With effect from October 1, 2006 the Bulgarian Parliament adopted a law concerning the commercial register, which follows the European practices and requirements under which the registration of companies shall be under a new procedure in the Registry Agency under the Ministry of Justice. Thus, the commercial registration is transformed into an administrative one, which facilitates the procedure and improves the quality of service provided. Another plus is the creation of a uniform electronic commercial register, with the help of which can be quickly issued certificates and will be allowed instant electronic access to the database, which will be updated continuously with information about acts and others. In the commercial register has been introduced a unique identification code, which shall replace the hitherto used BULSTAT.
According to the adopted law for the commercial register, the companies will have a unique name for the entire country, while the check-ups will be made and transmitted in electronic form. Moreover, the updates will be made on the basis of an application that can be accepted in electronic form as well. These applications, the complaints and the judicial acts will be entered in the electronic register. That commercial register will be public, and each citizen will have the right to free access, but the making of references and certificates will be paid according to the appropriate state fee. All companies must be reregistered and entered in the commercial register. This pre-registration is free of charge and is compulsory up to the end of this year 2010. In the event that this period is omitted, the Registry Agency will perform re-registration through its official channels, then will open up proceedings and accordingly the company will be deleted.
The necessary documents required for registration and re-registration of companies in the commercial register includes an application for re-registration form, which depends on the legal form of the seller; certificate of good standing; application form for declaration of association contract or articles of association, and an application form for registration of new circumstances. The re-registration certificate is to be issued by the court of registration within three days after submission and no state tax is due. When this certificate is forwarded, the court of registration shall provide the Agency with an access to the company case for taking down the information. At the re-registration, traders will be removed from the BULSTAT register and this code will become a unique identification code or Uniform Identification Code (UIC). At the re-registration, the companies' names should not coincide. However, if there are any matches, then the agency shall notify the traders which have matching names and shall enable them to change their name within a period of two months. If such change is not made, the agency shall re-register the trader by entering in the name the locality, and if necessary a figure.
The documents required for re-registration of the company are: – Application to court for a certificate of good standing – A copy of the court's decision – A copy of the Bulstat card – A copy of the company contract or statute – Stamp of the company – Identity card of the manager and the associates – Signed declaration under article 13, paragraph 4 of the Commercial Register – Certified attorney in case the documents must be submitted by a lawyer representing the company The deadline for obtaining the unique identification code is five days.
When there is no observation of the deadline for re-registration of traders is issued an official certificate for re-registration and then, once entered, these companies are archived and deleted from the agency. The agency enters the company and terminates its operations by using a liquidator who is liable shareholder if the company is of personal management, or is a member of the managing committee if this is a capital company. The liquidation costs are on the account of the seller and are expected to be around a thousand leva due to the need for appointing persons to conduct inspections of the company belongings. Another important factor which should be known is that if the company is not re-registered, its annual financial statements can not be published.
The sale of offices in Sofia has been very peaceful in the first nine months of the year, even though the supply was serious. The prices however remained high and no actual discounts were made by the owners and developers, with the biggest reduction being ten percent. Even with these price discounts, the offices kept their prices of 1500 Euro/sq.m, to even more than 2000 Euros/sq.m for the class A office buildings. As a result there were almost no deals for sale of offices in the current year, which comes to show that the prices asked for are not realistic. The main driving factor for that sphere of Sofia offices is the price.
At the same time, the rental market of Sofia offices is busier and attracts serious interest among the investors and business people. The rental prices of the Sofia offices are more flexible and the discounts are considerate, that is why many offices are being rented and the investors are looking for good location and then at the price. The other two options for renting an office are also tempting, namely the renting of one-day offices in business centres in Sofia and the rental of virtual offices, which saves a lot of money to the owners of small and middle-size companies, offering them various service packages according to the needs of their business.
Sofia offices available for rent are many in number and their price depends on the location and the class of the office. The offices of class A are being rented for sums that vary between 7 and 25 Euros/sq.m, where most of the offices go at the price of 10 Euros/sq.m. When the offices have very central location, then their price goes at 20 Euros/sq.m. The Sofia offices that are class B are offered at 3-4 Euros/sq.m when they are not furnished to 8-10 Euros/sq.m for the furnished ones.
