Country’s geography & information in brief
Bulgaria is strategically located in south-east Europe in the region known as The Balkans. It shares national borders with five countries and the Black Sea lies on its eastern border. It has an area of 111,000 sq km and an estimated population of 7.5m. Its capital city, Sofia, is one of the oldest cities in Europe and has good connections to other parts of Europe.
Despite rather weak annual GDP growth (~ 0.5%), the country’s economic stability attracts more and more businessmen every year. The main economic sector is tourism, due to low prices, the colorful landscape of the country, as well as magnificent beaches on the Black Sea coast. When it comes to low prices, it’s not 5%, not 10%, but 50% according to 2009-year Eurostat research (life in Bulgaria is 49% cheaper than the average in Europe). Bulgaria also has the cheapest workforce between European Union States, because the minimum wage was only 184 euros as at January of the year 2015. This fact is enjoyed by many businessmen who actively open their branches in Bulgaria, saving not only on taxes, but also on the wages of their employees. The level of education is relatively high and most people know English – ideal conditions to work.
These types of companies can be opened in Bulgaria
Naturally, the most popular are LLC companies or, as they are called in Bulgaria -(friendship with limited excuse). In Bulgaria, as in any other country in Europe, can be registered joint-stock company
Benefits of registering (OOD) in Bulgaria
- Lack of the minimum authorized capital
- Only 10% corporate tax (average 25% in Europe)
- Only 15% income tax (average 40% in Europe)
- Tax on dividends is just 5%
- Fairly quick registration process (7-10 days)
- Double taxation avoidance agreement with 72 countries
- Directors and shareholders of the company may be non-residents
- Lack of auditing for most small companies
The process of company registration is identical with other European jurisdictions, Bulgaria is in the EU, and therefore must follow the laid down rules. All paperwork usually falls on the shoulders of a law firm, such as ourselves, but the statement is complemented by the receipts of payment of registration fees, registration protocol, as well as director and shareholder statements.
We will not describe in detail the advantages of the joint-stock company, because they are very similar to the (OOD), and the most striking difference is the size of the minimum capital, which accounts for BGN 50.000 (approximately €25.000). Also, joint-stock company must have 3 shareholders.
Local and foreign investors who want to open a company in Bulgaria may contact our experts in companies’ formation in this jurisdiction.
Entity type: Private Limited Company
The appointment of a supervisory board is optional (the position is not mandatory but can be provided for in the shareholders’ agreement). The functions of the supervisory board include the supervision of the actions of the managing director and of the proper management of the company’s business, and reporting to the general meeting of shareholders. The general meeting of shareholders is the decision-making body of the company. It is summoned at least once a year. The shareholders vote proportionally to their contribution unless otherwise provided in the agreement of incorporation.
A foreign national must be resident in Bulgaria in order to participate as a general partner in a partnership. There is a minimum of one shareholder. If the whole capital belongs to a single shareholder there is a single-owned limited liability company.
Secretary: A company secretary is optional.
The share capital must be expressed in Bulgarian Leva (BGN). The usual authorized share capital of a Bulgarian company is BGN 5,000.The initial capital contribution of each shareholder must be at least BGN 10. At least one-third but not less than BGN 10 of the capital contribution of each partner, and 70% of the total amount of the registered capital, must have been paid in at the time when the company applies for registration. Capital contributions in cash not paid in at registration must be paid in afterwards within a period specified in the shareholders’ agreement, but not later than two years after registration.
Restrictions exist to any word that the Registrar considers undesirable, any name that is identical or similar to an existing company, any name that implies illegal activity or implies royal or government patronage, the following words or their derivatives: assurance, bank, banking, broker, brokerage, insurance, pension.
Information about the beneficiary
There is no explicit secrecy legislation for Bulgarian companies, but Bulgarian law places a clear and heavy responsibility on professionals to keep their client’s affairs confidential.
Audit & financial reports
In order to be either listed on the official market or admitted to trading on the free market, companies in Bulgaria must comply with the following Reporting requirements:
All companies must publish their interim and annual reports and submit them to the exchange, the SSEC and the Central Depository within 30 and 90 days respectively from the end of the fiscal period. Companies are also obliged to report all other market-sensitive information to the BSE. No auditing statements are required.
Under the Corporate Income Tax Act (CITA) all companies and partnerships (including non-incorporated partnerships) are liable to corporate income tax. The corporate income tax rate is 15%. From 2006 the rate is planned to be reduced to12%. Bulgarian resident entities are taxed on a worldwide basis. Other entities are taxed on their Bulgarian-source income. Non-business organizations (including governmental) are taxed for their business activities. Although branches are not legal persons, branches of non-resident companies have separate balance sheet and profit and loss account. They are subject to corporate income tax at the standard rate of 15%.
Double Taxation Treaties
Bulgaria concluded double taxation treaties with various countries: Albania, Armenia, Austria, Belarus, Belgium, China, Croatia, Cyprus, Czech Republic, Denmark, Finland, France, Georgia, Germany, Greece, Hungary, India, Indonesia, Republic of Ireland, Japan, Kazakhstan, Luxembourg, Macedonia, Malta, Morocco, Moldova, The Netherlands, Norway, North Korea, Poland, Portugal, Romania, Russian Federation, Spain, Singapore, South Korea, Sweden, Switzerland, Syria, Thailand, Turkey, Ukraine, United Kingdom, Vietnam, Yugoslavia, Zimbabwe.