BGN (25,500 Euros), are required to register for VAT, and the standard VAT rate is 20% with reduced rates for specific goods and services. The withholding tax on the distributed divided to residents and non-resident shareholders is 5%.

Joint Stock Company (AD)

Bulgaria company registration services for a joint stock company help design for performing major business or large companies and must be incorporated by at least two individuals or corporate bodies. They issue shares with a minimum share capital of BGN 50,000, and a minimum of 25% of the share capital must be used for the registration process. The minimum requirement of shareholders is two: a board of directors and a registered office in Bulgaria.

The implication rate for the Joint Stock Company is 10% of the corporate tax rate on the company's yearly profits. Companies with an annual turnover exceeding a threshold of 50,000 BGN (25,500 Euro) must register for VAT. The standard VAT rate is 20%, but there are reduced rates for specific goods and services. The withholding tax on distributed dividends to both resident and non-resident shareholders is 5%.

Single Member Limited Liability Company (EOOD)

You need to perform a Bulgaria business registration to form the business as a single member with limited liability with a single shareholder and provide the benefits of limited liability to sole owners. It requires one shareholder and at least one director with a registered office in Bulgaria to form an EOOD.

The tax implication of the Single Member Limited Liability Company is similar to the Limited Liability Company with 10% of the corporate tax rates, VAT on the required threshold limits of 50,000 BGN (25,500 Euro) and 5% of the withholding tax on the distributed divided to the resident or non-resident shareholders.

General Partnership (SD)

Our Bulgaria company registration services help form a business as a general partnership where two or more individuals share the responsibilities, profits, or losses. The requirements for forming a company as a general partnership are that you need two partners to establish a company in Bulgaria as SD.

The tax implication for General Partnership companies is that the profits generated are not subject to corporate income tax because partners are taxed individually on their share of profits, and the partners are required to register for the VAT based on their annual turnover.

Limited Partnership (KD)

Our Bulgarian company registration services help in a partnership with both types of partners, such as the general who manages the business and the limited partner who has a limited liability. The requirement for forming a limited partnership company is that you require at least one general partner and one limited partner for the company formation in Bulgaria.

The tax implication for Limited Partnership companies is that the profits generated are not subject to corporate income tax because partners are taxed individually on their share of profits, and the partners are required to register for the VAT based on their annual turnover.

Sole Proprietorship

A company formation in Bulgaria helps in the formation of Sole Proprietorship, which operates as an individual where the owner is personally responsible for the liabilities of the business.

The tax implication of the sole proprietorship is subject to personal income tax on their business profits, and the personal income tax rate is 10%. The VAT rule is similar to that followed by the Limited Liability Company, and they are required to pay social security contributions, which means the employer and employee are required to contribute.

Representative Office

The company formation in Bulgaria helps in the formation of a representative office, which is more limited than the branch office because its role is only to engage in market research and promotion of the business.

The tax implications on the representative office are not subject to any corporate tax and VAT because these offices don’t generate any profits in Bulgaria.

Branch Office

Our company formation service in Bulgaria helps in the formation of branch offices for foreign investors who wish to establish a branch in Bulgaria and comply with the rules and regulations of the Bulgarian Registry Agency, and it operates under the regulation of the parent company. The parent company provides necessary papers for the company's formation in Bulgaria, such as the certificate of incorporation, bank statements and details of the bank accounts, certificate of good standing, etc.

The tax implications on the branch offices are subject to corporate income tax on their profits of 10%. The VAT rules are similar to those of the Limited Liability Company, which complies with the tax implication of VAT rules. 

Breakdown of Bulgaria’s Tax System

Doing business in Bulgaria has the primary benefit of a low corporate tax rate of 10%, which makes it one of the most competitive tax rates in the European Union.  The breakdown of Bulgaria’s tax system differentiates in various areas such as:

Corporate Rate Tax

The Corporate income tax rate is 10% of the company's annual tax profits, and it is calculated based on accounting profits adjusted for tax purposes. The dividends distributed to resident and non-resident shareholders are generally subject to a 5% withholding tax. Also, the most beneficial part of Bulgaria's business setup is capital gain from the sale of shares, and certain financial instruments are generally exempted from the tax.

Personal Income Tax

The personal income tax rate is 10%, which covers income from employment, capital gain or self-employment and other sources.

VAT

If the business in Bulgaria crosses the limited threshold turnover, then the registration of VAT is a must at the time of Bulgaria's business setup. Then, the standard VAT is 20% in Bulgaria, with reduced rates of 9% for specific goods and services. The smaller companies in Bulgari are not registered under VAT but are allowed to provide accounting statements even if their turnover is zero.

Local Tax Rate

The local tax, as per the department, includes property tax, waste disposal, and vehicle tax. 

