Our company formation agents can help you with more information about how you can set up a company in Bulgaria
Company formation in Bulgaria consists in several actions that are mandatory before starting a business in this country. Firstly, one needs to decide about the form of business. According to the Bulgarian Foreign Investments Agency, an OOD – the Bulgarian limited liability company – is one of the most popular choices for small and medium businesses. There is also the option of incorporating a Bulgarian AD – the joint stock company,suitable for large companies.
Bulgarian limited liability company
Setting up a limited liability company in Bulgaria is a rather straightforward procedure. First thing to do is to choose the type of entityyou want. A popular form in Bulgaria is the one called limited liability company (LLC) known as drujestvo s ogranichena otgovornost (OOD) in Bulgarian language.
The steps of company formation of a LLC in Bulgaria
Once you decide to set up a LLC in Bulgaria, firstly you have to choose a name that has to be unique and you need to check if it is available and issue the proven document. The managing body of the company needs an act of association as a result of the constituent meeting.
The number of the stakeholders is at least one. The company body of the Bulgarian OOD is made of a general meeting of stakeholders and a (minimum one) manager. The LLC must have a director to represent the company in front of authorities, but it is not mandatory for him to be a Bulgarian resident. For an efficient communication, the OOD companyshould have a registered office in Bulgaria and a bank account.
The documents required by the Registry Agency
Next, the founder needs to put together the papers for the Registry Agency. They consist of:
– the application form,
– the name certificate,
– the signature specimen with the notary consent of the person who represents the company.
The authorized capital required for a LLC is 2 BGN (1 EUR) and the entrepreneur needs a bank document to state the deposit, attached to the file. The owners of the limited liability company must provide copies of identity documents. In case of legal entities setting up the company, legalized copies of the corporate documents are required. The Registry Agency accepts paper and electronic applications.
A court decision will acknowledge the main scope of the company and will include the articles of incorporation. The company receives a registration number and a taxation number. The National Social Security Institute provides the Bulstat number (a unique number) for which the company must apply along with the papers for the Commercial Registry. The Bulgarian law institutes penalties for delays.
In the process, the State Gazette publishes the Register entry, but it doesn’t mean that the set up of the company is complete.
A Bulgarian limited liability company is subject of the Corporate Income Tax Law and the rate is 10%. The 20% VAT is not mandatory for companies with an income under BGN 50,000. Another thing that is not compulsory for a LLC is the independent audit of annual accounts.
The LLC set up in Bulgaria is required to pay social security contributions. This can be done by filing an application at the Social Security Administration.
Types of companies in Bulgaria
The Bulgarian OOD (limited liability company) is a form of business especially established by the small and medium companies and it is formed by members with the liability limited to their contribution to the company’s capital. It is considered very advantageous to open a Bulgarian OOD because, unlike other jurisdictions, there is no need to submit a minimal share capital at incorporation.
The main documents of a Bulgarian limited liability company necessary for registration are the articles of incorporation and the memorandum of association (the last one in case only one shareholder is involved). The company of this type is managed by a director appointed by the general meeting of the shareholders (considered the highest instance in the entity). The name of the company must be unique and followed by the termination OOD.
A joint stock company in Bulgaria (AD) is a type of company designed for major businesses and must be incorporated by at least two individuals or corporate bodies. The name of the company must be unique and followed by the termination AD. Unlike the limited liability company, this entity must provide a minimum share capital of 50,000 BGN (for a closed joint stock company) or 100,000 BGN (for an open joint stock company) divided into shares with nominal value of 100 BGN.
At the base of each joint stock company, sits the by-laws of the company, containing the name and the registered address of the company, its purposes, details regarding the capital stock and shares, the name of the advantaged members and type of advantages, the modality of appointing the board of directors and the supervisory board, transforming or liquidating the entity. The main difference between the closed Bulgarian AD and the open Bulgarian AD is the only the shares of the last one can be traded at the stock market.
A single entrepreneur can register a Bulgarian sole proprietorship. The entrepreneur is fully liable for the company’s debts and can benefit from the full profits of it. There is no minimum share capital required for this type of business incorporated in Bulgaria and, in case of liquidation, the owner doesn’t have separated liability from its business and his personal assets may be affected by this process.
The Bulgarian general partnership is formed by two or more members with unlimited liabilities, united under the same name and with the same economic purposes. Just like in the case of the Bulgarian sole proprietorship, the personal assets of the members can be affected by the liquidation processes. A general partnership is based on the partnership’s articles which must state the name and address of each partner, the name of the partnership (formed by the names of the partners followed by the termination SD), the amount contributed by each partner and the modality the losses and profits will be divided between them.
Similar with the general partnership is the Bulgarian limited partnershipwhich is formed by two or more partners who can be general (this type of partner is fully liable for the entity’s liabilities and has full decisional powers and doesn’t need to contribute with a fix amount to the capital) and the silent partner (which has a liability limited to his contribution to the capital, doesn’t have a decisional power and, in case of liquidation, has his personal assets protected). This type of Bulgarian partnership is also based on the partnership’s articles. The name of this type of limited partnership must contain at least one general member’s name followed by the termination KD.
Incorporation procedure in Bulgaria
Preliminary procedure before registration. At the beginning of company incorporation in Bulgaria, the entity’s representative must execute the minutes of the constituent meeting of the shareholders or the general meeting of the general partners. After that, it is mandatory to obtain a notary certified statement of consent, the signature specimen of the manager and a certified copy of the articles of incorporation or the partnership agreement. A certificate from a bank stating that at least 70% of the minimum required capital has been paid must be obtained before starting the actual entity registration. The certified statement of consent and signature specimen of the manager must be notarized.
The actual registration process of a company in Bulgaria consists in depositing the notarized foundation deeds, minutes of the meeting of incorporation and the bank certificate stating the share capital. The procedure takes around four working days.
After that, the following step of the company incorporation in Bulgariaconsists in filling an application to the National Revenue Agency accompanied by the foundation deed, the bank account document or a document attesting the contributions value, an excerpt from the Commercial Register in order to get the VAT number. This process doesn’t take longer than 12 working days.
The whole process of Bulgarian company incorporation performed by a Bulgarian law firm takes around two working weeks. After the registration, you should hire an accountant and we can recommend you a professional, because we are in contact with many specialists in accounting in European countries.
Economy overview in Bulgaria
Situated in the center of Balkan Peninsula, on the road between Europe and Asia, Bulgaria has a lot of advantages to offer to the foreign and local investors. The main developed sector is the service sector represented by the tourism, Bulgaria being an attractive holiday destination due to its advantageous prices and beautiful landscape. Other developed sector is the agriculture.
The population is highly educated, English speaker, this leading a reputable workforce. The major advantages granted by the Bulgarian government are the taxation system, one of the lowest from EU, with a profit tax of only 10% and the small withholding taxes on dividends paid to non–residents of 5% and withholding taxes on interests paid to non-residents up to 10%. All the above can be minimized or even exempt by the vast network of double taxation treaties signed by Bulgaria so far.
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