BUSINESS IN BULGARIA
A comfortable location in the south-eastern part of Europe, access to the Black Sea, membership of the European Union are among the few factors contributing to the influx of foreign entrepreneurs to do business in Bulgaria.
In more detail, businessmen from third countries (from outside the EU) are attracted by access to European loans, low tax rates and cheap labor. At the same time quite qualified, Bulgarian universities provide good education, and it is not so easy to find a job in Bulgaria.
Despite some lagging behind other EU countries, the Bulgarian economy is quite stable, the government adheres to a systematic course for the development of market relations and the introduction of effective reforms. Next, learn how to open a business in Bulgaria for foreigners and familiarize yourself with the main aspects of business immigration to this country.
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How to open a business in Bulgaria
In most cases, local authorities do not create obstacles, but, on the contrary, encourage foreigners to open a business in Bulgaria. Citizens of third countries have the right to register their own company, both remotely and on Bulgarian territory. In order to do business and live in Bulgaria it is necessary to obtain a visa and a residence permit. If things go well already in 5 years it will be possible to apply for Bulgarian citizenship.
To open a long-term business visa (type D) you need to fulfill certain conditions, for example, to employ at least 10 locals in your company. There are options to legally bypass this requirement, for example, to open a representative office of a foreign company in Bulgaria. In any case, in order to find the best way of business immigration to Bulgaria, depending on the specific situation, it is worth consulting with experienced lawyers or special intermediary firms.
Almost any experienced entrepreneur knows that the successful development of a new company, especially in a foreign country, depends not only on the amount of investment and the state of the economy, but also on the ability to conduct business negotiations and understand the specifics of the local business culture. This allows you to make the right connections and promote your products on the market. Bulgaria is no exception here. Let's highlight the main points.
Bulgarian business culture
Punctuality. Bulgarians are quite demanding in this respect, meetings are scheduled in advance, tardiness is highly undesirable, maximum 10-15 minutes. In unforeseen cases, you should definitely call and apologize. Therefore, it is better to calculate the time of the trip to your destination taking into account the specifics of the city infrastructure. In Sofia, you may have to use the metro instead of a car or a cab.
Dress code. There are absolutely no differences from most civilized countries. Both for men and women a business suit of dark colors is preferable. Of course, much depends on the business sphere, but frank and bright outfits should not be worn.
Language and communication. The vast majority of locals, including entrepreneurs, prefer to negotiate in Bulgarian. Many know Turkish and Romanian. Older businessmen speak Russian, younger Bulgarians prefer to learn English. Face-to-face meetings and eye contact are very much appreciated. A casual handshake and exchange of business cards is considered the norm. Don't forget that in Bulgaria, shaking your head up and down means "no" and side to side means "yes".
Procedure and cost of company registration in Bulgaria
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Selection and reservation of a unique name for the new company. Verification in the electronic register of the commercial register. Cost 25-50 Bulgarian lev (13-25 euro), depending on the method of reservation (electronic or paper.).
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Holding a mandatory constituent meeting of shareholders. Notarization of a copy of the articles of association, a specimen signature and a special statement by the CEO of the company, which confirms that there are no violations of the Bulgarian Trade Act. Expenses at this stage are limited to a few euros.
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Opening a deposit account in a local bank and depositing the minimum amount of the authorized capital of the company. The cost of the bank's services is up to 10 euros.
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Registration in the commercial register of the National Trade Agency. Official fees in case of electronic application are 55 Bulgarian leva (about 27 euros), in case of paper application – 110 lev (55 euros). The procedure takes up to 4 days.
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Submission of documents to the tax office and obtaining a VAT payer certificate. The procedure is free of charge, but can take up to 12 days.
The total period of company registration in Bulgaria takes at least two weeks. It is highly likely that a local lawyer and accountant will need to be hired. More detailed information on the procedure of opening companies of different forms of ownership and the list of required documents can be found on the official investment portal of Bulgaria – investbg.government.bg.
Forms of ownership in Bulgaria
Foreign businessmen are given a wide choice of ownership forms for opening a company in Bulgaria. The share of foreign capital has no restrictions, up to 100%. The main thing is to comply with local laws and pay taxes correctly. Let us briefly consider the most popular types of companies in Bulgaria.
Limited Liability Company (LLC). Due to the minimum requirements for the authorized capital of 2 Bulgarian leva and optimal management structure, it is considered the most common form for a company in Bulgaria. The liability of the owners of the shares is limited to the share of contributions to the authorized capital.
The management is carried out by a director appointed by the general meeting of shareholders. It is most suitable for small and medium-sized businesses in Bulgaria. Shares may be transferred by inheritance, and in the case of third parties, only after the consent of the general meeting.
Joint Stock Company (JSC). The requirements for the authorized capital are 50 thousand lev (about 25 thousand euros) for closed companies and 100 thousand lev (about 50 thousand euros) for open type companies. Shares of the latter are freely traded on stock exchanges. A JSC is more suitable for large enterprises managed by several owners.
The company's management structure includes a board of directors and a supervisory board. Responsibility for liabilities extends to the property of the owners of the firm. There are no conditions for the transfer of shares.
Taxes in Bulgaria
The tax policy in Bulgaria is considered to be one of the most attractive in Europe with very low interest rates. First of all, it concerns corporate income tax. Bulgaria has also signed double taxation agreements with more than 60 countries.
Rates of the main taxes in Bulgaria in 2024
Corporate income tax – 10%. In some cases, such as when a company operates in a region with high unemployment (more than 35% or higher than the national average), relief up to 100% of taxable profits is provided. Assistance is also provided to farmers and companies when hiring unemployed and disabled people.
VAT. The main tax rate is 20%. Companies with an annual turnover of more than 50 thousand Bulgarian levs are subject to mandatory registration as a taxpayer. In some areas, for example, when renting out beds by hotels or similar establishments, a reduced rate of 9% is applied. The international transportation industry or companies sending goods outside the EU are fully exempt from VAT.
Income tax – 10%.
Dividend tax – 5%.
Business destinations in Bulgaria
The most popular areas for foreigners to open a business in Bulgaria are traditionally considered to be tourism and agriculture. In recent years, the IT sector, construction, logistics, services and maintenance have been emphasized. In any case, you will need a serious analysis of the local market and a careful choice of region.
Agriculture. A favorable climate, a huge area of fertile land (about half of the territory of Bulgaria), suitable for the development of crop and livestock farming, cheap and educated labor force. All this contributes to the attraction of foreign investments and the growth of the number of companies in the agricultural sector in Bulgaria. Mostly pepper, tomatoes, corn, grapes, tobacco, wheat, potatoes are grown. They are engaged in poultry farming and beekeeping.
Tourism. The Black Sea coast, moderate climate and rich nature attract a large number of tourists from different countries to the country. In addition to resorts on the seashore, the country develops skiing and cultural tourism associated with visiting historical sites. The tourist destination is considered quite popular with foreign businessmen.
Special attention should be paid to licenses and permits for certain types of activities, it is better to conduct the necessary consultations with local specialists in advance. Many entrepreneurs prefer to buy a ready-made business in Bulgaria and continue its development.
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