Bulgaria company registration

DOING BUSINESS IN BULGARIA IN 2017

Since 2003, Healy Consultants Group PLC has assisted our Clients with starting business in Bulgaria. Our services include i) Bulgaria company formation services ii) government license registration iii) corporate bank account opening services in Bulgaria and abroad iv) employee recruitment; v) employee visa strategies and vi) office rental solutions in Bulgaria.

  • Most of our Clients see Bulgaria as a relatively inexpensive option for entering the massive EU market and the Russian market;
  • The popular business entities for foreigners include LLC (to offer services) and free zone company (to operate an export oriented manufacturing business);
  • Bulgaria is a low tax jurisdiction – the corporate income tax is only 10%, while the withholding tax on dividends to foreign shareholders is 5%;
  • Bulgarian government offers several tax related incentives for foreign companies, which will invest in relatively poor municipalities;
  • Despite the advantages above, Bulgaria is still relatively small economy with one of the highest corruption rates in the EU.
SummaryLLCFast business setup solutionFree zone companyJSCLLPRepresentative officeBranch office
Also known asООДОДДФирма в Свободна ЗонаАДСООПредствителствоКлон на дружество
Best use of company?All products and servicesClose a customer deal nowManufacturing and export tradingTo secure public fundingProfessional servicesMarketing & researchSpecific projects
How soon can you invoice Clients/sign sales contracts?2 months3 weeks2 months2 months2 monthsCannot trade2 months
How soon can you hire staff?2 months6 weeks2 months2 months2 months2 months2 months
How soon can you sign a lease agreement?ImmediatelyImmediatelyImmediatelyImmediatelyImmediatelyImmediatelyImmediately
How long to supply corporate bank account numbers?2 months3 weeks2 months2 months2 months2 months2 months
How long to supply company registration/tax numbers?2 months3 weeks2 months2 months2 months2 months2 months
Corporate tax rate on annual business profits?10%10%up to 0%10%0%0%10%
Limited liability entity?YesYesYesYesYesNoNo
Government grants available?YesYesYesYesYesNoYes
Resident director/partner/manager/legal representative required?NoNoYesNoNoYesYes
Minimum paid up share capital? (EUR)11125,0002NoneNone
Corporate bank account location?UniCreditFibankDSK bankUBBUniCreditiBankSOCGEN
Can secure trade finance?YesYesYesYesYesNoYes
VAT payable on sales to local customers?20%20%20%20%20%No sales allowed20%
Average total business set up engagement costs? (EUR)8,36014,23013,4009,160Inquire a proposal8,2608,160
Average total engagement period?2 months1 month2 months2 months2 months2 months2 months

See full table

Accounting and tax considerationsLLCFast business setup solutionFree zone companyJSCLLPRepresentative officeBranch office
Corporate tax rate on annual business profits?10%10%up to 0%10%0%0%10%
Legally tax exempt if properly structured?NoNoYesNoYesYesNo
Group HQ tax incentives?YesYesYesYesYesNoYes
Must file an annual tax return?YesYesYesYesNoYesYes
Must file annual financial statements?YesYesYesYesNoYesYes
Must appoint an auditor?NoNoNoYesNoNoNo
Access to double taxation treaties?YesYesYesYesYesYesNo
Withholding tax on payments to foreign shareholders?5%5%5%5%5%No5%
Company RegistrationLLCFast business setup solutionFree zone companyJSCLLPRepresentative officeBranch office
Resident director/partner/manager/legal representative required?NoNoYesNoNoYesYes
Minimum number of shareholders/partners?11112Parent companyParent company
Minimum number of directors/managers?1113211
Minimum statutory paid up share capital? (EUR)11125,0002NoneNone
Must sign an physical office lease agreement during incorporation?NoNoYesNoNoNoNo
Shelf companies available?YesYesNoNoNoNoNo
Time to incorporate a new entity?1 month1 month1 month1 month1 month1 month1 month
Can easily convert to a JSC?YesYesYesYesNoNoNo
Can have preference shareholders/partners?NoNoYesNoNoNoNo
Business ConsiderationsLLCFast business setup solutionFree zone companyJSCLLPRepresentative officeBranch office
Good entity for trademark registration?YesYesYesYesYesNoYes
Can secure an import and export license?YesYesYesYesYesNoYes

Sponsorship by a local citizen required?No
Our Client needs to travel to Bulgaria for business set up?No
Temporary physical office solutions available?Yes
You need a local resident as bank signatory?No
Can be wholly foreign owned?Yes
The entity will likely be regulated by?Trade Registry
Monthly VAT reporting to the Government?Yes
Public register of shareholders and directors?Yes
Government approval required for foreign owners?Yes
Shareholders & directors documents to be attested/translated?Yes
Can bid for Government contracts?Yes
Each foreign director needs a personal income tax number?No
Foreign non resident director needs a residence visa?No
Maximum number of staff allowed?No maximum number for any entity
Expatriate to local staff ratio?None
Can secure residence visa for business owner?Yes
Other useful information
What will be included in my customer sales invoice?Sample invoice
This country has signed free trade agreements?Yes
This country is a member of WIPO/TRIPS?Yes
This country is a member of the ICSID?Yes
Average custom duties suffered?1%
Government foreign investment approval required?Yes
Maximum shareholding for foreigners?100%
Average monthly office rental? (EUR per sq m)12.5
Minimum statutory monthly salary? (EUR)240
Average monthly salary for local skilled employees? (EUR)484
Security deposit to be kept with Government?No
US$ deposit interest rate? (1 year average)0.45%
Overseas remittance currency controls?No
Banking considerations
Multi-currency bank accounts available?Yes
Corporate visa debit cards available?Yes
Quality of e-banking platform?Low
Crowd funding available in this country?Yes

