| Country |
Bulgaria |
| Language |
Bulgarian (76.9%)
Turkish (8.2%)
Romani (3.8%)
Other (11.1%) |
| Time in Bulgaria |
GMT+3 |
| Population |
6,966,899 (source: World Bank, 2021) |
| Currency |
(BGN, BGN) |
| Religion |
Eastern Orthodox Christianity (83.3%)
Islam (7.8%)
Roman Catholicism (0.9%)
Protestantism (0.7%)
Other (7.3%) |
| Tax regime |
10% |
| VAT |
20% |
| Overage salary |
4,201 BGN per month (source: National Statistical Institute, September 2022) |
| Types of incorporations |
Limited Liability Company (LLC)
Joint-Stock Company (JSC)
General Partnership (GP)
Limited Partnership (LP)
Branch of Foreign Company (BFC)
Sole Trader (ST)
Cooperative Society (CS)
Non-Profit Legal Entity (NPLE)
Trade Representative Office (TRO)
Other |
Why opening a company in Bulgaria
Opening a company in Bulgaria presents numerous advantages for entrepreneurs seeking a favorable fiscal environment. The country’s competitive tax rates, simplified incorporation procedures, and strategic location make it an ideal choice for expanding businesses. Whether you are a small startup or a multinational corporation, Bulgaria offers a business-friendly ecosystem that encourages growth and innovation. Moreover, the availability of skilled labor, affordable operational costs, and access to EU markets further enhance the country’s appeal. By establishing a company in Bulgaria, entrepreneurs can benefit from a supportive business environment and tap into a range of opportunities for success.
Advantages
Favorable Tax Regime
Bulgaria boasts a favorable tax regime with a flat corporate tax rate of 10%. This competitive rate significantly reduces the tax burden on businesses and promotes economic growth. Furthermore, Bulgaria offers double tax treaties with numerous countries, allowing for tax optimization and international business expansion.
Diverse Incorporation Types
Entrepreneurs in Bulgaria can choose from various types of incorporations to suit their business needs. These include Limited Liability Companies (LLCs), Joint-Stock Companies (JSCs), General Partnerships (GPs), Limited Partnerships (LPs), Branches of Foreign Companies (BFCs), Sole Traders (STs), Cooperative Societies (CSs), Non-Profit Legal Entities (NPLEs), Trade Representative Offices (TROs), and others. This flexibility provides entrepreneurs with options to structure their businesses according to their specific requirements.
Strategic Location
Situated at the crossroads of Europe, Bulgaria offers a strategic location for businesses. Its proximity to European markets, well-developed transport infrastructure, and access to the Black Sea provide logistical advantages for international trade and expansion. This advantageous geographic position enables companies to establish strong connections with both EU and non-EU markets.
Disadvantages
Language Barrier
While English is widely spoken in business circles, the official language in Bulgaria is Bulgarian. Entrepreneurs may encounter some language barriers when dealing with administrative procedures or local suppliers. However, professional translation services and hiring local staff can help overcome this challenge.
Bureaucratic Procedures
Like any other country, Bulgaria has certain bureaucratic procedures involved in setting up and running a business. Entrepreneurs should be prepared to navigate the administrative requirements and ensure compliance with legal obligations. Engaging a professional business consultant or lawyer can streamline the process and provide guidance.
Taxes
Bulgaria operates under a simple and competitive tax system, attracting businesses with its favorable tax rates and incentives. The corporate income tax rate is fixed at 10%, one of the lowest in the European Union. Additionally, Bulgaria offers a range of tax incentives, such as exemptions for reinvested profits, tax credits for research and development activities, and preferential rates for specific sectors or regions.
Personal income tax is also attractive, with a flat rate of 10%. This provides individuals with a transparent and straightforward taxation framework, encouraging entrepreneurship and investment.
Bulgaria follows a territorial tax system, meaning that companies are taxed on their Bulgarian-sourced income. This approach promotes international business operations and helps companies minimize their global tax liabilities.
