Bulgaria is becoming an increasingly attractive jurisdiction for business registration due to its favorable conditions and strategic location within the European Union. The corporate tax rate in the country is only 10%, one of the lowest in the EU, making it attractive for entrepreneurs seeking tax optimization. Additionally, company registration in Bulgaria provides access to the European Union markets and various international trade agreements, allowing for a convenient platform for export and international trade.
Companies in Bulgaria are often registered in sectors such as IT, logistics, manufacturing, trade, and services. The IT and technology sectors are particularly active, as Bulgaria supports these companies with tax incentives and the opportunity to work with highly skilled staff at relatively low costs.
Advantages of Company Registration in Bulgaria
Company registration in Bulgaria has several advantages. Specifically, this jurisdiction can attract entrepreneurs worldwide due to the following factors:
- The lowest corporate tax rate among EU countries, applicable regardless of the company’s income level or other conditions.
- No high requirements for share capital. It is sufficient to contribute only 1 euro (2 levs) to form the share capital.
- No requirements for company structure. A single founder and director can be a foreigner.
- Bulgaria is an EU member, which allows products and services to be marketed in the large European market, as well as attracting investments and benefiting from other advantages of the free movement of capital and goods.
- Tax incentives may be available under certain conditions, including full exemption from corporate income tax.
- Relatively quick and simple registration procedure.
- A large number of international double taxation avoidance treaties – 70 agreements.
- The opportunity to obtain residence documents based on business activities in Bulgaria, subject to certain conditions.
Forms of Business Registration in Bulgaria
The choice of business registration form in Bulgaria depends on several factors, such as the number of founders, types of business activities, business objectives, desired taxation, and other nuances. Each organizational and legal form has its advantages and disadvantages, so it is essential to seek the assistance of an experienced lawyer to avoid complications in the future.
Business registration forms in Bulgaria are regulated by the Commerce Act. Article 64 of the Act provides for the following business registration forms:
- General Partnership (SD)
- Limited Partnership (KD)
- Limited Liability Company (OOD)
- Sole Limited Liability Company (EOOD)
- Joint-Stock Company (AD)
- Sole Joint-Stock Company (EAD)
- Sole Proprietor (ET)
- Self-employed/Freelancer
The most popular forms of business registration in Bulgaria are the Limited Liability Company (OOD) and Sole Limited Liability Company (EOOD). Both forms do not require significant capital investments for registration. The share capital requirements are minimal – 1 euro, and the liability of the founders is limited to their contributions. The main difference between the two forms is the number of founders, which is reflected in the name of the organizational form. These companies are ideal for small and medium-sized businesses and are easy to manage.
The registration of a Joint-Stock Company may appeal to large businesses considering raising funds through the issuance of shares. The registration requirements for a joint-stock company are significantly higher, with a minimum share capital of 50,000 levs (approximately 25,500 euros). Managing a joint-stock company is also more complex, and this form of business is rarely registered.
Another popular request is the registration of a sole proprietor in Bulgaria, as the 10% tax rate is highly advantageous for small businesses and freelancers compared to other EU countries’ small business tax rates. However, it’s important to note that registering a sole proprietor in Bulgaria requires a permanent residence permit in the country.
As for self-employed individuals, they are not sole proprietors but are people engaged in private professional practice or crafts. This category includes accountants, consultants, lawyers, auditors, doctors, translators, cultural and art workers, architects, and other professionals who operate independently and are not registered as sole proprietors. The conditions for registering as a self-employed person in Bulgaria are similar to those for sole proprietors, requiring a permanent residence permit and a Bulgarian language proficiency level of B1 or higher.
Taxes for Companies in Bulgaria
Often, the primary criterion for choosing Bulgaria as a jurisdiction for business registration in the EU is taxation. This is unsurprising, as Bulgaria offers favorable tax rates for both businesses and individuals. The corporate income tax rate is only 10%, with no additional requirements for the number of employees, income thresholds, or activity restrictions, unlike other countries with favorable tax rates.
The standard corporate income tax rate is 10%. In certain cases, a 15% alternative tax rate applies, but this only affects the gambling sector and telecommunications operators.
The value-added tax (VAT) rate is 20%. A reduced rate of 9% applies in some cases, and a 0% rate may apply under certain conditions. Companies are required to register for VAT if their income exceeds 100,000 Bulgarian levs (approximately 51,000 euros). From January 1, 2025, the VAT registration threshold will increase to 166,000 levs, equivalent to 85,000 euros.
The dividend tax for payments to non-resident companies or individuals (both residents and non-residents of Bulgaria) is 5%, unless a lower rate is specified in international double taxation treaties.
Royalty tax is levied at 10%, with the same rate and conditions applying to interest payments.
The taxation of sole proprietors in Bulgaria is somewhat more complex, as individual entrepreneurs are considered self-insured persons and must pay not only 10% income tax but also social contributions. Additionally, certain activities require patents, which incur additional taxes.
Bank Account for Companies in Bulgaria
Opening a bank account in a traditional bank precedes company registration, making it an important step in establishing a business in Bulgaria. Up to 40 institutions offer banking services in the country. The largest market share is held by United Bulgarian Bank (19.78%), followed by DSK Bank (19.05%), UniCredit Bulbank (18.67%), Eurobank Bulgaria (11.27%), and First Investment Bank (8.07%), which offers innovative banking services for individuals and businesses.
We can assist you in opening a bank account for depositing the share capital in one of Bulgaria’s banks remotely with a power of attorney, or if you can visit the country in person, our specialist will accompany you at the bank to make the procedure as fast and smooth as possible.
It is generally recommended to open several bank accounts for business, as banks sometimes temporarily block accounts for AML measures and may request additional explanations, which can occasionally hinder business operations. To mitigate these risks, we suggest diversifying accounts where funds are received.
An additional solution is to open accounts in payment systems such as Payoneer, Wise, Paysera, Revolut, and others. Each payment system has its own features, fees, entry thresholds, and more. We will select a solution specifically suited to your business needs.
Process of Company Registration in Bulgaria
The company registration procedure in Bulgaria is fast and straightforward, but certain steps may be challenging without competent legal support.
Steps for company registration in Bulgaria:
- Document preparation. Articles of Association or a founding agreement, declarations, and a power of attorney are required. The power of attorney can be certified at the Bulgarian embassy or by a notary.
- Company name reservation. Under current rules, two companies cannot have the same name in Bulgaria, so the desired company name must be checked and reserved before registration.
- Opening a bank account for depositing the company’s share capital.
- Company registration in the Commercial Register.
We will need the following documents from the founder:
- Foreign passport
- Tax number
- Proof of address
- Company registration form (we will provide a sample)
- Power of attorney (we will provide a sample)
Scans should be high-quality color images in PDF or JPEG format.
The registration process will take 1 to 3 weeks.
Tax Table
| Tax Type | % |
|---|---|
| Corporate Tax | 10 |
| VAT | 20/9/0 |
| Dividend Tax | 5 |
| Interest Tax | 10 |
| Royalty Tax | 10 |
Price Table
| Service | EUR |
|---|---|
| Company registration | 900 |
| Legal address for 1 year | 500 |
| Bank account opening | 500 |
| Payment system account opening | 250 |
| Accounting services | 100 |
If you are considering registering a company in another jurisdiction, you can find a complete list of jurisdictions where we can assist you with business registration here.
If you are considering company registration in Bulgaria, leave a request on our website or contact us in any convenient way.
Company registration in Bulgaria is an optimal solution for entering the EU market with minimal costs and optimal tax burdens. We will help you establish and launch your business!