Benefits of Low Tax Rate for Doing Business in Bulgaria

Maintain Economic Growth

A low tax rate attracts investment and economic activity because the low tax rate can benefit businesses or individuals by increasing their overall return on investment and lead to an increase in the business's profits or income that will be utilized in spending or consumption to maintain economic growth.  

Attract Foreign Investments

Bulgaria, with a low tax rate, attracts foreign investors because a favourable tax environment encourages corporations and investors to establish operations, leading to job creation and increased capital flow.

Encourage Compliances

With a tax-friendly environment, businesses or individuals avoid tax evasion and comply with the tax regulations due to its low rate of tax policies. Our team of experts ensure that business comply with the latest tax regulation to function smoothly.

Foster Innovation

The low tax rate will benefit businesses or individuals who invest the profit in research and development in new technologies or innovation for economic growth, and they willingly invest in the new technologies and processes to secure a share in the innovation.

necessary papers required for opening of a Bank Account for Company Formation in Bulgaria

  • The necessary papers and certificate of Company registration in Bulgaria.
  • The copy of the Article of Association.
  • The copy of the Memorandum of Association.
  • If required, then the Certificate of Good Standing.
  • Identification necessary paper of company directors and shareholders.
  • Proof of address for directors and shareholders.

Process for the Company Formation in Bulgaria

Choosing a Company Name and Address

Our Service of Company Formation in Bulgaria helps in choosing a unique name for your company, and its availability in Bulgaria with the Commercial Register, which you are planning to incorporate, is the first crucial process towards the Bulgaria Company Registration.

Drafting of Articles of Association and Memorandum of Association

Our service for Bulgarian Company Registration helps draft the Article of Association and Memorandum of Association and outlines the company structure, activities, and internal regulations. It also includes details about shareholders, share capital, and other required information about the company.

Notarisation of the necessary papers

The Bulgarian Company Registration is only complete when the MoA and AoA and all the other necessary papers are certified properly by a notary public to gain the authenticity of the necessary papers.

Deposit of Share Capital

Our Bulgari Company registration services help you submit a minimum required share capital of your company in Bulgaria’s bank account to get a certificate confirming the deposit.

Registration with Commercial Register

For the Bulgaria business setup, we help you submit the registration application, which includes a notarized memorandum and article of association, proof of share capital deposited, and all the necessary papers to the commercial register.

Obtaining Unique Identification Number (EIK)

The Bulgarian business setup requires a unique identification number, and our experts help you get a UIN number after successful Bulgarian company registration.

Registration for VAT

Our experts keep a check on the annual turnover of the company to get the company registered for the VAT if the expected annual turnover crosses the limited thresholds with the National Revenue Agency.

Obtaining Necessary Licences and Permits

Bulgaria Company Registration is completed by obtaining the licenses and permits, which depend on the nature of the business activities. Your company requires certain licenses or permits and ensures compliance with industry-specific regulations.

Opening of Corporate Bank Account

Bulgaria company registration comes with a requirement to open a corporate bank account using the company’s name and the required necessary papers.

necessary papers Required for Company Formation in Bulgaria

Application for Company Formation

The application includes the basic information about the company, such as name, type of business entity and registered business address.

MoA and AoA

A legal necessary paper outlining the integral regulation of the company and other essential details.

Declaration of Consent

A necessary paper conforming to the consent of individuals appointed as the managers or directors.

Proof of Identification and Address

The passports, visas, or national ID cards worked as identification proof for the shareholders and directors during the time of the company's formation in Bulgaria.

Notarized necessary papers

The notarization of the MOA, AOA and other necessary papers is required from a public notary for the Bulgaria Business setup.

Bank Issuance Letter

A bank issues a letter confirming the deposit of the required share capital for incorporating a company in Bulgaria.

VAT registration

The companies with an annual turnover that exceeds the threshold limit require the registration of VAT for the Bulgaria business setup.

Time frames for Company Formation in Bulgaria

The time frame of the Bulgaria company registration can differ based on several factors, such as type of business entity, completeness of Paper works, and the efficiency of the registration process. The Limited Liability Company (OOD) or a Joint-stock company (AD) in Bulgaria takes two to four weeks from the submission of all the required necessary papers to the Commercial Register. Enterslice ensures that all the Paper works is complete and accurate and contributes to the more streamlined company formation in Bulgaria's Business Setup.

Set-up of Bulgaria Company Registration for Foreigners

Choosing a Business Entity

Our Service of Company Formation in Bulgaria helps in choosing a type of business entity for Bulgaria Business Setup.

Appoint a Local Representative

The foreigners need to appoint a local representative or entity who will act as a shareholder on behalf of the foreigner during the Bulgaria Company Registration process.

Obtaining a Bulgarian Personal Number (EGN)

The local representative or any foreign individual needs to obtain a Bulgarian Personal Number for the Bulgari Company Registration process.