Company types in Bulgaria
Limited Liability Company (LLC)
The Limited Liability Company (LLC) is the most common type of company in Bulgaria, suitable for small to medium-sized businesses. It offers limited liability to its shareholders, who are not personally liable for the company’s debts beyond their investment. The minimum share capital required to incorporate an LLC is BGN 2 (approximately €1). The cost of incorporation varies depending on legal fees and notary expenses. Typically, the cost ranges from BGN 200 to BGN 500 (approximately €100 to €250).
| Type |
Cost of incorporation |
Minimum share capital |
Taxes |
| Limited Liability Company (LLC) |
BGN 200 – BGN 500 |
BGN 2 |
10% corporate income tax |
Joint Stock Company (JSC)
The Joint Stock Company (JSC) is a company with shares traded on the stock exchange. It is suitable for larger businesses seeking access to public funding and widespread ownership. The minimum share capital requirement for a JSC is BGN 50,000 (approximately €25,565), with at least 25% paid-up capital upon incorporation. The cost of incorporation includes legal and administrative expenses, which can range from BGN 1,000 to BGN 3,000 (approximately €500 to €1,500).
| Type |
Cost of incorporation |
Minimum share capital |
Taxes |
| Joint Stock Company (JSC) |
BGN 1,000 – BGN 3,000 |
BGN 50,000 |
10% corporate income tax |
Limited Partnership (LP)
Limited Partnerships (LPs) consist of at least one general partner and one limited partner. General partners have unlimited liability, while limited partners have limited liability to the extent of their investment. The cost of incorporating an LP depends on legal fees and notary expenses. Generally, the cost ranges from BGN 500 to BGN 1,000 (approximately €250 to €500).
| Type |
Cost of incorporation |
Minimum share capital |
Taxes |
| Limited Partnership (LP) |
BGN 500 – BGN 1,000 |
N/A |
Depends on the partners’ tax obligations |
Branch of Foreign Company (BFC)
Foreign companies can establish a branch office in Bulgaria to conduct business activities. Branches operate as extensions of the parent company and are subject to the same legal obligations and regulations. However, they do not have separate legal personality and are fully liable for their activities. The cost of establishing a branch office includes legal and administrative expenses, which can vary depending on the complexity of the registration process and professional fees.
| Type |
Cost of incorporation |
Minimum share capital |
Taxes |
| Branch of Foreign Company (BFC) |
Depends on the complexity of the registration process |
N/A |
Depends on the parent company’s tax obligations |
Please note that the cost of incorporation and specific tax obligations may vary based on individual circumstances and legal requirements. It is advisable to consult with a professional advisor or lawyer when considering the appropriate type of incorporation for your business in Bulgaria.
Sole Trader[Cost]N/APersonal income tax
Representative Office (RO)
A Representative Office (RO) is an option for foreign companies to establish a presence in Bulgaria without engaging in commercial activities. ROs are limited to conducting market research, promotion, and other non-profit activities on behalf of the parent company. They cannot generate direct revenue or engage in profit-making operations. Establishing an RO involves registration and administrative procedures.
| Type |
Cost of incorporation |
Minimum share capital |
Taxes |
| Representative Office (RO) |
N/A |
N/A |
N/A (Non-profit activities) |
VAT in Bulgaria
Bulgaria follows a Value Added Tax (VAT) system, where most goods and services are subject to a standard VAT rate of 20%. However, certain goods and services may qualify for reduced VAT rates of 9% or 0%. Businesses registered for VAT must comply with invoicing and reporting requirements and file regular VAT returns.
Common questions
Can a foreigner be a shareholder in a Bulgarian company?
Yes, a foreigner can be a shareholder in a Bulgarian company. Bulgaria allows both individuals and legal entities, regardless of their nationality or residence, to own shares in Bulgarian companies. This openness to foreign ownership is in line with Bulgaria’s efforts to attract foreign investment and promote business activities within its borders.
Foreign shareholders can hold shares in various types of Bulgarian companies, including limited liability companies (OOD), joint-stock companies (AD), and other business structures. However, it’s important to note that specific regulations and requirements may apply depending on the type of company and the sector in which it operates.
Foreign shareholders have the same rights and obligations as domestic shareholders and are entitled to receive dividends, participate in decision-making processes, and benefit from the company’s growth and success.
