business in bulgaria


Before undertaking business activity in Bulgaria, it is necessary to choose which type of legal entity to form. The Commercial Act governs business establishment. Regardless of the nationality of their founders, all companies established and registered in Bulgaria are considered to be Bulgarian legal entities and bound by the Bulgarian law.

The following forms are examples of the types of legal entities that can be formed in Bulgaria: Sole-shareholder limited liability company (EOOD); Limited liability company with more than one shareholder (OOD); Joint stock company (AD); Joint stock company (EAD); Branch and Representative office.

The most common legal entities in Bulgaria are limited liability company (EOOD and OOD) and joint-stock company (AD) as they offer the best combination of running costs, management opportunities, limitation of shareholders' liability, legal regulation and administrative requirements.


Bulgaria is known as the EU Member State that offers the most favorable tax rates for legal entities. As a standard, foreign companies that are established as a permanent entity and earn profits from Bulgaria, are liable to pay 10% corporate tax on earnings. Both local and foreign companies are subject to the same Bulgarian corporate tax rate. However, foreign companies only pay Bulgarian taxes if they have a permanent organization or an administration board and earn profits from Bulgarian sources.

Bulgarian residents are liable to personal income tax on their total income received in a calendar year. Non-residents are taxed on income received from sources in Bulgaria. The personal income rate is flat 10% for all types of taxable income received for residents.

The standard VAT rate is 20%. The reduced rate is 9% and applies to certain tourist services such as hotels and other places of accommodation. The VAT system is generally aligned with the EU VAT Directive.


The regulation of employment in Bulgaria is governed by the Labor Code, which applies equally and must be complied with by both the executives and the employees. Bulgarian labor laws apply to foreign nationals and foreign businesses in Bulgaria in the same manner as domestic entities. All regulations related to minimum guarantees, employment benefits and compensation supersedes any agreement between the employer and employee. The employee-sided nature of Bulgarian labor legislation makes employment in Bulgaria complex.

Expats are liable to pay resident Bulgarian taxes only if they stay in the country at least 183 days during a calendar year. Your employer will typically arrange for your registration with the Bulgarian tax office and secure your social security. Self-employed workers will need to arrange their tax registration and Bulgarian social security themselves. Bulgarian social security payments are deducted from your gross salary by the employer.

In the condition of an employer-terminated agreement as a result of redundancy due to reduced workload or liquidation, one months’ notice is given along with a one months’ salary severance payment to the employee.


The citizens of the EU, EEA and Switzerland can be employed, self-employed or sent to a business trip to Bulgaria without restrictions and without a work permit since the country is a member of the EU. Special rules are also provided for family members of the EU, EEA and Swiss citizens.

Expats wishing to work in Bulgaria must apply for a temporary residence permit beforehand (consequently a work permit for non -EU, EEA citizens) or a permanent residence (no work permit needed). They may either arrange this along with their Bulgarian employers while they reside outside of Bulgaria. Alternatively, non -EU, EEA expats may enter the country, look for work, and then leave the country to process the visa. Company’s Directors or Members of Board of Directors do not need a work permit.

Foreigners looking to reside in Bulgaria have plenty of opportunities to rent apartments although expats are advised to seek out real estate agencies when looking for an apartment.


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