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  • Advantages and disadvantages

    Advantages of Bulgaria company registration

    Bulgaria business registration advantages and disadvantages

    1. A Bulgaria limited liability company can be incorporated within two weeks, with a minimum of one shareholder and one director, who may be foreigners residing outside the country. Conveniently, the minimum paid up share capital is only €1 and our Client will not be required to travel to the country;
    2. Bulgaria is an ideal European Union country to register a Bitcoin company, because:
      • Bulgarian banks are flexible and allow corporate bank accounts for Bitcoin businesses;
      • There is no negative legal regulation on Bitcoin. Furthermore, Bitcoin in Bulgaria is considered as financial asset following statement from Revenue Agency in April 2014, confirming the same;
      • Bitcoin transactions in Bulgaria are exempt from VAT since 2015;
      • Russian Bitcoin investors are welcomed in Bulgaria;
      • Bulgaria is part of SEPA, consequently fund transfers within such payment union are low.
    3. Bulgaria is a prime setup location for our Clients willing to run a manufacturing business in Europe and the Middle East, because:
      • Because of its EU membership and free trade agreements, Bulgaria enables manufacturing businesses to reach to i) 500 million duty-free EU market; ii) 80 million duty free Turkey market and iii) booming Middle Eastern markets;
      • Bulgarian labor costs are the lowest in Europe with average hourly costs recorded at €4.1, against €28 for the EU average. Furthermore, skilled workers are also available, with good qualifications in engineering, sciences and languages. According to the National Statistical Institute of Bulgaria, 20% of the total population have college degrees;
      • Tax holidays of up to 5 years are available to qualifying manufacturing projects under the Corporate Income Tax Act;
      • Electricity costs in Bulgaria are estimated to be 30% lower than the standard EU rates. Standard KwH for corporates is just €0,165 per hour;
      • Plovdiv (Bulgaria’s second largest city) is a great place to relocate a manufacturing business, with the city boasting one of the largest manufacturing clusters in Eastern Europe. Furthermore, Bulgaria is a great place for companies selling products and services to the automobile industry. Large EU companies like i) Witte ii) Montupet and iii) others car parts suppliers have relocated their factories to Bulgaria. The only Chinese car manufacturer in the EU – Great Wall Motors – chose Bulgaria to setup their factory;
      • For these reasons and more listed below, Bulgaria is positively ranked 38th in the Doing business 2016 ranking of the World Bank.
    4. Registering a business in Bulgaria enables our Clients to legally minimize tax because:
    5. Bulgaria is the preferred investment location within the EU for Russian entrepreneurs because:
    6. Additional government incentives for investment projects in Bulgaria include:
      • R&D-oriented companies registered in Bulgarian industrial zones benefit from a 2-year tax holiday;
      • Foreign investments in Bulgaria have preferential access to EU structural funds, available only in Bulgaria and Romania;
      • Foreign entrepreneurs who create 50 jobs are automatically exempted from VAT for up to 2 years VAT under the new VAT Law;
      • Under the Renewable and Alternative Energy Sources Act, foreign investments in renewable energy are connected with priority to the electricity grid, otherwise a time-consuming process;
      • Foreigners investing more than €10 million in Bulgaria will qualify to become Class A investors and consequently obtain full 100% reimbursements of labor costs.

    Disadvantages of Bulgaria company registration

    1. Our Clients will make few domestic sales in Bulgaria because:
      • The Bulgarian domestic market is relatively small, with a declining population of 7.3 million people. Purchasing power in Bulgaria also continues to be the lowest in the European Union since the country became a member in 2007;
      • While Bulgarian summer resorts are preferred tourism location by Russians, the political tensions with this country resulted in a drop of Russian tourists to Bulgaria from 700,000 in 2014 to 160,000 in 2015, according to the Bulgaria National Statistics Institute;
      • The country suffers from high unemployment levels, recorded at an average 10% in 2015.
    2. Our Clients will face red tape and unpredictable bureaucratic practices in Bulgaria because:
    3. Bulgaria’s infrastructure and energy sector are not up to par with EU standards because:
      • Roads in Bulgaria are generally in moderate to poor condition, causing additional operational costs for logistics companies;
      • Railway infrastructure quality in Bulgaria is lower than other European States, according to the World Economic Forum;
      • Power outages, while quickly fixed, are not uncommon in suburban areas. According to the World Bank, it takes an average of 130 days for a new manufacturing business to get connected to the electricity network, the 5th longest period within the European Union;
      • Ukraine’s crisis is increasing the risks of a second gas crisis in Bulgaria. The 930km gas pipeline infrastructure project “South Stream” was suspended indefinitely by the Bulgarian Government in 2014;
      • The period 2013-2015 was marked by deadly floods, due to inadequate maintenance of water reservoirs.
  • Best uses for a Bulgarian company

    1. Bulgaria is a great place for the formation of a manufacturing company, thanks to availability of low cost workers and limited operational costs;
    2. Bulgaria is also a good place to trade with Russia. While the country’s membership to the European Union enables foreign investors to protect their assets and make sure they can repatriate their earnings, the geographical proximity to Russia will also allow them to target such market.

Company registration

  • Time to incorporate: Two weeks
  • Cost to set up: €8,360
  • Minimum capital: €1
  • Physical office required: No

Required appointments

  • Shareholders: 1
  • Directors: 1
  • Company secretary: No
  • Resident director: No

Key facts

  • Corporate tax rate: 10%
  • Corporate tax base: Worldwide
  • Shelf companies: Available
  • Main company type: OOD LLC

Contact us

For additional information on our company registration services in Bulgaria, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Mr. Petar Chakarov, directly:
client relationship officer - Petar
Bulgarian chamber of commerce and industry Bulgaria financial supervision commission Bulgaria government