Are you looking forward to set up a business in Bulgaria? Here is an overview of conditions to be met and related procedures.
When it comes to setting up a business in a foreign country, it is best to be aware of conditions to be met and of related procedures. Bulgaria, located in South-East Europe, is very open toward foreign investment. Over the years, many foreigners worldwide, but especially from European countries, have successfully managed to set up a business there thanks to incentives provided by local authorities, as well as rather simple procedures. In fact, there are no restrictions on foreign investment, but you must have a tax address to be allowed to do so. In fact, the tax address can be created by a third party and changed once the company has been set up.
Types of companies
The following types of companies are recognized in Bulgaria: Unlimited (general) partnership, Limited partnership, Private limited company, Single person private limited company, Public limited company (Joint-Stock company), Public limited partnership, Sole trader, Joint venture, Branch, Holding, Corporation and Representative office.
The most popular type of company, which is the Private limited company, requires a minimum of two associates. In the case of a Single person private limited company, a single chair person is needed. A minimum capital of 50,000 leva is required while shares must cost a minimum of 1,95581 BGN (1 Euro). Partners' liabilities are limited to the amount contributed.
The corporation, for its part, requires a minimum of two shareholders. A minimum capital of 1 million leva has to be invested, and 5 million leva for public subscription. The company is responsible for its assets and towards its creditors.
To create a Partnership company, at least two partners are required. A minimum capital of 2 BGN is required and liabilities are joint and several.
Limited partnership company can be set up with a minimum of two members: a sponsor and a partner. No minimum capital is required and partners' liabilities are joint and several. Sponsors' liabilities are limited to the amount contributed.
Finally, the Partnership limited by shares requires a minimum of three sponsors and two partners. A minimum capital of 1 million leva is required and sponsors and partners' responsibilities are limited to the amount contributed.
Good to know:
Auto-entrepreneurs, for their part, have to set up a Limited liability company whereby their monthly income must reach at least 420 leva.
In general, the setting up of a business in Bulgaria takes between two and three weeks. In the first instance, partners have to meet before a public notary to jointly define the company's status and adopt the company's constitution, along with establishing the hierarchy. The founder will then sign a notarized agreement. A certified copy of the declaration of incorporation will subsequently be issued. Fees of 5 leva apply. Note that these formalities should be completed within a single day.
Thereafter, the company's founder or any other authorized person must open a bank account in the company's name in a commercial bank. The paid capital is then blocked until the Commercial Register gives its approval regarding the setting up of the company. The receipt issued on the opening of the bank account has to be produced to the Commercial Register. Note that fees ranging from 10 to 30 leva apply to the opening of a bank account, varying according to the bank selected.
The company then has to be registered with the Commercial Register by completing an A4 registration form. Two sworn and notarized affidavits by each director must also be produced according to the Articles 141 and 142 paragraph 8 of the Trade Act and Article 13 paragraph 4 of the Commercial Registration Act. The following documents will also be requested:
- the company's incorporation certificate,
- the appointment of cadres decree,
- associates' signatures specimens certified by the notary
- the bank receipt issued on opening an account.
Note that these documents can be submitted either online against 80 leva or in hard copy against 110 leva. Procedures should take a maximum of four days. At the Commercial Register's level, these should take up to 15 days.
Value Added Tax (VAT) registration is mandatory with the Commercial Register for companies having a turnover of more than 50,000 BGN as this institution works in collaboration with the National Revenue Agency. Therefore, relevant information will be automatically transmitted between these two authorities.
The company' accounts also have to be reported in accordance with the Accounting Act. These must comply with the Bulgarian tax regulations.