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

In Southeast Europe’s heart, Bulgaria offers a strategic location for businesses seeking expansion opportunities within the European Union and beyond. The area’s strategic location provides substantial logistical benefits due to its close proximity to crucial markets in Europe, the Middle East, and Asia.

Low minimum wage and social insurance costs

Bulgaria boasts one of the lowest minimum wages in the EU, which can translate into lower business labour costs. Social insurance costs are relatively low, making it an attractive destination for companies looking to manage expenses efficiently.

Favorable tax policies

Bulgaria’s corporate tax rate is one of the lowest in the EU at a flat 10%. This competitive rate and a 10% flat income tax rate create a favourable environment for both businesses and employees. Moreover, Bulgaria has an extensive network of double tax treaties, reducing the tax burden on international transactions.

Growing economy

Bulgaria’s economy has been steadily growing and is driven by the IT, manufacturing, and tourism sectors. The nation’s robust economy, marked by stability and promising growth prospects, is a compelling magnet for investors seeking opportune destinations to channel their resources.

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, characterised by consistent GDP growth and increasing foreign investment, indicates a robust and supportive environment for 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

OODs require a minimum capital of 2 BGN (about 1 EUR), making it accessible for most entrepreneurs.

Goal

The main advantage of an OOD is limited liability, which means that shareholders are only liable up to the amount of their capital contribution.

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.