Bulgaria offers one of Europe’s most attractive business environments with its strategic location, EU membership, and favorable tax system. This comprehensive guide walks you through the entire company formation process in Bulgaria, from selecting the right business entity to completing registration. Whether you’re an entrepreneur or SME looking to expand into the EU market, Bulgaria provides an efficient, cost-effective gateway with minimal bureaucracy and significant tax advantages.
Types of Business Entities for Bulgaria Company Formation
When establishing your presence in Bulgaria, choosing the right business entity is crucial for your operational success. Each entity type offers different advantages depending on your business goals, capital availability, and liability preferences.
EOOD (Едноличнo дружество с ограничена отговорност) – Single-Member Limited Liability Company
The EOOD is Bulgaria’s most popular business entity for foreign entrepreneurs and small businesses. It offers limited liability protection while requiring minimal capital investment.
- Single owner (individual or legal entity)
- Minimum capital requirement: BGN 2 (approximately €1)
- Limited liability (owner’s liability restricted to invested capital)
- Simplified management structure with a single manager
- Suitable for small businesses and individual entrepreneurs
OOD (Дружество с ограничена отговорност) – Multi-Member Limited Liability Company
The OOD structure is ideal for partnerships and businesses with multiple stakeholders, offering the same limited liability protection as the EOOD.
- Two or more shareholders (individuals or legal entities)
- Minimum capital requirement: BGN 2 (approximately €1)
- Limited liability for all shareholders
- Flexible management structure with one or more managers
- Suitable for partnerships and joint ventures
AD (Акционерно дружество) – Joint-Stock Company
The AD structure is designed for larger businesses with significant capital requirements and those planning future public offerings.
- One or more shareholders (individuals or legal entities)
- Minimum capital requirement: BGN 50,000 (approximately €25,565)
- Shares can be publicly traded
- More complex management structure (board of directors or supervisory board)
- Suitable for larger businesses and future public offerings
Branch Office (Клон)
A branch office is not a separate legal entity but an extension of a foreign company operating in Bulgaria.
- Not a separate legal entity (parent company bears full liability)
- No minimum capital requirement
- Must conduct the same business activities as the parent company
- Requires a branch manager with Bulgarian residence
- Subject to Bulgarian taxation on Bulgarian-sourced income
Trade Representative Office (Търговско представителство)
A representative office allows foreign companies to establish a presence in Bulgaria without conducting direct commercial activities.
- Limited to non-commercial activities (market research, promotion)
- Cannot generate revenue in Bulgaria
- No minimum capital requirement
- Not subject to corporate taxation (if no commercial activities)
- Registered with the Bulgarian Chamber of Commerce and Industry
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Step-by-Step Bulgaria Company Formation Process
The company registration process in Bulgaria is straightforward and can be completed within 7-14 days. Following these steps will ensure a smooth registration experience.
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Company Name Reservation
Select and verify the availability of your company name through the Bulgarian Commercial Register (Търговски регистър). The name must be unique and can be checked online through the Registry Agency’s website. Names are registered in the Cyrillic alphabet, though Latin versions can be used for marketing purposes.
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Preparation of Company Documents
Prepare the necessary formation documents, including:
- Articles of Association (Дружествен договор)
- Resolution for the establishment of the company
- Specimen signatures of company representatives
- Declaration of consent from the appointed manager(s)
- Declaration of compliance with local requirements
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Opening a Corporate Bank Account
Open a corporate bank account at a Bulgarian bank to deposit the company’s initial capital. Required documents typically include:
- Draft of the Articles of Association
- Identification documents of all shareholders and managers
- Proof of address for all parties involved
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Capital Deposit
Deposit the minimum required capital into the corporate bank account. For an EOOD/OOD, this is BGN 2 (approximately €1), while for an AD, it’s BGN 50,000 (approximately €25,565). The bank will issue a capital contribution certificate.
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Submission to the Commercial Register
Submit all documents to the Commercial Register (Търговски регистър) at the Registry Agency. This can be done in person or electronically with a qualified electronic signature. The registration fee is approximately BGN 55 (€28) for standard processing (completed within 3-4 business days).
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Tax Registration
Upon successful registration, your company will automatically receive a Unified Identification Code (ЕИК – Единен идентификационен код) which serves as both your company and tax identification number.
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VAT Registration (Optional)
If your annual turnover is expected to exceed BGN 50,000 (approximately €25,600), you must register for VAT. This is done through the National Revenue Agency (Национална агенция за приходите) and typically takes 7-14 days.
Document notarization is a key step in the Bulgaria company formation process
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Legal Requirements for Bulgaria Company Formation
Understanding the legal requirements for company formation in Bulgaria is essential for a successful registration process. Here are the key requirements you need to fulfill:
Document Requirements
For Individual Shareholders/Managers:
- Valid passport or ID (notarized copy)
- Proof of address (utility bill, bank statement)
- Clean criminal record certificate
- Notarized specimen signature
For Corporate Shareholders:
- Certificate of Good Standing
- Articles of Association/Incorporation
- Board resolution approving Bulgarian company formation
- Power of Attorney for the representative
Notarization and Apostille
All documents issued outside Bulgaria must be properly legalized:
- For EU countries: Documents require notarization
- For non-EU countries: Documents require notarization and apostille
- For countries not part of the Hague Convention: Full legalization through the Bulgarian embassy
Registered Office Requirements
Every Bulgarian company must have a registered office address in Bulgaria. This address is used for official correspondence and must be a physical location, not a P.O. box. Many formation service providers offer virtual office services that fulfill this requirement.
