How to open a company in bulgaria

How to open a company in bulgaria

If you’re contemplating broadening your entrepreneurial endeavors, consider Bulgaria, a country that offers a compelling case for business establishment. Strategically situated, Bulgaria boasts favourable tax policies and a burgeoning economy. If you’re planning to establish a company in Bulgaria, regardless of whether you’re an EU citizen or not, this guide is here to assist you. We’ll take you through the fundamental steps, from understanding the local business landscape to guiding you through the company registration process. We’ve got you covered so you can confidently navigate this process.

Overview of bulgaria’s business environment

Strategic location

Situated in the heart of Southeast Europe, Bulgaria presents a prime location for businesses looking to expand within the European Union and beyond. Its strategic geographic position offers significant logistical advantages, making it an ideal gateway to key markets in Europe, the Middle East, and Asia. With well-developed infrastructure, major transportation networks, and access to important trade routes, businesses operating in Bulgaria can efficiently manage supply chains and distribution channels. Additionally, the country’s membership in the EU facilitates smoother trade relations, providing companies with a competitive edge when reaching international markets. This combination of strategic accessibility and economic integration makes Bulgaria an attractive destination for business expansion.

Low minimum wage and social insurance costs

Bulgaria offers one of the lowest minimum wages within the European Union, which directly contributes to reduced labor costs for businesses operating in the country. Additionally, the relatively low social insurance contributions further enhance its appeal as a cost-effective destination for companies seeking to optimize their expenses. This financial advantage makes Bulgaria particularly attractive for industries that rely on affordable labor while maintaining operational efficiency.

Favorable tax policies

Bulgaria stands out with its highly competitive corporate tax rate, which is set at a flat 10%—one of the lowest in the European Union. This attractive tax policy, combined with a flat 10% income tax rate, fosters a business-friendly environment that benefits both companies and employees. Additionally, Bulgaria has established an extensive network of double tax treaties, which helps minimize tax liabilities on international transactions. This strategic advantage makes the country an appealing destination for foreign investors and multinational businesses seeking tax efficiency and financial stability.

Growing economy

Bulgaria’s economy has experienced steady growth, driven primarily by key sectors such as information technology, manufacturing, and tourism. The country’s economic landscape is characterized by stability, resilience, and promising expansion opportunities, making it an attractive hub for both local and international investors. With a well-developed infrastructure, a skilled workforce, and a favorable business environment, Bulgaria continues to position itself as a strategic destination for companies looking to capitalize on emerging market potential and long-term economic prosperity.

Benefits of starting a business in bulgaria

Strategic location

As mentioned, Bulgaria’s geographical position is ideal for businesses looking to access European and global markets. Its membership in the EU further enhances its attractiveness, offering businesses access to a market of over 500 million consumers.

Low minimum wage and social insurance costs

The low minimum wage and social insurance costs can significantly reduce operating expenses, allowing businesses to allocate resources more effectively. This economic efficiency can be a crucial factor in a company’s profitability.

Favorable tax policies

Bulgaria’s low corporate and income tax rates make it a tax-efficient destination for businesses. Numerous double tax treaties further alleviate tax burdens on international operations, enhancing the overall business climate.

Growing economy

Bulgaria’s positive economic trajectory, marked by consistent GDP growth and a steady rise in foreign investment, reflects a strong and supportive environment for business expansion. The country’s pro-business policies, competitive tax rates, and strategic location within Europe further enhance its appeal to investors. As economic stability continues to strengthen, Bulgaria offers an increasingly favorable landscape for companies looking to establish or expand their operations, making it a promising destination for long-term business development.

Requirements for starting a business

Visa requirements for EU and non-EU nationals

EU nationals

EU nationals can travel to Bulgaria without a visa and reside for up to 90 days. For longer stays, they must register with the local authorities and obtain a residence certificate.

Non-EU nationals

For business purposes, non-EU citizens generally require a long-stay visa to enter Bulgaria. With this visa, individuals can reside within the country for up to one year. Thereafter, they may apply for a residence permit if they desire to extend their stay.

Company name and address registration

Before registering your company, you must choose a unique name and physical address in Bulgaria. The name must be checked for availability and compliance with local regulations.

