{"id":4556,"date":"2026-07-06T07:34:51","date_gmt":"2026-07-06T07:34:51","guid":{"rendered":"https:\/\/leinonen.eu\/bgr\/?p=4556"},"modified":"2026-07-14T07:17:14","modified_gmt":"2026-07-14T07:17:14","slug":"types-of-business-entities-in-bulgaria","status":"publish","type":"post","link":"https:\/\/leinonen.eu\/bgr\/news\/types-of-business-entities-in-bulgaria\/","title":{"rendered":"Choosing the Right Business Entity in Bulgaria: A Guide"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">The five traditional business forms most commonly used by foreign investors in Bulgaria are described below, and selecting the right one for your foreign-owned business is a vital first step towards success in a new market. Bulgaria now also offers a sixth option, the Variable Capital Company (VCC\/DPK), covered later in this guide. Conducting thorough research and consulting with a specialist Bulgarian accountant is key, as choosing wisely could save you significant inconvenience and money in the long run.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Since 1 January 2026, Bulgaria has been part of the eurozone, so all share capital, thresholds, and fees are now set in euro at the fixed rate of 1 EUR = 1.95583 BGN. In this article, Leinonen Bulgaria will introduce your legal entity options, discussing the pros, cons, and main uses of each.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The Five Traditional Business Entities in Bulgaria<\/h2>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-black-color\">Sole Proprietorship (ET)<\/mark><\/strong><mark style=\"background-color:rgba(0, 0, 0, 0);color:#884098\" class=\"has-inline-color\"> <\/mark>\u2013 natural person with unlimited liability (the simplest model)<\/li>\n\n\n\n<li><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-black-color\">Limited Liability Company (OOD\/EOOD)<\/mark><\/strong> \u2013 the most common form for small to medium enterprises (SMEs)<\/li>\n\n\n\n<li><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-black-color\">Joint-Stock Company (AD\/EAD) <\/mark><\/strong>\u2013 for larger ventures, public capital-raising via shares<\/li>\n\n\n\n<li><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-black-color\">Branch of foreign company<\/mark><\/strong> \u2013 not a separate legal entity (operations under parent\u2019s liability)<\/li>\n\n\n\n<li><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-black-color\">Trade Representative Office (RO)<\/mark><\/strong> \u2013 non-commercial (for marketing and representation only)<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">The most common business entities in Bulgaria are the ET and the OOD\/EOOD. OOD and EOOD dominate thanks to their simplicity, limited liability, and minimal capital, while the ET is easy to set up, making it popular among freelancers and small-volume traders.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Formation Requirements and Timelines for Legal Entities in Bulgaria<\/h3>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table class=\"has-fixed-layout\"><thead><tr><th><strong>Legal Entity<\/strong><\/th><th><strong>Requirements and Steps<\/strong><\/th><th><strong>Timeline (best case and realistic)<\/strong><\/th><\/tr><\/thead><tbody><tr><td>ET<\/td><td>Register with Commercial Register\/BULSTAT<\/td><td>1-3 days<\/td><\/tr><tr><td>OOD\/EOOD<\/td><td>Notarise Articles, deposit capital and file online or in person<\/td><td>A few working days once the filing is complete (longer if bank account opening, document legalisation, or translations are needed)<\/td><\/tr><tr><td>AD\/EAD<\/td><td>Notarise articles, one or more founders, deposit 25% of capital, establish a Board of Directors (minimum three members)<\/td><td>A few working days once the filing is complete (longer for complex structures or document legalisation)<\/td><\/tr><tr><td>Branch<\/td><td>Parent resolution, register branch in Commercial Register<\/td><td>3 days (in practice 1 month)<\/td><\/tr><tr><td>RO<\/td><td>Apply to Bulgarian Chamber of Commerce and Industry (BCCI) and register with BULSTAT<\/td><td>1-3 days (depending on urgency)<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">Capital and Ownership<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">Minimum Capital and Other Important Requirements<\/h3>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table class=\"has-fixed-layout\"><thead><tr><th><strong>Legal Entity<\/strong><\/th><th><strong>Minimum Capital<\/strong><\/th><th><strong>Requirements and Considerations<\/strong><\/th><\/tr><\/thead><tbody><tr><td>ET<\/td><td>No minimum<\/td><td>Unlimited liability<\/td><\/tr><tr><td>OOD\/EOOD<\/td><td>EUR 1<\/td><td>Minimum capital fully paid at registration<\/td><\/tr><tr><td>AD\/EAD<\/td><td>EUR 25,000<\/td><td>25% initial deposit of minimum capital required<\/td><\/tr><tr><td>Branch<\/td><td>No minimum<\/td><td>Obligations backed by parent company<\/td><\/tr><tr><td>RO<\/td><td>No minimum<\/td><td>Obligations backed by parent company<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\">Do any Legal Entities Have Restrictions or Rules Regarding Shareholders, Partners, or Directors?