Located in Eastern Europe, Bulgaria is offering the key managers of global US and European companies a great base for the outsourcing of their businesses. Once concentrated in countries like India and also having China and Vietnam in their shortlist, today the European and the North American companies are looking towards a country which has less social and cultural differences. Bulgaria is such a country for them – it has stable economy, a well-developed educational system forming specialists in computer sciences, electronics and engineering, physics and mathematics, etc. The excellent education has placed Bulgaria into the fifth place in the world when it goes to sciences which make it today a tempting zone for outsourcing of businesses because of the high mental potential of the young specialists. An interesting fact to mention is that Bulgaria ranks second in the IQ tests made by MENSA and the SAT test results. In the IT sphere, the country is among the top ten destinations when it goes to certified IT professionals.
Which are the global companies that have already outsourced their business in Bulgaria? Several major companies have established their branches in the Bulgarian capital Sofia in the last few years. Among these outsourcing pioneers are the German software company SAP, which has focused some of its major Java software development in Sofia. Another giant company that has outsourced part of its business activities is IBM, which was soon followed by HP, Oracle, Cisco Systems, Ericsson, Siemens, etc. and many more companies which joined the group after Bulgaria entered the European Union in January 2007.
One of the main questions that the outsourcing companies often face is connected to the potential of the Bulgarian professionals and their ability to develop and further educate themselves. These young people have several main qualities – they speak good English, they are technically aware and they know how to program well. The Bulgarian programmers have proven their ability to understand and work perfectly with the software code and to observe the deadlines of the different projects. This turns Bulgaria and its capital Sofia into a tempting offshore destination, which has potential and all the preconditions for remaining such country for a very long time.
Bulgaria is among the most tempting countries to start a business in because of the favorable business conditions, the modern ways to make business including the options for opening virtual offices and renting serviced office in Sofia, and of course thanks to the competent young professionals, including accountants, lawyers, property managers, etc. Foreign investors, who wish to start business in the Bulgarian capital Sofia, should know that currently both the flat income tax rate on the individuals and the standard corporate tax is 10 %. All individuals in Bulgaria are subjects of a tax on their income as employees or self-employed persons. When a foreign individual is a permanent resident of the country, tax will be calculated on the income earned in Bulgaria and the income earned outside the country. If a foreign resident is employed in the country, then the tax is set on the income earned in Bulgaria. This income tax and the national insurance are deducted by the employers from the salary of the employees every month. Besides the 10 % corporate tax, the companies are further subjects to special tax rate if they are dealing with insurance or gambling.
The corporations in Bulgaria could be four types – this information would be useful to you no matter if you set up a virtual office, a serviced office or an office for long-term rent. – The first option is to set up a limited liability company which in Bulgaria is with the suffix OOD. To set up such a company is needed at least one shareholder, that could be a company or an individual but director must be appointed. According to the new laws, no initial capital is needed to set up a company. The minimum share capital in this case is five thousand leva and the owners of the company are liable only for that amount. – The second option is to set up a liability company with one shareholder only where the suffix in Bulgarian is EOOD. This company is owned only by one individual who can be also a foreign resident and is seen as a director of the company. – The third option is the so called consolidated company with the suffix AD in Bulgarian. This company has at least one shareholder with the minimum value of the share – one leva. The minimum registered capital of the consolidated company is 50 000 leva and at least one fourth of the registered capital must be paid before the registration is made. The consolidated company is managed by a board of management. – There is yet another, final option to set up a company with a single shareholder, where the suffix is EAD and the company is owned and controlled only by one shareholder. In such cases the owner is obliged to fill in an annual balance sheet for the tax authorities.
The other basic information for the investors who are planning to set up a virtual office, to use the service of the one-day offices or to rent a long-term office in Sofia or in any other place of Bulgaria concerns the capital gains tax, which is paid by individuals when there is a sale of real estate, vehicles, etc and this tax is paid on the difference between the sale and the market price. The capital gains tax for Bulgarian companies is added to the regular income. It is important to remember that the tax year in Bulgaria ends on 31st December, while the annual report of the limited companies must be presented by 31st March. Individuals should file this annual report by mid of April. The companies which had profit the previous year, should pay twelve monthly payments in advance during the following year, while the new companies should make four advance payments, one each third month of the year.