Preparing Articles of Association and Memorandum of Association

Our service for Bulgarian Company Registration helps draft the Article of Association and Memorandum of Association and outlines the company structure, activities, and internal regulations. It also includes details about shareholders, share capital, and other required information about the company.

Notarisation of the necessary papers

The Bulgarian Company Registration is only complete when the MoA and, AoA and all the other necessary papers are certified properly by a notary public to gain the authenticity of the necessary papers.

Deposit of Share Capital

Our Bulgari Company registration services help you submit a minimum required share capital of your company in Bulgaria's bank account to get a certificate confirming the deposit.

Registration with Commercial Register

For the Bulgaria business setup, we help you submit the registration application, which includes a notarized memorandum and article of association, proof of share capital deposited, and all the necessary papers to the commercial register.

Obtaining Unique Identification Number (EIK)

The Bulgarian business setup requires a unique identification number, and our experts help you get a UIN number after successful Bulgarian company registration.

Registration for VAT

Our experts keep a check on the annual turnover of the company to get the company registered for the VAT if the expected annual turnover crosses the limited thresholds with the National Revenue Agency.

Obtaining Necessary Licences and Permits

Bulgaria Company Registration is completed by obtaining the licenses and permits, which depend on the nature of the business activities. Your company requires certain licenses or permits and ensures compliance with industry-specific regulations.

Opening of Corporate Bank Account

Bulgaria company registration comes with a requirement to open a corporate bank account using the company’s name and the required necessary papers.

City-Specific Requirements for Doing Business in Bulgaria

Sofia (The Capital)

Sofia is the capital of Bulgaria, and it offers a diverse range of business environments, easy access to government institutions, and a well-developed infrastructure. It emerged as a hub for the technology and innovation sectors, and the startups and tech companies grew in Sofia. Also, it is a city centre for many financial institutions and international organizations.

Plovdiv

Plovdiv is the second largest city in Bulgaria. It has a strong economic environment and a strong cultural and historical significance, for which it is becoming a hub for various manufacturing and trade industries.

Varna and Burgas

The Varna and Burgas are coastal cities and have major economic centres, which are important for industries like maritime trade, tourism, and logistics.

Ruse and Veliko Tarnovo

Ruse and Veliko Tarnovo are two cities located in the northern part of Bulgaria. Both cities are renowned for their historical and cultural significance, which makes them ideal for businesses that are involved in regional trade, cultural activities, or industries specific to the region.

Summary of Main Provision for Corporate Governance in Bulgaria Business Setup

The main sources of corporate governance regulation in Bulgaria are the Public Offerings of Securities Act, the Accountancy Act, the Credit Institution Act, the Independent Financial Act and the Commercial Act. The Bulgaria National Corporate Governance Code (BNCGC) was developed by the National Committee on Corporate Governance (NCGC) to guide Bulgaria companies on how to apply established best practices and principles of Corporate Governance.

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Steps to be followed at Post-Registration of the Company Formation in Bulgaria

Securing Licenses and Permits

As per the business activities of your company, you need to obtain a required license or permit from relevant authorities.

Assisting in Opening of Corporate Bank Account

Our incorporation service in Bulgaria business setup helps you to open a corporate bank account in Bulgaria for your business transaction.

Lease Agreement for Registered Office

Our Bulgaria Company Registration service ensures the preparation of the necessary papers proving the registered address of your company in Bulgaria.

Few Common Errors to Avoid in Company Formation in Bulgaria

  1. Neglecting VAT Registration even if your company exceed the VAT registration thresholds and you fail to register for VAT can result in penalties. So, you need to be aware of the turnover thresholds and fulfil your VAT registration obligation as required.
  2. Failing to check industry-specific regulations leads to legal issues because if your company fails to comply with the specific licensing or regulation requirements of the industries, it will raise legal action against your company.
  3. Failing to understand the long-term implications of the chosen business structure can impact your company’s financial health.

Frequently Asked Questions

The procedure for doing business in Bulgaria is completed in a few steps such as:

  • Choosing the Company name and address
  • Opening of Local Bank Account
  • Government Official Registration
  • Notarisation of the necessary papers.

Under the Bulgaria Commercial Code, foreign investors can open a business in Bulgaria by following the same requirements.

The leading businesses are tourism, technology, agriculture, textiles, telecommunications, and pharmacy.

Bulgaria is a good option for Bulgaria Company Registration.

The most effective benefits are a low tax rate and a capital gain rate of 5%.

Bulgaria's tax rate is 10%, regardless of whether the income arises from work in Bulgaria or from foreigners.

The present largest net direct investment inflow is from the Netherlands and Switzerland.

Sofia is the richest city in Bulgaria.

The corporate income tax (CIT) rate is 10% in Bulgaria.

The Bulgarian society is facing several challenges, including low birth rates, high mortality rates, and significant external migration, particularly of young people.

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