Opening a local bank account

Conducting business in Bulgaria necessitates establishing a domestic bank account. You’ll need this account to deposit the initial capital required for company registration and to manage your business finances.

Necessary documents

To start a business in Bulgaria, you’ll need to prepare several documents, including:

• A completed application form
• Articles of association
• Proof of address
• Identification documents
• Bank certificate of deposited capital

Types of business structures

Limited liability companies (single-member LLC, OOD)

A limited liability company (OOD) is Bulgaria’s most common business structure, suitable for small to medium-sized enterprises. It can be established by one or more individuals or legal entities.

Investment focus

A Limited Liability Company (OOD) in Bulgaria requires a minimum capital of just 2 BGN (approximately 1 EUR), making it an extremely accessible option for entrepreneurs and small business owners. This low capital requirement reduces financial barriers to entry, encouraging both local and foreign investors to establish businesses with minimal initial investment. Additionally, the straightforward registration process and business-friendly regulations further enhance Bulgaria’s attractiveness as a destination for startups and growing enterprises.

Goal

One of the key advantages of a Limited Liability Company (OOD) in Bulgaria is the principle of limited liability. This means that shareholders are only responsible for the company’s obligations up to the amount of their capital contribution, protecting their personal assets from business-related risks. This structure provides entrepreneurs with a secure legal framework, reducing financial exposure while offering flexibility in business operations. As a result, OODs are a popular choice for small and medium-sized enterprises (SMEs) looking for a balance between liability protection and ease of management.

Joint stock companies

A joint stock company (AD) is typically used for larger businesses. It requires a higher minimum capital of 50,000 BGN (about 25,000 EUR).

Investment focus

ADs can issue shares, making it easier to raise capital from investors.

Goal

The primary goal is to support larger business ventures with significant growth potential.

General/limited partnerships

In Bulgaria, partnerships can be classified into general and limited. General partnerships entail partners bearing unlimited liability, whereas limited partnerships comprise both general and limited partners.

Investment focus

In a partnership, general partners are responsible for managing the business and bear unlimited liability. In contrast, limited partners who contribute capital to the partnership benefit from limited liability. This means their assets remain shielded from any debts or obligations incurred by the business, ensuring their financial protection.

Goal

Partnerships are ideal for businesses where multiple individuals or entities want to collaborate and share profits and responsibilities.

Sole proprietorship

A sole proprietorship is an easy-to-setup business in which an individual exclusively owns and manages a business. It comes with unlimited personal liability.

Investment focus

This structure is suitable for small businesses and individual entrepreneurs.

Goal

The main goal is simplicity and direct control over the business.

Branches and subsidiaries

Foreign companies can establish branches or subsidiaries in Bulgaria. Branches are extensions of the parent company, while subsidiaries are separate legal entities.

Investment focus

Branches offer more straightforward integration, whereas subsidiaries provide greater operational independence.

Goal

Both structures aim to facilitate international expansion and local market presence.

Company registration process

Choosing the company name and address

Select a unique name and register it with the Bulgarian commercial register. Ensure the name complies with local regulations and is not already in use.

Opening a local bank account

Open a bank account in Bulgaria and deposit the minimum required capital. Obtain a certificate of deposited capital from the bank.

Government registration process

To register your company in Bulgaria, visit the Bulgarian Commercial Register. Gather the necessary documentation, which includes the application form, articles of association, and proof of your company’s address. Submit all documents to the register to complete the registration process.

Stamp registration

Obtain a company stamp, which is required for official documents and transactions in Bulgaria.

Costs of incorporation

Registration fees

The registration fee for incorporating a company in Bulgaria varies depending on the business structure but generally ranges from 100 to 200 BGN.

Capital requirements

The minimum capital requirement for an OOD is 2 BGN, while for an AD, it is 50,000 BGN. These funds must be deposited in a local bank account before registration.

Foreigners and business in bulgaria

Visa types for business operations

Short-stay visa (type C)

Allows stays of up to 90 days for business purposes.

Long-stay visa (type D)

Allows stays of up to 12 months and is suitable for those looking to establish a business or invest in Bulgaria.

