The most commonly used corporate form in Bulgaria is the OOD, which corresponds to the LTD under English law and the Italian S.R.L.
Limited liability companies may also have a sole owner and are called EOOD.
The company agreement, corresponding to articles of association in Italy, may contain various arrangements between the shareholders within the limits of applicable law. Appropriate advice is therefore necessary to avoid having to revisit decisions made too hastily.
The market offers all-inclusive “packages” which often turn out to be worthless deals for incautious shareholders who entrust themselves to improvised, or simply poorly prepared, “advisers” and “fixers”.
The cost of incorporation is certainly closely related to the client’s requirements and the activity to be carried out in Bulgaria.
In every case, it is essential to have a clear view of your business’s development and to have capable professionals alongside you to make the most of investment opportunities in the Republic of Bulgaria.
Incorporation never takes more than five working days, but generally the company can already be seen in the Commercial Register, equivalent to Italy’s Chamber of Commerce register, after the third day.
The essential information comprises the company name, choice of legal form, members’ personal details, share capital, objects and registered office.
A notarial deed is not required, so companies are generally set up by lawyers.
Other available business forms include single-member limited liability companies, joint-stock companies and single-member joint-stock companies, sole traders, limited partnerships and EEIGs (European Economic Interest Groupings); holding companies are subject to specific rules.
The capital may also be wholly owned by foreign persons or entities.
Corporate taxation in Bulgaria, as for individuals, is a FLAT 10% of profits. Dividends distributed by a Bulgarian company to its shareholders are taxed at 5%.
VAT is 20%, except for tourism and hotel services, for which it is set at 9%.
It must never be forgotten that incorporating a company abroad must form part of a planned international expansion project. Using foreign companies inappropriately not only constitutes an abuse of EU law but may also give rise to unwelcome tax and criminal-law problems.
The answer to how to form a company in Bulgaria therefore necessarily involves choosing thorough, clear and comprehensive legal advice.
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