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Yes. An EOOD must have one manager, and an OOD must have at least one manager. An AD must have a Board of Directors with a minimum of three members (a Supervisory Board is optional under the two-tier structure).<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Taxation<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">What tax Regimes are Applicable for Each Type of Business Entity in Bulgaria?<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>ETs are taxed under personal income tax (15%) or patent\/regime, and are subject to social and health contributions<\/li>\n\n\n\n<li>EOODs, OODs and ADs are subject to corporate tax at 10% (dividends are taxed at 5%)<\/li>\n\n\n\n<li>Branches are taxed on Bulgarian sourced profits as per corporate tax rules<\/li>\n\n\n\n<li>ROs do not generate income and therefore pay no corporate tax<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">What are the VAT Rules for Business Entities in Bulgaria?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">VAT registration is mandatory once taxable turnover exceeds EUR 51,130. From 1 January 2026, this turnover is assessed on a calendar-year basis (rather than the previous rolling 12-month period), and the registration application must be filed within 7 days of exceeding the threshold. Below this threshold, VAT registration is voluntary.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Accounting and Reporting<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">What are the Accounting and Audit Requirements of Each Business Entity in Bulgaria?<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>ETs can carry out simplified single-entry bookkeeping and standard tax and social filings<\/li>\n\n\n\n<li>EOODs\/OODs must keep double-entry books and prepare annual financial statements. Under Article 40 of the Accountancy Act, an audit is required only if, as at 31 December, the company exceeds at least two of these three thresholds: assets over EUR 1,022,584 (BGN 2,000,000), net sales revenue over EUR 2,045,168 (BGN 4,000,000), or more than 50 employees.<\/li>\n\n\n\n<li>ADs\/EADs are subject to mandatory annual audit regardless of size, unless they carried out no activity during the year<\/li>\n\n\n\n<li>Branches maintain separate accounting records and file local tax reports<\/li>\n\n\n\n<li>ROs have lighter bookkeeping than trading entities, but they still have compliance duties, including registration with the Bulgarian Chamber of Commerce and Industry (BCCI) and BULSTAT, and employment obligations if they hire staff<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Legal and Operational<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">What Business Activities can Each Type of Legal Entity Engage in?<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>ETs have unlimited liability and are suitable for small-scale services<\/li>\n\n\n\n<li>EOODs\/OODs\/ADs are open to a broad range of activities defined in the Commercial Register<\/li>\n\n\n\n<li>Branches can contract and trade under parent authority, with liabilities borne by the parent<\/li>\n\n\n\n<li>ROs are limited to marketing, representation, and research (but may employ staff)<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Compliance and Governance<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">What are the Corporate Governance Requirements of Each Legal Entity in Bulgaria?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Depending on the type and size of a business entity in Bulgaria, ongoing compliance obligations may include annual reporting, tax and VAT filings, social contributions, register updates, and governance meetings.