Double tax treaties

Bulgaria has entered into bilateral tax treaties with various countries to promote international business ventures and prevent double taxation. These agreements alleviate the tax burden on foreign investors, enabling a more conducive environment for cross-border economic activities.

Government assistance

Grants and financial support

The Bulgarian government offers various grants and financial support programs to encourage business development, especially in technology, manufacturing, and renewable energy sectors.

Corporate tax benefits

In addition to the low corporate tax rate, businesses can benefit from various tax incentives, including exemptions and deductions for specific investments and activities.

Institutional support

Several institutions, including the Bulgarian Small and Medium Enterprises Promotion Agency (BSMEPA) and InvestBulgaria Agency, support businesses in Bulgaria, offering assistance with market entry, funding opportunities, and regulatory compliance.

Multiplier’s role

Overview of Multiplier’s services in hiring and compliance

Multiplier, a pioneering international employment platform, is revolutionising how businesses hire and manage employees across borders. With a particular focus on Bulgaria, Multiplier provides a comprehensive portfolio of services tailored to streamline and simplify the intricate process of global workforce management, ensuring that businesses can navigate this complex landscape effectively.

Recruitment and selection:

Multiplier’s extensive local and international talent pool network enables businesses to access a diverse range of skilled professionals. Their recruitment experts work closely with clients to understand their unique hiring needs and identify the best candidates for each position. From job posting and candidate screening to interviewing and onboarding, Multiplier manages the entire recruitment process, ensuring a seamless experience for employers and job seekers.

Payroll and compliance:

Navigating the nuances of payroll and employment laws in different countries can be daunting. Multiplier takes the burden off businesses by handling all payroll-related matters, including salary calculation, tax deductions, and social security contributions. Their compliance experts stay current with regulatory changes, ensuring that clients remain in full compliance with local employment laws.

Employee benefits and insurance:

Multiplier understands the importance of offering competitive employee benefits and insurance packages to attract and retain top talent. They work with leading insurance providers to offer a range of customisable benefits, including health insurance, life insurance, and retirement plans. Multiplier also assists with administering and managing these benefits, ensuring that employees receive the support and coverage they need.

Immigration and visa support:

Hiring foreign employees often involves complex immigration and visa requirements. Multiplier’s immigration specialists provide personalised assistance to help businesses navigate the necessary paperwork and processes. They offer expert advice on obtaining work permits, visas, and other immigration-related matters, ensuring a smooth and stress-free experience for employers and employees.

HR consulting and advisory services:

Multiplier offers HR consulting and advisory services to businesses going beyond essential services. Their team of HR experts guides various aspects of human resource management, including employee engagement, performance management, and conflict resolution. Multiplier’s insights and recommendations help clients optimise their HR practices, improve employee morale, and enhance productivity.

By partnering with Multiplier, businesses gain access to a wealth of resources and expertise, allowing them to focus on their core operations and achieve their growth objectives. Multiplier’s commitment to excellence and innovation has made it a trusted partner for companies looking to expand their global workforce and succeed internationally.

• Handling local payroll and tax compliance
• Ensuring adherence to labour laws and regulations
• Providing legal and administrative support for hiring

FAQs

What are the benefits of starting a business in bulgaria?

Starting a business in Bulgaria offers several advantages, including strategic location, low labour costs, favourable tax policies, and a growing economy. These factors create an attractive environment for entrepreneurs and investors.

What is the minimum capital requirement for starting a company in bulgaria?

The minimum capital requirement for a limited liability company (OOD) is 2 BGN (about 1 EUR), while for a joint stock company (AD), it is 50,000 BGN (about 25,000 EUR).

Can foreigners own and operate a business in bulgaria?

Yes, foreigners can own and operate businesses in Bulgaria. They may need to obtain the appropriate visa and comply with local company registration and operation regulations.

How long does it take to register a company in bulgaria?

The company registration process in Bulgaria typically takes about 2 to 3 weeks, depending on the documentation’s completeness and the registration authorities’ efficiency.

What are the tax benefits of operating a business in bulgaria?

Bulgaria offers a flat corporate tax rate of 10%, one of the lowest in the EU. Additionally, various tax incentives and double tax treaties can reduce the overall tax burden for businesses operating in Bulgaria.