Bulgaria is an independent European state which became a full member of the EU in 2007. A favorable investment climate has been created here, a transparent system of registration of the foreign companies operates. The state gives support in the development of the business of non-residents. The registration of the company in Bulgaria provides many opportunities for business development. This is an entrance to international markets, activity in the developed European space, in the conditions of economic stability.
Major Forms of Legal and Business Presence
If you wish to become present in Bulgaria and conduct business in this jurisdiction and worldwide, this is possible to accomplish in one of these forms:
- Limited Liability Company (LLC) – is a body corporate suitable for carrying out small and medium businesses. Members of this company bear restricted financial liability for the results of the entity’s operation, within the amounts of their investments only. The registered statutory capital of a limited liability company shall be not less than BGN 5,000.
- Joint-Stock Company – a body corporate suitable for a large business that intends to involve extra financing from the public subject to the fulfillment of certain conditions. This entity has to be formed by one or more natural or corporate persons. The minimum amount of the statutory capital of a joint-stock company shall be BGN 50,000. For certain types of regulated businesses (like banking), this value may be higher.
- General Partnership – an option for doing business that can be arranged by two persons at least with unrestricted liability for the results of the joint operation under a common business name for such partners. Management is conducted jointly too in this case.
- Limited Partnership – an option for doing business where there are (i) at least one partner who bears the unlimited liability for the results of the joint business cooperation and also manage such joint activities, and also (ii) one or more limited partners who are liable within the amounts of their contributions made; they cannot participate in arranging management of such joint business activities.
Other forms of organizations are provided by the legislation of Bulgaria, for example, enterprises with unlimited liability. However, their co-owner may be a foreigner only if he is a permanent resident of the country. Non-residents can register partnerships, acting as their members but there are no tax privileges for them. The joint ventures have the right to provide banking and insurance services (provided for obtaining the license). LLCs are made for the implementation of trade and investment activities. All the enterprises in Bulgaria are unified for the purpose of taxation.
Prifinance specialists will help to choose the optimal form for the companies. The decision is made based on the specifics of the activity and the volume of the planned operations.
Registration Requirements and Steps
The professional registration and service of the company in Bulgaria are carried out by Prifinance employees from its start and up to completion. In general, this registration process covers these preliminary steps:
- Identifying key business priorities and activities you are going to realize through the intended enterprise.
- Appointing a representative who will carry out registration and other related actions in Bulgaria.
- Selecting a business name for a future body corporate.
- Collecting all compulsory details about the founders, beneficiaries, and managers of the prospective enterprise.
- Arranging a business address for the future company.
- Determining the size of the authorized capital and the proportions in which the equity participation is carried out. Depositing such an amount. Later, such an account may be used for carrying out daily transactions of the newly formed company.
- Preparing constituent documents for a future body corporate.
- Forming and executing the standard package of the documents that includes:
- application of the established form;
- director’s declaration (assured by the notary) about the consent to manage the company;
- a declaration (does not require assurances) about the intention to perform only those actions that are permitted by law and notified to the authorized bodies;
- charter with the constituent protocol;
- receipts confirming the fact of payment of all registration fees;
- bank statements on making contributions in favor of the formation of the authorized capital;
- a declaration confirming the correctness of all data recorded in the documents;
- power of attorney – in case of delegation of the authority to the nominal representatives.
- Registering with tax and social security state bodies.
- Applying and obtaining licenses and special permits for specific regulated activities a future entity is going to conduct./li>
Legal and Regulatory Framework
Local legislation can be justifiably considered as favorable for conducting entrepreneurial activities both locally and worldwide. Major business regulatory authorities that operate in this jurisdiction are the Ministry of Economy, the Financial Supervision Commission, and the Bulgarian National Bank. The principal legal act in the area of doing business is the Bulgarian Commercial Law.
The legislation does not set strict requirements for the national composition of the founders. The registration can be carried out by both local residents and non-residents. But, the registration and maintenance of the company in Bulgaria is carried out taking into account the peculiarities of the legal framework of the legislation for non-residents – the Law “On Foreigners in the Republic of Bulgaria”.
The provisions of tax legislation make up a separate category of normative legal acts. It is relevant for all the foreigners carrying out the activities within the country. These are the provisions of the laws “On Corporate Income Tax”, “On VAT”, as well as the rules regulating the payment of local taxes and fees. The simplified taxation is applied here only for certain types of activities, there are obligations to maintain accounting, preparation and submission of reports.
Tax System in Bulgaria
If you are considering an option of company registration in Bulgaria, keep in mind these tax highlights you may find beneficial for doing business there:
- Corporate income tax (CIT) rate – 10%
- Personal income tax rate – 10%
- Value-added tax rate – 20%
- Withholding tax rates – (i) dividends – 5% (ii) interests – 10% (iii) royalties – 10%
- Capital gains tax rates – (i) corporate – the same as the basic CIT rate (ii) personal – 10%
It should be noted separately about two VAT rates in Bulgaria:
- 20% – for most taxable transactions;
- 0% – for export operations and those ones that are not subject to taxation under international agreements.
The country has agreements with many states on the avoidance of double taxation. The corporate income tax rate is considered one of the lowest in Europe. The base for calculating the taxes of legal entities is reduced by the amount of dividends.
Advantages of the Jurisdiction
Company formation in Bulgaria is beneficial for a number of reasons:
- This is a prestigious European jurisdiction that provides the access to the perspective markets.
- Loyal legislation promotes the implementation of profitable activities.
- It is possible to carry out direct transactions here without notifying the state bodies about the carried out activities.
- The jurisdiction provides an access to the opportunities provided to the EU countries.
- The registration procedure here is simple and fast.
- Entrepreneurs have the right to conduct financial reporting under the IFRS standards.
- There are many incentives for foreign investors in certain industries (manufacturing, R&D works, education, production of electricity from renewable sources, etc.).
How Prifinance Specialists May Help You
Our professionals are ready to assist you with getting a more precise overview of benefits you can get from a Bulgarian enterprise as well as consult you about the peculiarities of doing business in this country and worldwide. We offer company incorporation and bank account opening services in Bulgaria and worldwide. New registration and ready-made options. Provide extensive details for more precise consultations and suggestions that can be effective for your future project.