Management Requirements
Bulgarian companies must have at least one manager (director) who can be of any nationality. There are no residency requirements for managers, making Bulgaria an attractive option for foreign entrepreneurs. However, the manager must provide a notarized specimen signature and a declaration of consent to serve as manager.
The Bulgarian Commercial Register (Търговски регистър) where company registrations are processed
Bulgaria’s Taxation System for Companies
Bulgaria offers one of the most favorable tax regimes in the European Union, making it an attractive destination for foreign investors and entrepreneurs.
Bulgaria’s competitive tax rates compared to EU averages
Corporate Income Tax
Bulgaria boasts a flat corporate income tax rate of 10%, one of the lowest in the European Union. This rate applies to all companies regardless of their size or revenue, creating a level playing field for businesses of all scales.
Value Added Tax (VAT)
The standard VAT rate in Bulgaria is 20%, with a reduced rate of 9% applicable to certain services such as hotel accommodations. Companies with an annual turnover exceeding BGN 50,000 (approximately €25,600) must register for VAT. Companies engaged in intra-EU trade can register for VIES (VAT Information Exchange System).
Dividend Tax
Bulgaria imposes a 5% withholding tax on dividends paid to non-resident individuals and entities. However, dividends paid to EU/EEA resident companies are exempt from withholding tax under the EU Parent-Subsidiary Directive, provided certain conditions are met.
Personal Income Tax
Bulgaria applies a flat personal income tax rate of 10%, making it equally attractive for company managers and employees. This includes income from employment, self-employment, and other sources.
Social Security Contributions
Employers must make social security contributions for their employees, which amount to approximately 18.5-19.6% of the employee’s gross salary. Employees contribute an additional 13.8% of their gross salary.
Tax Incentives
Bulgaria offers various tax incentives to attract foreign investment:
- 0% corporate tax in regions with high unemployment (subject to conditions)
- R&D tax credits for eligible activities
- Accelerated depreciation for new equipment and technology
- Tax exemptions for manufacturing companies in industrial zones
Double Taxation Treaties
Bulgaria has signed double taxation treaties with over 60 countries, ensuring that businesses don’t pay taxes twice on the same income. These treaties provide clarity on tax obligations and help optimize tax planning for international operations.
Advantages of Bulgaria Company Formation
Bulgaria offers numerous advantages for entrepreneurs and businesses looking to establish a presence in the European Union.
Bulgaria’s strategic location provides access to multiple markets
Financial Benefits
- 10% flat corporate tax rate (lowest in the EU)
- 10% personal income tax rate
- 0% dividend tax for EU residents
- Low minimum capital requirements (BGN 2 for EOOD/OOD)
- Competitive labor costs (average salary ~€800/month)
- Stable currency pegged to the Euro (BGN 1.95583 = €1)
Strategic Advantages
- Full EU market access (500+ million consumers)
- Strategic location between Europe, Asia, and the Middle East
- EU legal framework and protections
- No residency requirements for company directors
- Fast company registration process (7-14 days)
- Simplified administrative procedures
Business Environment
- Skilled multilingual workforce (high proficiency in English)
- Growing IT and outsourcing sectors
- Government incentives for foreign investors
- Modern banking system with international banks
- Developed infrastructure and internet connectivity
- Lower operational costs compared to Western Europe
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Common Challenges in Bulgaria Company Formation
While Bulgaria offers many advantages, foreign investors may face certain challenges during the company formation process. Being aware of these challenges helps you prepare effectively.
What’s Easy
- Low corporate tax rate (10%)
- Minimal capital requirements
- No residency requirements
- Fast registration process
- EU market access
Common Challenges
- Language barriers
- Document legalization
- Banking procedures
- Cultural differences
- Regulatory compliance
Language Barriers
While English is widely spoken in business circles, official documents and government websites are primarily in Bulgarian. All official submissions to the Commercial Register must be in Bulgarian, requiring professional translation services.
Document Legalization
Foreign documents must be properly legalized for use in Bulgaria, which can be time-consuming. The process varies depending on whether your country is a signatory to the Hague Convention (requiring apostille) or requires full legalization through the Bulgarian embassy.
Banking Procedures
Opening a corporate bank account in Bulgaria has become more stringent due to enhanced anti-money laundering regulations. Banks require comprehensive documentation about the company’s activities, source of funds, and beneficial owners. The process can take several weeks, especially for non-resident directors.
Understanding Local Business Culture
Bulgarian business culture has its unique characteristics, combining Eastern European traditions with modern European practices. Building personal relationships is important, and decision-making may be more hierarchical than in Western countries.