Before becoming a shareholder in a Bulgarian company, it’s advisable to seek legal and professional advice to understand the legal framework, tax implications, and any specific requirements associated with the chosen type of company and the nature of the business activities.
What is the duration of the company registration process in Bulgaria?
The duration of the company registration process in Bulgaria can vary based on several factors, including the type of company you are registering, the completeness of the documentation, and the efficiency of the authorities involved. However, as a general guideline, the process typically takes around 2 to 4 weeks to complete.
Here’s a rough breakdown of the steps and the time they might take:
- Name Reservation: The first step is to reserve the company name. This usually takes a few days, as you need to check the availability of the chosen name and wait for approval.
- Preparation of Documentation: You’ll need to prepare the necessary documents, such as the Articles of Association, shareholder details, and director information. The time for this step depends on how quickly you can gather the required information and draft the documents.
- Notary Certification: Certain documents, such as the Articles of Association, may need to be certified by a notary. This step can take a few days.
- Company Registration Submission: Once all the documents are prepared and certified, you can submit them to the Commercial Register. The registration process itself usually takes around 5 to 7 business days.
- Obtaining Tax Identification Numbers: After the company is registered, you’ll need to obtain tax identification numbers for the company and its employees. This step might take a few more days.
- Opening Bank Accounts: Once you have the necessary numbers and documents, you can open bank accounts for the company. This process varies between banks but might take another week or so.
How can I register a company in Bulgaria?
Registering a company in Bulgaria involves several steps. Firstly, you need to choose the type of company you want to establish, such as a Limited Liability Company (LLC) or Joint Stock Company (JSC). Then, you need to prepare the necessary documents, including the articles of association, proof of identity, and proof of address. Next, you must submit the documents to the Bulgarian Commercial Register and pay the registration fee. Once your application is processed and approved, you will receive a registration certificate. It is recommended to seek professional assistance or consult with a lawyer to ensure compliance with all legal requirements and streamline the registration process.
What are the tax obligations for companies in Bulgaria?
Companies in Bulgaria are subject to various tax obligations. The corporate income tax rate is 10% on the company’s taxable profit. Additionally, companies are required to contribute to social security funds for their employees, including contributions for health insurance, pension insurance, and unemployment insurance. Value Added Tax (VAT) is also applicable to companies engaged in the sale of goods or services, with the standard rate set at 20%. It is important for businesses to maintain accurate accounting records, submit tax returns, and fulfill their tax obligations in a timely manner to comply with Bulgarian tax regulations.
Can a foreigner own a company in Bulgaria?
Yes, foreigners can own and operate a company in Bulgaria. The country has a favorable business environment and encourages foreign investment. As a foreigner, you can establish a company as an individual or through a legal entity. There are no restrictions on foreign ownership, and foreign investors enjoy the same rights and protections as Bulgarian citizens. It is advisable to consult with a lawyer or professional advisor to understand the specific requirements, legal procedures, and considerations for foreigners looking to start a business in Bulgaria.
What are the advantages of opening a company in Bulgaria?
Opening a company in Bulgaria offers several advantages. Firstly, the country has a competitive tax regime with a low corporate income tax rate of 10%. This can result in significant tax savings for businesses. Bulgaria also has a strategic location in Southeast Europe, providing access to the European Union (EU) market and neighboring countries. The cost of doing business in Bulgaria is relatively low compared to other EU countries, including affordable labor costs. Additionally, the country has a well-educated workforce, a stable economic environment, and various government incentives and support programs for businesses. These factors make Bulgaria an attractive destination for entrepreneurs and investors looking to expand their operations.
Are there any specific requirements for accounting and financial reporting in Bulgaria?
Yes, companies in Bulgaria are required to maintain proper accounting records and prepare financial statements in accordance with the Bulgarian Accounting Act. The financial statements must follow the International Financial Reporting Standards (IFRS) or the Bulgarian Financial Reporting Standards for Small and Medium-sized Enterprises (BFRS for SMEs). Companies must appoint a certified accountant or engage an accounting firm to handle their financial matters. Annual financial statements, including the balance sheet, income statement, and cash flow statement, must be submitted to the Bulgarian Commercial Register. Compliance with accounting and financial reporting requirements is essential to ensure transparency, accurate financial information, and compliance with legal obligations.
