UPDATE 2019 We created this article in help of all investors who want to start their business in Bulgaria. It provides all essential details that need to be known about company formations and their registration in Bulgaria.
SIDENOTE: This post was originally published in Jan 2018. But we gave it an update in August 2019
In general, every foreigner is allowed to start a business in Bulgaria, no matter if he/she has a Bulgarian residency permit or not. The establishment of a company formation in Bulgaria is easy and straightforward. There are several types of company formations that can be registered in the country. Each of them has its individual specifics that are listed below.
Types of Company Formations in Bulgaria
An important precondition for starting a business in Bulgaria is a registration of the company in the Bulgarian Commercial Register. The Commercial Register is a single, centralized, electronic database that aims to facilitate business start-ups in the country and reduce corruption.
In accordance with the Bulgarian law the following types of company formations are present:
Lіmіtеd Lіаbіlіtу Cоmраnу
The Limited Liability company (Bulgarian: Дружество с ограничена oтговорност, short: ООД) is probably the most common and popular form of doing business in Bulgaria. The formation is also known as LLC in the USA and Ltd. in the United Kingdom. This type of company can be established by one or more shareholders who have liability limited to the amount of their deposits in the company. The Limited Liability company is a preferred type of business formation because of the minimum capital requirement of 2 BGN which is about 1 EUR.
An alternative of LLC is a single-member Limited Liability business formation (Bulgarian: Еднолично дружество с ограничена отговорност, short: ЕООД). In this case, one of the partners is holding the entire capital of the company. Foreigners can be designated as business managers.
In any case, to establish a Bulgarian LLC formation it is good to consider the following issues:
- Name of the company
- Scope of company’s activity
- Registered address
- Amount of initial capital
The registration procedure of Limited Liability Company formation requires the following:
- A partnership agreement in writing form. It must be signed personally by the founders or by a representative with explicit power of attorney.
- Listing in the Bulgarian Commercial Register.
- A deposit of the initial capital. A bank account opening is required.
- An appointed manager of the company.
- Registration in the Bulgarian Registry Agency.
Јоіnt-ѕtосk Cоmраnу Formation
The Joint-stock company formation (Bulgarian: Акционерно дружество, short: АД) is preferred mainly by capital companies. This option is suitable for large companies that want to start a business in Bulgaria.
The minimum capital for opening a Joint-stock in Bulgaria is 50 000 BGN (approximately 26 000 EUR). The capital is divided into shares whose owners can be both individuals and businesses. Each share certifies that its holder/s participate/s with its nominal value in the company’s capital and grants one vote for the general meeting of the shareholders.
The Joint-stock Company is liable to its creditors with its property. The company formation should have one or more registered shareholders (individuals or companies) and minimum three members of the board of directors. Shareholders are not obligated to participate in the management. As regards their responsibilities, they are regulated by the (Articles of Incorporation/Commercial Law)
For the management of a Joint-stock company are required:
- 1. General meeting of the shareholders;
- 2. Board of Directors (in case of single-staged managing system) or Supervisory Board and Management Board (when the managing system is two-stage)
To register a Joint-stock company in Bulgaria, the following is necessary:
- An election of an available business name.
- A Meeting of Incorporation.
- Election of the Board of Directors, respectively Supervisory and Management Boards.
- Deposit of the company’s capital into an opened bank account.
- Listing the company in the Bulgarian Commercial Register.
- Registration in the Bulgarian Registry Agency.
General Partnership (Bulgarian: Събирателно дружество, short: “с-ие”) is a type of company established by two or more persons who want to manage efficient business transactions under a shred registered trade name. The trade name should contain the family name of one or more of the partners or the trade names of their existing companies.
In general, a General Partnership formation is characterized by shared ownership, shared returns and risks, and shared governance. Thus, the partners are liable with all their assets. They may have either material or nonmaterial rights and obligations. The foremost step to register a General Partnership is to list the company in the Bulgarian Commercial Register.
Limited Partnership (Bulgarian: Kомандитно дружество, short: “КД”) type of business formation can be established by two or more persons who want to manage efficient business transactions under a shred registered trade name. A Limited Partnership is founded on the basis of a partnership contract.
The way that partners can participate in a Limited partnership is the main difference between this company formation and General Partnership. In a Limited Partnership one or more of the partners are solidary and unlimitedly liable for the company’s liabilities and the others are responsible for the amount of the contracted contribution. So partners can be general partners – the ones that bear unlimited responsibility and limited partners – the ones that have limited liabilities.
The trade name of the partnership must contain the name of at least one of the limited partners. Only general partners can register the Limited Partnership in the Bulgarian Commercial Register.
Why Starting a Business in Bulgaria
There are a lot of benefits of having an active company in Bulgaria. The country is a member of the European Union which is considered to be one of most influential economic areas in the world. As an official member, Bulgaria makes use of all the economic, political, legal, labor, environmental and consumer benefits of the union.
The tахеѕ іn Вulgаrіа аrе аmоng thе lоwеѕt іn thе ЕU whісh mаkеѕ іt оnе оf thе mоѕt favored соuntrіеѕ for business. The country has an excellent reputation for its low flat rate on the corporate and personal income which is 10%. It offers affordable setup fees and social security contributions. The value-added tax (VAT) rate at 0% within the EU is yet another good advantage of setting a company in Bulgaria. Regarding the standard VAT rate here it is 20% and the tax on dividends from company’s profit is 5%.
How to Start Business in Bulgaria
Contact us and take advantage of our incorporation services to start your company in Bulgaria. We will be glad to help you choose the most suitable company formation for your business in compliance with the Bulgarian Commercial Law.
Our team of professionals can take care of:
- Preparing all necessary documents and represent you during the registration procedure
- Opening a company account at bank of your choice
- Administering the process of receiving Tax ID and Value Added Tax Identification number
In addition, our accountancy department can manage your financing and the preparation of all the needed reports so that you can concentrate exclusively on your business.