Company Formation Services in Bulgaria
Are you considering incorporating an International Business Company? If you are considering to register it in Bulgaria, this IBC structure will have significant prominence, particularly within the field of international financial services. It offers a wide range of advantages, such as a remarkably low corporate tax rate in the entire European Union, standing at a mere 10%. Additionally, Bulgaria offers a streamlined and expedited VAT registration process that typically takes approximately 14 days.
TBA counts with a proficient team of legal experts and accountants who deliver a comprehensive array of personalised services. These services include the establishment of Bulgarian corporate entities, guidance pertaining to the structuring of foreign direct investments into Bulgaria and the broader Balkans region, and specialised counsel concerning property transactions and ownership structures. In recent years, Bulgaria has actively pursued membership in the European Union and NATO, with notable success. The country joined NATO in 2004 and became a full-fledged EU member as of January 1, 2007.
Advantages of Incorporating in Bulgaria
Bulgaria has been an EU member since 2007.
A minimal corporate tax rate of just 10%.
Directors can be of any nationality.
Shareholders can be private individuals or legal entities.
A minimum required share capital of only EUR 1.
Strong currency (LEV).
Economic freedom.
Positive economic trends.
Strategic location in Southeastern Europe.
Low costs and taxes for employees.
A workforce proficient in English and Russian.
Bulgaria has emerged as an enticing option for launching a business, primarily due to its strategic location. It shares borders with the Black Sea to the east, Romania to the north, Serbia and Macedonia to the west, and Greece and Turkey to the south. Situated in southeastern Europe, Bulgaria encompasses a territory spanning 110,994 square kilometers, making it the 14th largest European country.
The process of establishing a company in Bulgaria may initially appear straightforward and uncomplicated. Bulgarian Company Laws stipulate relatively clear requirements, and the overall procedure is notably swift and hassle-free compared to other corporate endeavors. Our team of corporate attorneys commences the process of creating companies in Bulgaria with a thorough analysis of each client’s specific needs, aiming to address essential considerations, including:
- Defining the new company’s purpose, whether it involves running an active business, land acquisition, or other endeavors.
- Identifying the legal form that best aligns with the profile and requirements of the business entity.
- Understanding the specifics of the business operations to be conducted by the company.
- Determining ownership and management arrangements, along with the associated legal implications.
- Clarifying the powers granted to the manager(s) by the shareholder(s) and owner(s).
- Anticipating further expenses and costs that may arise after the Bulgarian company formation process is completed.
- Exploring legal avenues for reducing these additional costs while maintaining compliance with Bulgarian legislation.
- Considering options for tax optimization and tax planning.
Certain elements from the list above must be explicitly defined in the registration documents of the Bulgarian company, specifically in the Memorandum of Incorporation. These documents are part of the paperwork submitted to the Registry Agency during the registration of a Bulgarian limited company. Consequently, it is highly advisable that these documents be custom crafted for each individual client by a solicitor specializing in the establishment of Bulgarian trading companies. This tailored approach ensures that the specifics and objectives of the client’s business or property acquisition intentions are accurately addressed, as opposed to using generic forms that overlook these unique considerations.
When it comes to the initial costs and expenses, it’s not uncommon for non-legal professionals to offer attractively low fees to lure clients, only for the clients to later discover hidden or additional costs of various kinds. Additionally, even if a Bulgarian LTD is correctly registered with the Commercial Register, it may encounter operational challenges for various reasons. The effective registration with the Bulgarian Trade Register marks the final stage of establishing the respective limited liability legal entity. However, it does not conclude the process of launching a company in Bulgaria. There are certain mandatory procedures following company formation that necessitate the involvement of qualified accountants.
It is worth noting that attorneys practicing under the Bulgarian Bar Act are bound by specific obligations, which they must adhere to rigorously. They can be held responsible for their actions and, as such, are required to maintain professional indemnity insurance coverage. In contrast, non-lawyers and paralegals do not bear these obligations.
Financial Advantages of Establishing a Company in Bulgarian
There are numerous compelling reasons that drive investors to open a company in Bulgaria. Foremost among these is the remarkably low corporate tax rate in the entire European Union, a mere 10%. Notably, this is the maximum rate any company registered in Bulgaria is obligated to pay to the state. Furthermore, the law permits the deduction of all relevant and business-related expenses from the total corporate turnover at the end of each financial year. As long as a company’s expenses are managed diligently by a proficient accountant or business consultant, it is nearly guaranteed that these financial outlays will be deducted from the turnover.
The second major advantage that appeals to investors is the minimal initial capital requirement for a Bulgarian limited liability company (OOD). This capital amounts to a mere 2 Bulgarian levs, which equates to slightly more than 1 Euro. This low capital requirement has significant implications, as it allows businesses to start with minimal costs within the EU. Additionally, some investors start with small companies and subsequently transform them into medium or large entities by raising the capital incrementally. A crucial benefit of this small capital requirement is that it leads to minimal business risks. Any owner of a company is legally responsible and cannot be held accountable for more than the share capital. This means that even if a company accumulates significant debt, its financial responsibilities, regardless of the source, are strictly limited to the 1 Euro capital.
Simplified Incorporation Process in Bulgaria
Establishing a business in Bulgaria comes with multiple advantages, including a nominal minimum required capital of just 1 Euro and a simplified incorporation process. Typically, it takes only a few days for a company to incorporate in Bulgaria, with a maximum duration of up to two weeks in certain cases. A key advantage in opening a business in Bulgaria lies in the option to employ a power of attorney for the company’s establishment, eliminating the need for the founder to be physically present in Bulgaria during registration. Another significant aspect is that a dormant company, one without ongoing activities, does not incur any financial obligations, although it must submit an annual tax return. This straightforward process can be handled by accounting services or directly by the company’s manager.
Accounting records
Companies in Bulgaria generally maintain current accounting records at reasonable costs. Most companies choose to use the services of an accountant once a year, a practice permitted by Bulgarian law.
Lowest taxes in Europe
- Corporation tax: 10% (average European rate: 25%).
- Personal income tax: 10% (average European rate: 40%).
- Dividend Withholding Tax: 5% (0% under the European parent/subsidiary directive).
Bulgaria's Rankings
Bulgaria boasts impressive rankings, including being the EU’s fourth-fastest-growing economy, ranking fifth for math specialists, third for the number of qualified IT specialists per capita, and second in Europe for favorable locations for transport companies.
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Disclaimer: While TBA & Associates strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact TBA Customer Services for advice on your specific cases.