BUSINESS IN BULGARIA

Bordering both the European Union (EU) and Asia, Bulgaria’s strategic geography makes it an appealing location for foreign-owned businesses. With a thriving resources sector dominated by mining and alternative energy, and other leading industries including tourism, information technology, agriculture, pharmaceuticals, and textiles, Bulgaria opens the door to a prosperous market full of opportunity.

Compiled by Leinonen financial experts, this article serves as a guide to the basics of doing business in Bulgaria. Alongside general benefits and considerations, we will discuss the logistics of establishing a business and managing employment, payroll and taxation in the country.

Business in Bulgaria: General Factsheet

5 Benefits of Doing Business in Bulgaria

1. Political and Economic Stability

Bulgaria has been an EU member state since January 2007, and government policy is focused on building a favourable business climate for foreign investors. All the biggest banks are represented in Bulgaria, and the country has signed Double Taxation Treaties with more than 60 countries.

This means:

• Low investment risk
• Low currency risk (Bulgaria adopted the euro on 1 January 2026)
• Low budget deficit

2. Strategic Geographical Location

Bulgaria has access to five pan-European transport corridors. Serving as a bridge between Europe and Asia, it has easy access to profitable markets like Türkiye and the Middle East. In 2025, Bulgaria entered the Schengen zone, opening the door to easier trade and movement between other member states. Find out more on the benefits of establishing a business in Bulgaria now it is in the Schengen area in this article by Leinonen.

3. Highly Qualified, Multilingual Workforce

• In 2024, there were 15,737 foreign students in Bulgaria from countries including Greece, United Kingdom, Ukraine, Germany, and Italy
• 1 in 4 people in Bulgaria had a university degree in 2021, according to the National Statistical Institute (NSI)
• 46% of the population of Bulgaria speaks at least one foreign language

“…If you want first-class mathematicians, try looking in Bulgaria.”
Willian Fitzsimmons, Dean of Admissions & Financial Aid, Harvard College

4. Low Production Costs and Taxes

• Flat 10% personal income tax
• 10% corporate income tax
• 0% corporate tax for manufacturing companies operating in municipalities with unemployment at least 25% above the national average.
• Bulgaria’s outsourcing sector employs over 105,000 people and continues to grow, although growth has slowed to single‑digit levels since 2023.

5. Balanced Work to Lifestyle Logistics

Day‑to‑day living costs in Bulgaria remain comparatively low. In 2026, Sofia ranks 301st globally in cost of living, making it more affordable than many major European cities. While office rents remain competitive, the market has tightened due to falling vacancy rates and increased demand.

Establishing a Business in Bulgaria

The establishment of a business in Bulgaria is governed by The Commercial Act. Foreign persons who want to establish a business have the same rights as Bulgarians, and there is no limitation on the share participation of foreign legal entities and individuals. It only takes a couple of days to register a new company in Bulgaria; minimum start-up capital has been reduced to only BGN 2 (EUR 1) for limited liability companies, and international VAT registration takes typically around 7-14 days.

The following forms of commercial organisation can be set up:

• Sole shareholder limited liability company
• Limited liability company with more than one shareholder
• Sole trader, individual company with unlimited liability
• Joint stock company
• Sole shareholder joint stock company
• Unlimited partnership set up by two or more individuals who carry unlimited responsibility
• Limited partnership, responsibility is set according to agreement
• Partnership limited by shares
• Branch
• Representative office
• Consortium and holding

The registration must be carried out by a professional firm in Bulgaria. Foreign entities must register a local company or branch if they intend to carry out commercial activities in Bulgaria. Representative offices are permitted but cannot engage in revenue‑generating business. Regardless of the founders’ nationality, all types of entities established in Bulgaria are considered Bulgarian and treated under the Bulgarian legislation system.

Contact us if you wish to get a thorough comparison of establishing a branch office, subsidiary company, or a representative office in Bulgaria.

Accounting in Bulgaria

The Bulgarian accounting legislation is generally aligned with EU legislation. Companies have to observe and keep their accountancy in compliance with the requirements under the Accountancy Act. Fiscal year corresponds to the calendar year, and all companies in the Commercial Register must announce their annual financial statement no later than 30 June the following year.  

