Bulgaria has steadily emerged as a compelling destination for international entrepreneurs and investors looking to enter the European market. With a flat 10% corporate tax rate—among the lowest in the EU—strategic access to the European Economic Area (EEA), and relatively low business operating costs, Bulgaria company formation is increasingly viewed as a smart move for startups, SMEs, and holding entities alike.

Whether you're planning to incorporate a trading company, a consultancy, or a tech firm, understanding the legal, regulatory, and operational landscape of company formation in Bulgaria is essential before making the leap.

Why Choose Bulgaria for Company Formation?

Several factors make Bulgaria an attractive jurisdiction for business formation:

• Low Corporate and Personal Income Tax: A flat 10% tax rate on corporate profits and personal income.

• EU Membership: Seamless access to the European Single Market.

• Favorable VAT Regime: Standard VAT rate of 20%, with EU VAT exemptions under certain conditions.

• Cost-Efficiency: Competitive labor and overhead costs compared to Western Europe.

• Skilled Workforce: A high literacy rate and a growing base of tech-savvy professionals.

Types of Legal Entities in Bulgaria

The first step in company formation is choosing the appropriate legal structure. The most common types of entities are:

1. Limited Liability Company (OOD / EOOD)

• OOD (Obshchestvo s Ogranichena Otgovornost) is a limited liability company with two or more shareholders.

• EOOD is a single-member limited liability company, ideal for sole entrepreneurs.

• Requires a minimum share capital of BGN 2 (approximately €1).

• Most popular structure for both local and foreign investors.

2. Joint Stock Company (AD / EAD)

• Suitable for larger businesses or those seeking public or institutional investment.

• Minimum capital of BGN 50,000 (€25,000) required.

• Requires a Board of Directors or Supervisory Board, depending on the governance model.

3. Sole Proprietorship

• Simple to register but offers no separation between personal and business liability.

• Generally not recommended for foreign investors due to liability concerns.

4. Branch Office

• Allows foreign companies to operate in Bulgaria without incorporating a separate legal entity.

• Not considered an independent legal entity; the parent company is fully liable for the branch’s obligations.

5. Representative Office

• Cannot conduct commercial activity.

• Used primarily for market research, promotional, or liaison purposes.

Key Requirements for Bulgaria Company Formation

Foreign investors have the same rights as Bulgarian nationals when it comes to setting up a business. However, there are regulatory steps and documentation required:

A. Registered Address

Every company in Bulgaria must have a registered local address. This is typically a commercial or office address where official correspondence is sent.

B. Capital Requirements

• For OOD/EOOD: Minimum share capital is BGN 2 (symbolic requirement).

• For AD/EAD: Minimum capital is BGN 50,000.

C. Founders and Directors

• Companies must appoint at least one director (individual, not corporate).

• Shareholders can be individuals or legal entities of any nationality.

D. Bank Account and Capital Deposit

You must open a capital deposit account at a Bulgarian bank to deposit the required share capital before registration.

Step-by-Step Company Formation Process in Bulgaria

Step 1: Name Reservation

• Choose a unique company name.

• Conduct a name availability check with the Bulgarian Commercial Register.

Step 2: Prepare Incorporation Documents

Key documents include:

• Articles of Association or Memorandum of Incorporation

• Specimen signatures (notarized)

• Company decision (if formed by a legal entity)

• Proof of capital deposit

• Declaration of compliance with Bulgarian Commercial Law

Step 3: Register with the Commercial Register

• File all documents with the Bulgarian Registry Agency (part of the Ministry of Justice).

• The registration process typically takes 2–5 business days.

• Upon approval, the company receives a Unique Identification Code (UIC).

Step 4: Register for Tax and VAT

• After incorporation, companies must register with the National Revenue Agency (NRA).

• VAT registration is mandatory if turnover exceeds BGN 100,000 per year or if dealing with EU partners.

• Voluntary VAT registration is possible and often recommended for international trading businesses.

Step 5: Social Security and Employment Registration

• Companies employing staff must register as an employer with the NRA.

• Employee contracts must be reported to the labor office within three days of commencement.

Post-Incorporation Compliance

Once the company is operational, ongoing compliance is critical:

• Annual Financial Statements: Required for all legal entities and must be submitted to the Commercial Register.

• Corporate Income Tax Returns: Due by March 31st each year for the previous financial year.

• Monthly VAT Returns: Required if the company is VAT-registered.

• Payroll and Social Contributions: Must be calculated and submitted monthly if employees are hired.

Banking and Business Operations

Opening a Corporate Bank Account

A local business bank account is essential for operations, tax payments, and employee salaries. Most banks require:

• Certificate of incorporation

• Company stamp

• UIC and tax registration numbers

• Director’s ID/passport

Business Licenses

Certain sectors—such as financial services, transport, education, and healthcare—require additional licenses or permits. It's advisable to check sector-specific regulations during the planning stage.

Taxation Overview

Corporate Income Tax

• Flat rate of 10% on worldwide income.

Withholding Taxes

• 5% on dividends paid to both resident and non-resident shareholders (subject to double tax treaties).

• 10% on royalties and interest to foreign entities.

VAT

• Standard rate: 20%

• Intra-EU services and exports may be zero-rated or exempt under certain conditions.

Advantages of Forming a Company in Bulgaria

• Access to the EU Market: Trade freely across Europe with simplified VAT and customs rules.

• Low Operational Costs: Affordable office space, wages, and administrative expenses.

• Double Tax Treaties: Bulgaria has tax treaties with over 70 countries to reduce withholding taxes.

• Ease of Incorporation: Fast and straightforward registration process with minimal capital requirements.

• EU Residency Options: Company owners can pursue residence permits under business ownership routes.

Conclusion

Bulgaria company formation offers a strategic gateway to the European market, with favorable tax policies, a pro-business regulatory framework, and low costs of operation. Whether you're launching a consultancy, trading business, or EU-focused startup, Bulgaria provides a legally sound and investor-friendly environment.

Before you start, ensure that you:

• Choose the right legal structure.

• Understand your compliance responsibilities.

• Engage a local legal or accounting advisor to avoid delays and ensure proper setup.

With thoughtful planning and the right support, incorporating a business in Bulgaria can unlock significant benefits for both EU-based and international entrepreneurs.

FAQs

1. Can a foreigner register a company in Bulgaria without a local partner?

Yes. Foreign nationals and foreign legal entities can own 100% of a company in Bulgaria. There is no requirement for a local shareholder or director.

2. Is a visit to Bulgaria required to incorporate a company?

While a physical visit is helpful, it is not mandatory. Many service providers can handle the incorporation process through notarized power of attorney and remote communication.

3. How long does it take to register a company in Bulgaria?

Company registration typically takes between 2 to 5 working days after all documents are submitted correctly to the Bulgarian Commercial Register.