Useful Information Regarding Company Incorporation in Bulgaria

Dear expats,
As a lawyer in my practice I have met a lot of inquiries from foreigners regarding different aspects of the process of incorporation of a company in Bulgaria and afterwards. So I wanted to be helpful and clarify some of them for people who have decided to invest in my country. I will try to be as prompt as I can be...

There are a number of different options for Bulgarian businesses such as a Limited Liability Company (Ltd, in Bulgarian EOOD or OOD) (with one or more shareholders) or as a Public Limited Company (Plc, in Bulgarian EAD or AD).
Bulgarian incorporation in particular are attractive because of the low minimum capital requirement for a civil law jurisdiction. The process of incorporation takes from 48 hours to 1 week. The business climate in Bulgaria is good for new investors; we have 10 % flat rate of tax withholding and 20 % VAT.
From my personal experience in the field of commercial law I suggest to every expatriate to engage the services of a lawyer for the process of incorporation of a company, so that the process can be clear and without any unpleasant surprises.  The establishment of a business entity in Bulgaria is easy and straightforward. No residence permission is required to establish a business presence, although there is some regulation of the use of business and trading names. The shareholders can be residents or nationals of any jurisdiction, with addresses in any jurisdiction. Further, there are no residence/nationality requirements for company officers, including directors.
According to the Bulgarian Commercial Code there are five main types of business entity:
• private limited company
• joint-stock company
• general partnership (unlimited partnership)
• limited partnership
• partnership limited by shares

Further forms of business organisation recognized by Bulgarian law include:
• the joint venture/consortium
• the branch of an overseas
legal person
• the trade representative office
• the sole trader
• a co-operative
Of the above, the most popular are the private limited companies and the joint-stock companies. Both offer limited liability.
Limited Liability Company (OOD/EOOD)
A limited liability company may have natural or legal persons as members. The minimum capital for company incorporation is 2 Leva which is approximately 1 Euro, but I suggest You that 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. By default, shares in a limited liability company may be transferred only with the approval of at least 75% of votes and 75% of the total capital represented) but the articles of association can be altered to oust this.
The only objects unavailable to private limited companies are banking and insurance. A private limited company differs from a joint-stock company in that its capital is not divided into separate negotiable shares and is not represented by share certificates. (E)OOD (the “E” representing single member status) does not have a Board of Directors or a Supervisory Board. Instead, the authority to run the company is with its director.

The shareholders can be residents or nationals of any jurisdiction, with addresses in any jurisdiction. Further, there are no residence/nationality requirements for company officers, including directors.
It is important for you to know that Bulgaria have a double taxation treaties in place with 61 jurisdictions incl. Albania, Armenia, Austria, Belarus, Belgium, Canada, China (PRC), DR Congo, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Finland, France, Georgia, Germany, Greece, Hungary, India, Indonesia, Ireland, Israel, Italy, Japan, Kazakhstan, Korea (North), Korea (South), Kuwait, Lebanon, Luxembourg, Macedonia, Malta, Moldova, Mongolia, Morocco, Norway, Poland, Portugal, Romania, Russia, Serbia and Montenegro, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, Syria, Thailand, Turkey, the Ukraine, the Netherlands, the UK, Vietnam etc. See for a full list at www.nap.bg.
The rate of corporate tax is 10%. In addition, where a company pays a dividend to a foreign shareholder, the company is obliged to impose a withholding tax of 5%. Under the applicable double taxation treaty, the withholding tax amount can be used as a tax credit for the shareholder's foreign tax obligations. In this way, the tax on corporate activity is one of the lowest globally, and joint-lowest in the EU.
The Government of Bulgaria has a stated policy of maintaining low and uncomplicated taxation to encourage economic growth and minimize the administration costs.
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:
1. it should have registered address - the headquarters which have to be in Bulgaria;
2. an appointed director(manager), which can be yourself or appointed person by You.
The necessary documents and procedures for incorporation and afterwards:
1.    Personal ID/ passport of the shareholders and the director;
2.    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.
3.    If you have authorized an attorney you have to sign a Power of attorney for the registration;
4.    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.
5.    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.
6.    In order for the company to operate you will need to conduct a contract for accounting services.
7.    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:
1.    State fees 160 BGN (81 euro), but if the documents are submitted electronically by an attorney it is 80BGN (41 euro).
2.    Bank fees between 10-30 BGN for opening an account and the capital amount
3.    Notary fees for the specimen are between 6 and 20 BGN (3-6 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.
4.    If you have appointed an attorney there is a separate fee for his services
5.    Fees for the accounting services;