What support and incentives are available for businesses in Bulgaria?
Bulgaria offers various support measures and incentives to promote business growth and investment. These include grants, subsidies, and financial assistance programs provided by government institutions at the national and regional levels. There are also specific incentives for sectors such as information technology, manufacturing, tourism, and research and development. Additionally, Bulgaria is part of the European Union, allowing businesses to access EU funding programs and participate in cross-border projects. The Bulgarian Investment Agency and other organizations provide guidance and support for foreign investors, helping them navigate the business landscape, obtain necessary permits and licenses, and benefit from available incentives.
Can I open a bank account for my Bulgarian company as a non-resident?
Yes, it is possible for non-residents to open a bank account for their Bulgarian company. However, the specific requirements and procedures may vary among different banks. Generally, you will need to provide the necessary identification documents, proof of company registration, and proof of address. Some banks may also require a personal visit to the branch, while others offer remote account opening options. It is recommended to contact banks directly to inquire about their account opening procedures for non-resident company owners and compare the services, fees, and requirements before making a decision.
Are there any specific regulations or restrictions for hiring employees in Bulgaria?
Employment in Bulgaria is regulated by the Labor Code, which sets out the rights and obligations of employers and employees. Companies are required to comply with labor laws regarding working hours, minimum wages, social security contributions, and employee benefits. Employers must register their employees with the National Revenue Agency and make the necessary social security contributions. There are no specific restrictions on hiring foreign employees, but they may need to obtain the appropriate work permits or visas depending on their country of origin. It is important for businesses to familiarize themselves with the labor regulations and consult with legal professionals to ensure compliance with all employment-related requirements.
What are the investment opportunities in Bulgaria?
Bulgaria offers a range of investment opportunities across various sectors, making it an attractive destination for both domestic and foreign investors. Here are some key investment opportunities in Bulgaria:
- Real Estate and Property Development: Bulgaria’s real estate market offers opportunities for residential, commercial, and tourism-related projects. The country’s picturesque landscapes, coastal areas, and historical sites attract tourists and investors looking to develop hotels, resorts, and other hospitality ventures.
- Information Technology (IT) and Innovation: Bulgaria has a rapidly growing IT sector with a well-educated workforce and competitive labor costs. The country is known for its software development, outsourcing services, and tech startups. Cities like Sofia and Plovdiv are emerging as IT hubs.
- Manufacturing and Industry: Bulgaria’s strategic location, membership in the European Union, and skilled workforce make it a favorable location for manufacturing activities. Industries such as automotive, electronics, machinery, and textiles offer investment potential.
- Renewable Energy: The Bulgarian government promotes renewable energy projects, including solar, wind, and hydroelectric power. The country’s commitment to reducing carbon emissions and its abundant natural resources make it a viable destination for green energy investments.
- Agriculture and Food Processing: Bulgaria’s fertile soil and diverse climate support agricultural activities. Investments in modern farming practices, organic agriculture, and food processing have the potential to tap into both domestic and export markets.
- Tourism and Hospitality: Bulgaria’s rich cultural heritage, historic sites, and natural beauty attract tourists. Opportunities exist in the development of hotels, resorts, and ecotourism ventures, especially in regions like the Black Sea coast and the mountainous areas.
- Pharmaceuticals and Healthcare: The healthcare sector in Bulgaria offers room for investment in medical facilities, pharmaceutical production, and healthcare services. The demand for quality healthcare services and products is growing.
- Logistics and Transport: Bulgaria’s strategic location at the crossroads of Europe and Asia presents opportunities in logistics and transportation. The development of modern logistics centers, rail infrastructure, and transport networks can enhance trade connectivity.
- Education and Training: As an emerging hub for IT and innovation, Bulgaria offers opportunities in education and training services. Investors can contribute to the development of skilled professionals through partnerships with local universities and training institutions.
- Financial Services and Fintech: The financial sector in Bulgaria is evolving, and there are opportunities for investments in banking, fintech startups, and financial services that cater to both domestic and international clients.
Is Bulgaria a member of the European Union?
Yes, Bulgaria became a member of the European Union on January 1, 2007.
