{"id":4556,"date":"2025-07-18T07:34:51","date_gmt":"2025-07-18T07:34:51","guid":{"rendered":"https:\/\/leinonen.eu\/bgr\/?p=4556"},"modified":"2025-07-23T13:20:52","modified_gmt":"2025-07-23T13:20:52","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>There a five main legal entities in Bulgaria, and selecting the right one for your foreign-owned business is a vital first step towards success in a new market. 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>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\">5 Main Legal 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>The most common business entities in Bulgaria are ET and OOD\/EOOD. OOD and EOOD dominate thanks to their simplicity, limited liability, and minimal capital, while ET is easy to setup, 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>3 working days (in practice 1-3 months)<\/td><\/tr><tr><td>AD\/EAD<\/td><td>Notarise articles, \u22653 founders, deposit 25% capital and establish Board structure<\/td><td>3 working days (but more complex internally \u2013 in practice 1-3 months)<\/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>BGN 2<\/td><td>Minimum capital fully paid at registration<\/td><\/tr><tr><td>AD\/EAD<\/td><td>BGN 50,000<\/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>Yes. EOODs must have one manager, and OODs must have at least one manager. ADs must have a Board of Directors with a minimum of three members (although Supervisory Board is optional).<\/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>Value Added Tax (VAT) registration is mandatory for businesses that have turned over at least BGN 100,000 in the last 12 months. Below this threshold, VAT is optional. This means if a VAT registered business\u2019 turnover drops below BGN 100,000, deregistration is not required.<\/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 produce double-entry bookkeeping and annual financial statements; auditing is only required if the company has assets of more than BGN 2 million, revenue of more than BGN 4 million, or more than 50 employees<\/li>\n\n\n\n<li>ADs\/EADs are audited annually, regardless of size<\/li>\n\n\n\n<li>Branches maintain separate accounting records and file local tax reports<\/li>\n\n\n\n<li>ROs have minimal bookkeeping \u2013 only reporting to the Chamber is required<\/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 are unlimited liability and 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, and liabilities are borne by 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>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 \u2013 but it does entail personal liability and full social burdens<\/li>\n\n\n\n<li>Featuring liability protection and low capital requirements, OOD\/EOOD is ideal for SMEs, but 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>EOOD\/OOD is the best option for most startups. 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>When forming a business entity in Bulgaria, it is vital to stay up to date on the latest developments in accounting and tax.<\/p>\n\n\n\n<p>Some of the most recent and soon to be implemented changes include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>VAT threshold reverted to BGN 100,000 from April 1 2025<\/li>\n\n\n\n<li>Standard Audit File for Tax (SAF-T) implementation to start on Jan 1 2026<\/li>\n\n\n\n<li>New Company with Variable Capital structure now available for flexible capital deployment<\/li>\n\n\n\n<li>E-government progress now allows 3 day online registrations<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Contact Leinonen Bulgaria for Tailored Advice<\/h2>\n\n\n\n<p>Securing a trusted Bulgarian accountant early will help you choose the right legal entity for your business\u2019 long-term success, and Leinonen has been trusted by foreign-owned businesses in Bulgaria for 16 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><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\u2019 best interests at heart.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>There a five main legal entities in Bulgaria, and selecting the right one for your foreign-owned business is a vital first step towards success in a new market. 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. In [&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 v25.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\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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