Business entities in Bulgaria
Healy Consultants assists our Clients by optimizing the corporate structure for their new business in Bulgaria. There are several ways of doing business in Bulgaria, with the most common being to set up a limited liability company. However, Healy Consultants recommends that our foreign Clients to set up a Bulgarian joint stock company (JSC) because this type of vehicle i) will give their business a marketing edge for a similar incorporation cost and ii) will not require them to invest a large amount in the JSC’s paid up share capital, unlike most other EU jurisdictions.
The Bulgaria limited liability company (OOD)
- A limited liability company in Bulgaria can be incorporated with i) a single shareholder (in these cases, the abbreviation is EOOD to denote the single-member nature of the company) and ii) a single director, whom both can be of any nationality and are not required to be ordinarily resident in Bulgaria. Set at only €1, the minimum capital required for LLC incorporation is another advantage of Bulgaria business setup;
- Following incorporation, the company will be required to file its annual financial statements with the Bulgarian Trade Register every year, before March 31st.
The Bulgaria Joint Stock Company (AD/EAD)
- A joint stock company (JSC) is known in Bulgaria as an AD company and can be incorporated with i) a single shareholder (in which case the abbreviation becomes EAD) or ii) two or more shareholders (AD company). To approve the Bulgarian JSC setup, Bulgarian authorities will require i) an initial share capital of at least €25,000, 25% of which must be paid up at incorporation and ii) the appointment of a board of directors, comprising at least three members who can be of any nationality and iii) the appointment of a certified accountant;
- To give your company a marketing edge, Healy Consultants recommends the setting up a joint stock company in Bulgaria, instead of using an OOD. Our Clients often find that an AD or EAD company allows them to raise capital more easily in Europe in order to finance their business expansion. This is because i) Bulgarian company law does not restrict the issuance and transfer of shares by JSCs and ii) Bulgarian JSCs can be listed on either the Sofia Stock Exchange or on another stock exhchange in the EU, including: i) EuroNext; ii) Athens Exchange and iii) the London Stock Exchange;
- All Bulgarian JSCs are required to i) have their balance sheet and annual financial statements audited by a certified accountant and ii) file them with the Bulgarian Trade Register before March 31st each year.
The Bulgaria branch office
- In accordance with the Bulgarian Trade Law, foreign companies can open branch office entities in Bulgaria to do business. Because branches are not considered as separate legal entities, their parent company will be subject to unlimited liability for losses incurred by the branch;
- The Bulgaria branch must i) appoint a resident legal representative and ii) file annual financial statements with the Bulgarian Trade Register before March 31st each year.
The Bulgaria representative office (also known as trade representative office)
The Bulgaria representative offices can be 100% foreign-owned, but cannot pursue any commercial activities in Bulgaria. Consequently, this entity can only engage in i) liaison activities ii) market research and iii) promoting the business of the parent company.
The Bulgaria sole proprietorship (ET)
- This type of entity is suitable for professionals and very small scale operations as the owner can fully benefit from the company’s profits.
- Negatively, this type of entity imposes on the business owner an unlimited liability for the company’s debts.
- Foreigners can register a sole proprietorship in Bulgaria only if they already have obtained a residence permit in the country.
The Bulgaria limited partnership
- The limited partnership in Bulgaria is formed by a minimum of two partners with different powers and liability over the company’s debt.
- One type of partner is the “general partner”, who is fully liable for the company’s debt, but also boasts maximum decision power. Such partners do not have a fixed contribution to the company’s capital, however, their actual contribution determines their share in the future profits and their liquidation quotas.
- The second type of partner is called “limited partner” with limited decisional power in case in liquidation. Such partner has a liability limited only to his contribution to the company’s capital.
Table of comparison between Bulgaria entities
|Also known as:||OOD||AD||Branch||Trade representative office|
|How long to set the company up?||2 weeks||4 weeks||3 weeks||2 weeks|
|How long to open company bank account?||4 weeks||4 weeks||4 weeks||4 weeks|
|Authorities pre-approval needed to incorporate the company with a single shareholder?||No||No||No||No|
|Minimum share capital?||€1||€25,000||€1||€1|
|File annual tax return?||Yes||Yes||Yes||Yes|
|Corporate bank account options?||DSK Bank||FI Bank||SG bank||Reiffeisen bank|
|Does our Client need to travel?||No||No||No||No|
|Resident director required?||No||No||No||No|
|Minimum directors allowed?||1||3||1||1|
|Corporate shareholders allowed?||Yes||Yes||Yes||Yes|
|Individual shareholders allowed?||Yes||Yes||No||No|
|Corporate director(s) allowed?||No||Yes||No||No|
|Bulgaria corporate tax rate?||10%||10%||10%||0%|
|Annual financial statements required?||Yes||Yes||Yes||Yes|
|Statutory audit required?||No||Yes||No||No|
|Allowed to issue sales invoices in Bulgaria?||Yes||Yes||Yes||No|
|Allowed to sign contracts with Bulgaria entities?||Yes||Yes||Yes||No|
|Allowed to import and export goods?||Yes||Yes||Yes||No|
|Can rent an office in Bulgaria?||Yes||Yes||Yes||Yes|
|Can buy Bulgaria property?||Yes||Yes||Yes||No|
|Can own equity in other Bulgaria companies?||Yes||Yes||Yes||No|
|Total Bulgaria business setup costs in Yr. 1||€8,360||€9,160||€8,160||€8,260|
|Subsequent annual costs (excl. accounting and tax fee)||€4,630||€4,630||€4,530||€4,530|
|Sample engagement fee invoice|
Frequently asked questions
Are there any restrictions on foreigners' ability to set up a company in Bulgaria?No, generally speaking. Bulgarian investment law works on the principle of equality between Bulgarian investors and foreign investors, although there are narrow limitations in fields such as arms manufacturing, gambling and tobacco processing.
What is the minimum investment required to start a Bulgarian company?Investors can incorporate an OOD in Bulgaria with just €1 of capital, with a requirement of €6,250 paid up upon incorporation for the AD/EAD joint stock company. The initial investment requirements are therefore low and manageable for most businesses.
What are steps to set up a Bulgarian company?Read our detailed guide to setting up a company in Bulgaria to learn more.