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Bulgaria

Bulgaria

from 1.200 €

Company incorporation in Bulgaria

Setting up a company in Bulgaria is a relatively quick process and is an advantageous solution for Italian entrepreneurs who intend to invest abroad, due to the low taxation, reduced bureaucracy and labour costs, which are among the lowest in Europe.

Capital: Sofia
Official language: Bulgarian
Currency: Bulgarian Lev
Population: 7 million (2019)
Tax system: 10%
VAT: 20%, 9% for hotel services
Average salary: 7,000 euro/year

Opening a company in Bulgaria

To date, more than 13,000 Italian companies have opened or moved their tax position in Bulgaria, for a total value in terms of investment of over 1.7 billion euros. Bulgaria, as well as being appreciated for the establishment of new companies or startups is also one of the most interesting countries in Europe to implement relocation strategies, due to low labour costs.

Why Bulgaria?

Bulgaria is one of the most attractive countries to set up a company in Europe. It is a developing country in a strategic geographical location. Enjoying a stable banking system and offering attractive investment incentives, the country definitely deserves consideration for your financial projects.

Moreover, Bulgaria has been in Europe since 1 January 2007 and is in the process of joining the Schengen area. It is also committed to adopting the euro, but currently the Bulgarian Lev is used.

Advantages

1. Stable banking system and business environment

Bulgaria is not yet a member of the Eurozone but enjoys a very stable currency, the ‘Lev’, which is supported by the currency board, pegging it to the euro at a level of 1.96. The country has the second lowest public debt in the EU (17.0% of GDP) and one of the lowest budget deficits. The country ranks 57th out of 185 other economies for “ease of doing business” according to a World Bank measurement.

2. Favourable tax system

One of the main advantages of registering a company in Bulgaria is its tax regime, with a corporate tax rate of 10%, the lowest in the European Union. More details under “Taxes in Bulgaria”.

3. Low labour costs

Bulgaria has the lowest labour costs in the EU with a minimum wage of around €200 and an average salary of around €500. However, the workforce is well educated, highly skilled and multilingual.
Office rental prices are affordable and the cost of electricity for industrial users is 70% of the European average tariffs.

4. Access to strategic markets

Starting a business in Bulgaria also benefits from a strategic location:

  • European Union: zero-tariff market with a population of 500 million
  • CIS: excellent relations with the former Soviet countries
  • Turkey: a zero-tariff market with a population of around 80 million.
  • Bulgaria has 68 double taxation agreements in force.

Taxes in Bulgaria

One of the main advantages of registering a company in Bulgaria is its tax regime: the corporate tax rate is only 10% (the lowest in the EU), and personal income tax is 10% (flat rate). Industries in areas of high unemployment are granted a special tax rate of 0%.

Dividends and liquidation proceeds payable to non-residents are subject to 5% withholding tax (lower rates may apply under a tax treaty) and are exempt from withholding tax under the European Parent and Subordinate Companies Directive when payable to an individual residing in the EU. Bulgaria has a standard VAT rate of 20%, with a reduced rate of 9% for hotels and accommodation services. Intra-Community exports and supplies are zero-rated.

Types of companies

The most common form of company incorporation in Bulgaria is the OOD. There are two types of limited liability companies in Bulgaria;

  • Multiple owner (OOD)
  • Single owner GmbH (EOOD)

OOD

Company form Limited liability company, OOD
Responsibility The liability of the shareholders for the company is limited to the amount of the contributed capital.
Capital The share capital consists of the capital contributions, which must be at least BGN 2 (EUR 1). The capital contributions must be fully paid up.
Members One or more natural or legal persons, residents or non-residents. Details of members are made public.
Manager At least one manager, who must be a resident or non-resident individual.
Secretary Appointing a secretary is possible but not mandatory.
Registered office A company must have a registered office in Bulgaria.
Management Annual balance sheet and annual report to the business register mandatory. SMEs may submit simpler financial statements. Mandatory annual general meeting. Monthly VAT declaration (if VAT-registered).

EOOD

Company form Solely limited liability company, EOOD)
Responsibility (as OOD)
Capital (as OOD)
Members Single shareholder, who holds 100% of the shares in the company.
Manager (as OOD)
Secretary (as OOD)
Registered office (as OOD)
Fiscal management (as OOD) + Unlike the OOD, an annual general meeting is not required.

The EOOD is a single-member company, which can be converted into an OOD without too much difficulty.

VAT in Bulgaria

Value added tax, VAT applied to the purchase and sale of goods and services has the following values in Bulgaria:

Ordinary rate 20%
Hotel services 9%

VAT number

Companies with an annual turnover of more than BGN 20,000 (approximately EUR 10,200) are required to register for VAT purposes. This applies likewise in the case of distance sales in Bulgaria exceeding BGN 70,000 (approximately EUR 35,800).

Every company in Bulgaria that is registered for VAT will have to file a VAT return with the National Revenue Agency (NAP – Национална агенция за приходите).

Why trust us at CompanyFormation.co.uk?

We receive requests from all over the world about starting a business in Bulgaria, how the tax system works in Bulgaria, etc. With over 10 years of experience, we are confident that we have developed our incorporation services into a complete package for our clients to enable them a quick and safe start-up in Bulgaria.

Contact us now using the form below.

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