In recent years, Bulgaria has initiated legal and factual steps towards becoming the most attractive investment destination in the region. Some of the actions include introducing the lowest flat corporate tax (10%) and providing institutional support for building new infrastructure near the place of the investment.
If you would like to establish your presence on the Bulgarian market (i.e., branch, subsidiary, holding company, representative office, etc.) we will handle all the formalities: the establishment, incorporation, etc. We will also provide you with comprehensive support and advice in the process.
So that your foreign operations would have the right support from day one, our services include:
- Experienced multilingual staff: English, Bulgarian and Russian
- Document processing in local language and in accordance with local legislation
- Registrations with all competent authorities, including Commercial Register and VAT
- Opening a bank account on behalf of the client under a task framed power of attorney
- Providing a legal address and post handling
- An officially accredited accounting division under the direction of professionally certified accountants and tax advisors
- Comprehensive invoicing and bookkeeping services, sales and inventory statistics, profit calculations, agents’ commission processing and reporting
- Payroll management including salary payments, tax withholdings, and deductions from a paycheck
REGISTRATION IN THE COMMERCIAL REGISTER
The newly established company becomes a legal entity after it is registered in the electronic Commercial Register with Register Agency. The information in the register is public and freely available online.
Registration process usually takes 3 to 5 days after the documents are submitted. Incorporation can be filed either by a lawyer or by legitimate proxy.
POWER OF ATTORNEY
Some further changes, such as appointment of a new manager, changing of legal address or change of registered capital are also subject to registration. All companies registered in the Commercial Register should announce the annual financial statement for every year no later than 30 June the following year.
The initial step for establishment of all types of entities is the adoption of the Article of Association. The document must contain: trade name, seat and address of management, scope of business activities, managing bodies and representation, shareholders’ relations etc.
The most common commercial entities in Bulgaria are limited liability companies (EOOD and OOD) and joint-stock companies (AD) as they offer the best combination of running costs, management opportunities, limitation of shareholders’ liability, legal regulation and administrative requirements.
PERSONAL DATA ADMINISTRATOR
Companies that operate with personal data of employees, counter partners, vendors and clients, etc. must adopt and process their GDPR activities-
LIMITED LIABILITY COMPANY (OOD)
The preferred form of conducting business in Bulgaria is through the limited liability company or the OOD. Not only does the creation of an OOD require only 2 BGN as starting capital – the shareholders’ limited liability and a simple corporate structure are highly appealing as well.
The shares of an OOD are transferrable and may be obtained as inheritance. However, the shareholders’ general meeting has to approve the transfer of shares to third parties. In case of a transfer, a notarized contract must be submitted to the state commercial register.
The OOD company is governed by:
- The shareholders’ general meeting
- Manager(s) that direct the day-to-day and represent the company
Foreigners can also be appointed managers of the company.
According to Commercial Act, an OOD company can be established by physical or legal persons and there is no limit to the number of shareholders. In case of a single shareholder, the entity is registered as a single member limited liability company.
The liability of the OOD Company is limited to the extent of its own assets. The shareholders themselves bear liability limited to the amount of their contributions in share capital.
Minimum required capital to start a liability company is 2 BGN (1 EUR). The capital comes from the shareholders and the registered capital is the main financing source of the company.
Shared capital is formed by incorporation expenses, accounting and administrative support, and all current expenses which will be running until the time company is able to make a profit and finances its activity.
The bank will then issue a certificate of capital, which is one of the mandatory documents in registering a company.
Shareholders may be either individuals or companies, no matter if they’re local or foreign. If a shareholder is a company, a certificate of good standing is needed.
Transfer of a share from one shareholder to another is unrestricted, but transfer to a third party is subject to a more complex procedure.
The OOD is managed by the shareholders’ general meeting and by the appointed directors. The EOOD is managed and represented by the owner of the capital. The owner can do it either personally or through an employed director.
A Director is either an individual or a legal entity who represents the company in court and in dealings with third parties, the Director also conducts the daily activities of the company.
Company can be represented by more than one Director:
- Jointly and separately: any manager can represent the company by itself, all documents need to be signed by one of the managers only in order to be valid
- Jointly: documents are valid only when signed by all managers
A Director is usually appointed by the shareholders or, in the case of an EOOD, the owner. A written contract must be also signed. The rights and obligations, as well as the scope of their authority, are determined in a management agreement.
The minimum required capital to establish a joint-stock company in Bulgaria is 50 000 BGN. One of the characteristics of a joint-stock company is that the shares may be transferred with no regulations, and shareholders have no ownership over the company.
The joint-stock company is governed by:
- A shareholders’ general meeting
- A board of directors (one-tier management system) or a Supervisory board and a Management board (two-tier management system)
Foreigners can be appointed managers of the company.
After the required documents are filed, the company must be entered to the commercial register of commercial companies. It must be done at the end of the first working day following the day of the documents filing.
ESTABLISHING A BRANCH OR A REPRESENTATIVE OFFICE
A foreign investor could also decide to conduct business in Bulgaria by way of a branch or a representative office.
A branch registration application can be submitted to the Bulgarian Commercial Register by a foreign legal entity authorized to carry out commercial activity under their national law.
As a part of the mother company, the branch is not regarded as a separate entity, thereby it is not a prerequisite to have a distinct structure of governance nor to possess any paid up capital. All assets and liabilities of the branch belong to the mother company.
A representative office can be established by a foreign person with the right to conduct business under their national law.
Applying to register a representative office takes place at the Bulgarian Chamber of Commerce. As a representative office is not a distinct legal entity and cannot perform business, its purpose is to conduct non-transactional activities such as marketing and training.