Information Regarding Company Incorporation in Bulgaria

 

The following information is provided for foreigners who tend to invest in Bulgaria. Investment in Bulgaria is highly attractive nowadays. This is а result of the low corporate and income tax which is at the amount of 10% and the low VAT rate which is at the amount of 20%. The procedure for incorporation of company is light weighted and if it is performed by an competent attorney will take future investors little time and efforts.

There different types of companies which can be incorporated in Bulgaria at this point Public liability company, General partnership, Limited liability company, Private limited liability company etc.

The following article tends to bring to Your attention a detailed information about the Limited Liability Company and the Private Limited Liability Company, because these two types of companies are most common in Bulgaria and the costs for their formation are minimized.

A Limited Liability Company can be incorporated by natural person or legal entity as members. The minimum capital for company incorporation is 2 Leva which is approximately 1 Euro, but my suggestion is that the amount of the capital is higher than 2 Leva, e.g. 50 or 100 Leva in order for smooth accounting. All members are personally liable for the debts of the company up to the amount of their share of capital. Members are not liable for the unpaid portions of others’ contributions. 

*Banking and insurance companies can not be limited liability companies.

The shareholders can be residents or nationals of any jurisdiction, with addresses in any jurisdiction. 

The procedure for incorporating of a company takes about a week and Your presence is not required in the country (if you have authorized an attorney), which is convenient for the people who are not living in Bulgaria. According to the Bulgarian Commercial Code in order for the company to operate:

·        it should have registered address – the headquarters which have to be in Bulgaria;

·        an appointed director(manager), which can be yourself or appointed person by You.

Necessary documents and procedures for incorporation and afterwards:

·       Personal ID/ passport of the shareholders and the director;

·       Specimen of the signature of the director, which has to be notary verified. If you are not coming in Bulgaria you have to verify it with apostille in your country.

·       If you are not coming to the country you will have to sign a separate Power of attorney for opening of a bank account for the capital of the company which is an escrow bank account and it is only for the purpose of the incorporation. This account is not the company bank account, which can be opened after the incorporation, because the bank requires the UIC number of the newly formed company as well as a company stamp and the presence of the director. You can open a company account with a signed power of attorney, but for security reasons I always suggest to my clients and friends to be performed personally.

·       You will have to decide what the scope of activity of the company is and to consult with an attorney if you need a license for it.

·       In order for the company to operate you will need to conduct a contract for accounting services.

·       If you plan to use the company for business activity in the EU you will have to be registered at the National revenue agency according to the VAT act.

 

Costs for incorporation and afterwards:

 

·       State fees 110 BGN (56 euro), but if the documents are submitted electronically by an attorney it is 55 BGN (27 euro);

·       Bank fees between 10-30 BGN for opening an account and the capital amount;

·       Notary fees for the specimen are between 6 and 20 BGN (3-10 euro). If you have verified the specimen with an apostille you will have costs for translation and legalization in the Bulgarian Ministry of foreign affairs and the fees depend of the language;

·        If you have appointed our law firm there is a separate fee for its services;

·        Fees for the accounting services.

 

Taxation:

There is a summarized information about the taxes which should be payed by a Limited Liability Company.

Corporate tax of 10% /this is applicable for every revenue the company has/

Dividend tax of 5% / this is applicable when the company pays dividends to foreign shareholders – Bulgaria is a party upon double taxation treaty, currently with 61 jurisdictions. According to double taxation treaty agreement the withholding tax amount can be used as a tax credit for the shareholder’s foreign tax obligations/.