Will you set up a virtual office or will set up a company and need an office for a long-term in Sofia? Then it will be good to know that in Bulgaria the employer is obliged to deduct tax at source from the employee and in this way to make an additional contribution to the social security sphere. The social security rates are around 21.4 per cent for the employers and 13 per cent for the employee. Tax deductions at source are also made in case of dividends when the standard deduction is 5 %, in case of interest or royalties with the standard tax is being 10 %. In situations of foreign residents, the tax deducted at source is always subject to the Double Taxation Prevention Treaty.
The Nordic countries – consisting of Denmark, Finland, Iceland, Norway and Sweden, and the associated territories the Faroe Islands, Greenland and Åland – on September 11 signed tax information exchange agreements (TIEAs) with Aruba and the Netherlands Antilles. The new agreements are 'part of a campaign led by the Nordic Council of Ministers to encourage greater efforts to prevent international tax evasion', according to Norden.
Norden states that 'the TIEAs will provide the tax authorities with access to all information about citizens who try to avoid paying tax on income and capital investments and who have undeclared assets in their home countries. The information covered includes details of the real ownership of companies, i.e. throughout the entire ownership chain, details of the founders, trustees and beneficiaries of trusts, and information held by banks and financial institutions'.
The TIEAs were signed at ceremonies at the Danish (Aruba) and Finnish (Netherlands Antilles) embassies in Paris. Similar deals have already been struck with the Isle of Man, Jersey and Guernsey, the Cayman Islands, Bermuda, and the British Virgin Islands.
Denmark has recently signed agreements with Anguilla, Antigua and Barbuda, Gibraltar, St Kitts and Nevis, St Vincent and the Grenadines, and the Turks and Caicos Islands. Other Nordic countries are scheduled to sign agreements with these states soon. The Faroe Islands also signed a treaty with San Marino on September 11. Negotiations continue with many other states.
The agreements mean that both Aruba and the Netherlands Antilles have satisfied the 12 TIEA quota defined at the G20 summit on April 2, placing them on the OECD’s white list of territories that have substantially implemented the agreement standard. Aruba, to date, has signed 12 agreements, whilst Netherlands Antilles has now concluded 15 agreements.
Bloomberg, April 28th 2009, Commentary by Matthew Lynn.
London’s status as a global financial hub has taken a beating in the past year. The British have nationalized half the country’s banking system. The non- domicile tax system that allowed foreigners to shelter much of their wealth from the authorities has been hit by hefty charges. And tough new rules on pay are being proposed. And now? The top rate of income tax has just been increased to 50 percent from 40 percent. The phrase “last straw” doesn’t even begin to capture how many of London’s bankers, private-equity partners and hedge-fund managers will be feeling. They may have put up with drizzly weather, creaky transport systems and a national mood that makes financiers about as popular as Bernard Madoff at a retirees’ wealth-management convention. Yet it is hard to see how a city can remain as a finance center when it has the fourth-highest tax rate in the developed world. Only Denmark, Sweden and the Netherlands have a higher top rate, according to accounting firm KPMG LLP. Bear in mind that London draws in talent from around the world. It is inconceivable that lots of clever young people primarily interested in making money are going to move to one of the highest tax regimes in the world. Bankers will be checking their atlases more than ever. As it happens, they won’t be short of choices. Europe has lots of places that could host a financial hub: some old, some new. Geneva, Monaco, Bulgaria or Macedonia, to name just a few. All of them have a better shot than London in the next 20 years of building a friendly environment for Europe’s bankers. They don’t even need to be established. Forty years ago, Hong Kong was little more than an island in the South China Sea. Twenty years ago, Dubai was just a strip of sand with a port attached. If the demand is there, the infrastructure will follow. Here’s a rough guide, based on the following criteria: — Low taxes; — Decent infrastructure; — Reasonable divorce laws (no point in sheltering your bonus from the taxman only to see it clobbered by your spouse); — Lots of good-looking women, or men; — An airport, schools and a good golf club; — Low risk of anti-banker backlash next time the financial system implodes. Monaco: Always a safe choice. You can’t beat the principality for taxes — there aren’t any on personal income. The place is crowded and expensive, though. The women are too busy tanning themselves to pay any