Setting up a business in Bulgaria is an easy process that does not involve complex procedures but rather is straightforward and fast. One of the main advantages of company formation in Bulgaria is the lower tax rates that companies enjoy. Bulgaria boasts of having the lowest corporate tax rates of 10% on profit, becoming a threshold for the EU. The fact that the tax is based on profit means that this can be further reduced depending on the accounting framework employed. The minimum capital required is also low making setting up a business in Bulgaria a lucrative option.
We look at the company formation and registration process in Bulgaria with an aim of understanding the requirements in detail.
Company Formation in Bulgaria
Right to form a company
A Bulgarian or a foreigner holds the right to form a Bulgarian company and acquires the value of the shares they have contributed. Prior to setting up a business in Bulgaria, there are preliminary discussions that are conducted by shareholders. This is with regards to the commercial activities that the company will be engaged in.
Types of Bulgarian Companies
Based on the preference of the individuals with a common goal, a company in Bulgaria can be registered either as a limited liability company, partnerships, a subsidiary, or a sole proprietorship.
- Sole proprietorship-involves an individual member and bears a lot of liability
- A general partnership involves two or more partners with equal liabilities
- Limited liability company- has liability only to the extent of minimum capital required and is mostly used for small and medium businesses.
- Subsidiaries- are branches of the parent company that conducts the same activities as the parent company.
The sole owned company (EOOD) and multiple shareholders companies are the most common type of company formation in Bulgarian along with the joint-stock company. The articles of incorporation are then prepared and all shareholders sign the important document.
Minimum Required Registered Capital
The amount of capital required for a Bulgarian limited liability company is 2 Bulgarian Levs with the provisions of expanding being allowed for. The small minimum capital required means that the liability of shareholders is also low and that the financial responsibilities the shareholders have is limited solely to the amount of minimum capital.
Duration for the Opening of a Company
It is possible to open a company in Bulgaria within 14 days. This is made possible by the Bulgarian Registry agency which has an advanced online system that ensures incorporation of companies can occur within 14 days.
Applicants are now able to enjoy less cumbersome procedures and tedious waiting with the shortened timespan that is advantageous for businesses. It is also possible to open a business without physically visiting the government offices.
Company Registration in Bulgaria,
A company comes into existence once it is registered and the name appears on the Commercial Register. Preliminary to registration is the submission of crucial documents which include:
- Application for Registration
- Minutes of meetings
- Bank evidence of deposited capital
- Declaration in compliance with the Commercial Act art.142
- Memorandum of association
- Company name uniqueness certificate
- Managers signatures
- Company domicile contract
- Declaration for lack of bankruptcy
- Receipt for taxes paid
- Declaration for the authenticity of stated circumstances
It is upon submission of the documents that a unique company number is issued and thereafter a company entry in the Commercial Register is made. Once this is successful, you will need to register the company with the National Tax Register Authority for VAT purposes.
The Regulatory Environment for Company Registration in Bulgaria
If you are looking to set up your business in Bulgaria, you will appreciate the freedom that Bulgaria offers to foreign companies. Capital can be transferred to foreign companies and foreign investors for the purpose of conducting business.
The need to seek authorization prior to business incorporation is eliminated. However, for businesses such as banking, transport, and insurance there are higher regulations that are mandatory.
Registration of a Bulgarian Company beyond Borders
It is possible to open a Bulgarian company with the help of a proxy. All you need to do is to give the proxy the power of attorney. This can be through the engagement of lawyers or the use of professional services. All essential points are then given to the proxy for the registration of the company. There is however need to append final signatures before the business is up and running.