Regulatory Compliance
Staying compliant with Bulgarian regulations requires ongoing attention. Companies must submit annual financial statements, maintain proper accounting records, and comply with tax filing deadlines. Penalties for non-compliance can be significant.
Navigating cultural differences is key to successful business operations in Bulgaria
Why Choose Bulgaria? Comparison with Neighboring Countries
When considering company formation in Eastern Europe, it’s valuable to compare Bulgaria with neighboring countries to understand its competitive advantages.
| Factor | Bulgaria | Romania | Serbia | Greece |
| Corporate Tax Rate | 10% | 16% | 15% | 22% |
| VAT Rate | 20% | 19% | 20% | 24% |
| Min. Capital (LLC) | €1 | €45 | €1 | €1 |
| Registration Time | 7-14 days | 3-5 days | 7-10 days | 10-15 days |
| EU Membership | Yes | Yes | No | Yes |
| Avg. Monthly Salary | €800 | €1,100 | €650 | €1,200 |
Key Competitive Advantages
Bulgaria stands out among its neighbors for several reasons:
- Lowest corporate tax rate in the European Union at 10%
- EU membership providing access to the single market, unlike non-EU neighbors
- Lower labor costs compared to Romania and Greece, while maintaining a skilled workforce
- Political stability as a NATO and EU member with a stable currency pegged to the Euro
- Strategic location at the crossroads of Europe, the Middle East, and Asia
- Simplified company formation with minimal capital requirements and straightforward procedures
Pro Tips for Smooth Bulgaria Company Formation
Based on experience with hundreds of successful company formations, here are essential tips to ensure your Bulgarian company registration proceeds smoothly.
Professional guidance can significantly streamline the formation process
Before Starting
- Research your business name in advance to ensure availability in the Bulgarian Commercial Register
- Prepare all personal documents (passport, proof of address) with proper legalization before starting the process
- Understand your VAT obligations based on your expected turnover and business activities
- Consider your banking needs and research Bulgarian banks that best serve foreign-owned companies
During Registration
- Use professional translation services for all documents to ensure accuracy in Bulgarian
- Consider a virtual office service if you don’t have a physical presence in Bulgaria
- Appoint a local accountant familiar with Bulgarian tax regulations from the start
- Keep digital copies of all submitted documents for future reference
After Registration
- Register for online tax filing to simplify your compliance obligations
- Understand annual filing requirements and deadlines to avoid penalties
- Consider local business insurance appropriate for your industry
- Join relevant business associations to network with other companies and stay informed about regulatory changes
The most common mistake foreign entrepreneurs make when forming a company in Bulgaria is underestimating the importance of proper document preparation and legalization. Investing time in getting this right from the start saves significant delays later in the process.
Frequently Asked Questions About Bulgaria Company Formation
How long does it take to register a company in Bulgaria?
The standard company registration process in Bulgaria takes 7-14 days from submission of all required documents. This includes approximately 3-4 business days for the Commercial Register to process the application, plus time for document preparation and bank account opening. Express registration services are available for an additional fee, potentially reducing the registration time to 3-5 business days.
Do I need to be physically present in Bulgaria to register a company?
No, physical presence in Bulgaria is not required for company registration. The entire process can be completed remotely by granting power of attorney to a local representative who can sign documents and submit applications on your behalf. However, for opening a bank account, some banks may require at least one in-person meeting, though this policy varies between financial institutions.
What are the ongoing compliance requirements for Bulgarian companies?
Bulgarian companies must fulfill several ongoing compliance obligations, including:
- Filing annual financial statements by March 31st of the following year
- Submitting annual corporate tax returns by June 30th
- Filing monthly or quarterly VAT returns (if VAT registered)
- Maintaining accounting records according to Bulgarian standards
- Reporting any changes in company structure or management to the Commercial Register
Can a foreign company open a bank account in Bulgaria?
Yes, foreign companies can open bank accounts in Bulgaria, but the process has become more stringent due to enhanced due diligence requirements. Banks typically require comprehensive documentation about the company’s activities, beneficial owners, and source of funds. Some banks may require an in-person meeting with at least one company director. It’s advisable to research different banks as requirements and fees can vary significantly.
What is the minimum capital requirement for a Bulgarian company?
The minimum capital requirement depends on the type of business entity:
- For an EOOD or OOD (Limited Liability Company): BGN 2 (approximately €1)
- For an AD (Joint-Stock Company): BGN 50,000 (approximately €25,565)
The capital must be deposited in a corporate bank account during the registration process. For an EOOD/OOD, the minimal capital requirement makes it one of the most accessible company types in the EU.
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Conclusion: Your Gateway to European Business
Bulgaria offers a compelling combination of EU membership, favorable taxation, minimal bureaucracy, and strategic location that makes it an ideal choice for company formation. With a corporate tax rate of just 10%, minimal capital requirements, and a straightforward registration process, Bulgaria provides an efficient gateway to the European market for entrepreneurs and businesses worldwide.
Whether you’re establishing your first European presence or optimizing your corporate structure, Bulgaria’s business-friendly environment offers significant advantages. By understanding the formation process, requirements, and potential challenges outlined in this guide, you’re well-equipped to make informed decisions about your Bulgaria company formation journey.
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