Penalties for not submitting the report on time are as follows:

• For companies: a pecuniary sanction between 0.1% and 0.5% of net turnover, but not less than BGN 200.
• For directors / responsible persons: fines of BGN 200 to BGN 3,000, doubled for repeated violations

Audit is mandatory for companies which meet or exceed two of the below criteria during the current or previous year:

• Book value of assets: over BGN 4 million
• Net sales revenue: over BGN 8 million
• Average number of employees: above 50

The audit is also mandatory for some of the AD-s and KDA-s, emittents on public markets, insurance companies, credit institutions, additional social contribution funds, and other companies when required by legal acts.

Penalties are as follows:

• Directors: fines between BGN 500 and BGN 5,000
• Companies: sanctions between BGN 2,000 and BGN 10,000

Micro, small and medium-sized companies (SMEs) can apply National Accounting Standards. Newly established entities are considered SMEs in the year of their establishment, and must comply with these rules for the first and second year.

When Companies in Bulgaria Must Apply IFRS (Updated for 2026):

In Bulgaria, the application of International Financial Reporting Standards (IFRS) is not determined by exceeding financial or employee thresholds. Instead, IFRS is mandatory only for Public Interest Entities (PIEs).

Entities Required to Apply IFRS (Mandatory)

The following categories must apply IFRS, regardless of size or financial indicators:

• Issuers of securities listed on an EU‑regulated market
• Credit institutions
• Insurance companies
• Pension companies and the funds they manage
• State and national railways
• Water and sewage service operators

These entities are legally classified as public interest entities (PIEs) and are therefore required to prepare financial statements under IFRS as endorsed by the EU.

Leinonen is happy to help with all of your accounting needs in Bulgaria.

Employment in Bulgaria

Employment contracts in Bulgaria are signed between the employee and the employer in a written form, specifying certain statutory requirements.

Employment contracts must include:

• Involved parties
• Physical location where employment will be performed
• Employment position and work description
• Date of signing and of expected commencement of work
• Duration of the contract
• Duration of the working day or week
• Basic and, if applicable, any additional employment remuneration
• Terms and conditions of employment remuneration payment
• Annual paid leaves (basic, extended, additional)
• A common notice period for employment termination

All employment contracts must be registered with the respective territorial division of the National Revenue Agency (NRA):

• In three days after concluding or amendment of the employment contract, but before the first working day
• In seven days after its termination

Employment contracts can be concluded for a fixed or indefinite period of time. Fixed-term contracts can only be signed in exceptional cases specified in the Labour Code. For both types of contracts, employers have the opportunity to assess an employee’s capability for certain work through a probation period not exceeding six months.

Employers report monthly information about employees’ social contributions and personal income tax. Declaration for social contributions should be submitted until the 25^th of the following month. It is an employer’s legal responsibility to pay over employees’ tax and social security deductions to the Bulgarian tax authorities.

Avoid penalties and ensure everything is done correctly and on time by outsourcing your payroll management to Leinonen.

Taxation in Bulgaria

Bulgaria has two levels of taxes: state taxes that go to the NRA, and local taxes paid to municipal councils.

When establishing your company, you need to:

• Register your company for taxation
• Start keeping financial records
• Start preparing a tax return

An annual activity report is not needed if your company shows no activity throughout the year, or if there are no reported revenues and expenditures compliant with Bulgaria’s accounting law.

Being an Expat

Citizens of the EU, EEA and Switzerland can be employed, self-employed or sent on 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 from the EU, EEA and Switzerland.

Expats wishing to work in Bulgaria must apply for a temporary residence permit (consequently a work permit for non-EU/EEA citizens) or a permanent residence (no work permit needed) beforehand. They may arrange this along with their Bulgarian employers while they reside outside of Bulgaria. Alternatively, non-EU/EEA expats may enter the country to look for work, and then leave the country to process the visa. Company 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 accommodation.

Doing Business in Bulgaria? Get Expert Support Today

Leinonen financial specialists have been assisting foreign-owned businesses in Bulgaria for more than 15 years. Our local experts stay up to date on the latest tax, payroll, and accounting legislations, providing peace of mind to over 1500 clients across the EU.

Get in touch today to find out how we can support your company’s new or existing Bulgarian venture.