attention to you, and anyway, if you aren’t a Russian billionaire, you can forget it. Yachts are mandatory. As for the backlash risk, you are dangerously close to France, and the people there keep railing against tax havens. They might one day choose to do something about the small one carved out of their own country. Geneva: There’s a reason that banks have been setting themselves up on the shores of Lake Geneva for hundreds of years: There is nowhere safer for the wealthy. The taxes can be low, but they are also complicated: The Swiss top rate is actually 40 percent, but can be a lot less if you aren’t Swiss. The quality of life is good, but expensive: The “recessionista” look hasn’t made it to Geneva yet and probably never will. And there is zero chance of a backlash against bankers: The Swiss won’t rely on the chocolate industry to keep their economy afloat. Bulgaria: Things have changed a bit since Todor Zhivkov led the People’s Republic of Bulgaria as one of the most loyal of the Soviet satellite states. Now with a top tax rate of just 10 percent, the country has one of the most pro-business fiscal regimes anywhere in the world. Since 2007, it has been a member of the European Union, so you shouldn’t need to worry too much about political stability. There is plenty of Black Sea coastline to work on your tan, even if it can’t quite match the Hamptons for sophistication. There are 127 airports with paved runways, according to the CIA World Factbook, so you should be able to park your jet. Yet it’s only two decades since Bulgaria was a hard-line Marxist state, so don’t count on surviving if there’s another revolution. Macedonia: A small landlocked country that was once part of communist Yugoslavia, Macedonia is probably not the first place you would think of relocating your hedge fund. It’s not a member of the EU yet, it has a slight tendency toward civil war, and it gets involved in lengthy disputes with the Greeks, so you might be at risk during a financial meltdown. There are only 10 airports with paved runways, according to the CIA Factbook, so maybe trade in the jet for a chopper. Gross domestic product per capita is only $9,000, so your support staff will be cheap, and the top tax rate is just 10 percent. Plus you can always slip away to a Greek island for the weekend. Then there are always old-style havens such as Andorra, Jersey or the Isle of Man for those wishing to relocate. Who knows, maybe in a few years, all London’s finance moguls will be sunning themselves by the Black Sea or Lake Geneva and reading about yet another attack from the U.K. prime minister or the French president on tax refugees. Once all the banks have moved away, perhaps it will become clear to governments that taxes are causing new businesses and talent to go elsewhere.
The collapse in commercial property prices is encouraging entrepreneurs to set up “virtual” offices at prestigious addresses, renting space by the month, the week or even the hour.
Landlords are providing such offerings as a way to fill space during hard times, allowing tenants to rent over short periods rather than locking them in for years at depressed rates.
Virtual users get the flexibility to use an office or conference room as needed. They can hold meetings, receive mail and have their telephone calls answered by a receptionist who will put them through to more humble home offices in distant locations.
The interest towards the renting of virtual offices is also expected to increase in Bulgaria. This service has already been offered on the market for a few years.
The growing interest comes as office rents in the US fall and vacancies rise in line with unemployment. Reis, a property research company, predicts that office vacancies will reach 15.2 per cent in the US this quarter. Even in Manhattan, where space is notoriously hard to find, the vacancy rate is approaching 10 per cent. With new jobs scarce, financially-pinched entrepreneurs starting new businesses want the credibility that a virtual office can bring.
New clients for Regus, the biggest virtual office provider in the US, were up by 38 per cent in March from the year before. At Rockefeller Group business has doubled in the past six months. The downturn has also benefited smaller providers, such as City Space Suites, which has office space in New York's Chelsea and Union Square neighbourhoods and says its offices are 95 per cent occupied.
“Some people don't need an office, but they need an address,” Mr Watler said. “Rockefeller Center in New York is better than Mockingbird Lane.”
Such was the case for Richard Wolfman, who runs Global Group Ventures, a new commercial mailing company, through a virtual office in Garden City, New York. He spends $240 a month for an address provided by Intelligent Office, where he can collect mail and have a receptionist handle his calls. A frequent traveller, he can also use the company's spaces in other cities across the US, making his business seem more national when he meets clients.