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Specific Corporate Governance Requirements for Legal Entities<\/h3>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table class=\"has-fixed-layout\"><thead><tr><th><strong>Legal Entity<\/strong><\/th><th><strong>Annual General Meeting<\/strong><\/th><th><strong>Board of Directors<\/strong><\/th><th><strong>Managers and Supervisors<\/strong><\/th><\/tr><\/thead><tbody><tr><td>ET<\/td><td>&#8211;<\/td><td>&#8211;<\/td><td>&#8211;<\/td><\/tr><tr><td>EOOD\/OOD<\/td><td>Yes<\/td><td>&#8211;<\/td><td>\u22651 manager, supervisor optional<\/td><\/tr><tr><td>AD\/EAD<\/td><td>Yes<\/td><td>\u22653 members or two-tier board<\/td><td>&#8211;<\/td><\/tr><tr><td>Branch<\/td><td>&#8211;<\/td><td>&#8211;<\/td><td>Local manager<\/td><\/tr><tr><td>RO<\/td><td>&#8211;<\/td><td>&#8211;<\/td><td>&#8211;<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">Practical Considerations<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">What Type of Business is Each Legal Entity in Bulgaria Best Suited to?<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>ET is a great option for small, simple operations, but it entails personal liability and full social contributions<\/li>\n\n\n\n<li>With liability protection and low capital requirements, OOD\/EOOD is ideal for SMEs, though it is important to consider accounting costs and social contributions<\/li>\n\n\n\n<li>AD\/EAD is best for large-scale or public capital needs, but is complex and costly<\/li>\n\n\n\n<li>Branches are great for foreign-owned businesses wishing to test the market without forming a separate legal entity in Bulgaria<\/li>\n\n\n\n<li>ROs are useful for establishing a marketing-only presence, but they are not allowed to generate revenue<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">EOOD\/OOD is the best option for most startups. An AD should generally only be used when raising external capital.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Recent Developments and Planned Future Changes<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">When forming a business entity in Bulgaria, it is vital to stay up to date on the latest developments in accounting and tax. Some of the most recent changes include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Bulgaria adopted the euro on 1 January 2026. All share capital, thresholds, accounting records, and invoices are now in euro at the fixed rate of 1 EUR = 1.95583 BGN<\/li>\n\n\n\n<li>The mandatory VAT registration threshold is EUR 51,130, and from 1 January 2026 turnover is assessed on a calendar-year basis, with registration due within 7 days of exceeding the threshold<\/li>\n\n\n\n<li>SAF-T (Standard Audit File for Tax) reporting began on 1 January 2026 for large enterprises, with a phased rollout reaching all businesses by 2030<\/li>\n\n\n\n<li>The Variable Capital Company (VCC), a flexible structure aimed at startups and technology companies, is now available with no minimum capital requirement<\/li>\n\n\n\n<li>E-government progress allows online company registration in around three working days<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Contact Leinonen Bulgaria for Tailored Advice<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Securing a trusted Bulgarian accountant early will help you choose the right legal entity for your business\u2019s long-term success, and Leinonen has been trusted by foreign-owned businesses in Bulgaria for more than 17 years. Your expert Bulgarian accountant will not only guide you through the process of choosing and registering your legal entity, but also provide vital ongoing support with obligations like VAT, SAF-T, and social contributions.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/leinonen.eu\/bgr\/contacts\/\" target=\"_blank\" rel=\"noreferrer noopener\">Get in touch<\/a> today to connect with a Bulgarian accountant who has your business\u2019s best interests at heart.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The five traditional business forms most commonly used by foreign investors in Bulgaria are described below, and selecting the right one for your foreign-owned business is a vital first step towards success in a new market. Bulgaria now also offers a sixth option, the Variable Capital Company (VCC\/DPK), covered later in this guide. Conducting thorough [&hellip;]<\/p>\n","protected":false},"author":26,"featured_media":4558,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[1],"tags":[],"coauthors":[114,123],"class_list":["post-4556","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.0 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Choosing the Right Business Entity in Bulgaria: A Guide &#8211; Leinonen Bulgaria<\/title>\n<meta name=\"description\" content=\"Find out how to choose the right legal entity in Bulgaria as a foreign-owned business in this article by trusted Bulgarian accountants, Leinonen.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/leinonen.eu\/bgr\/news\/types-of-business-entities-in-bulgaria\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Choosing the Right Business Entity in Bulgaria: A Guide &#8211; 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