Company formation in Bulgaria consists of several actions that are necessary for starting a business in Bulgaria. Firstly, one needs to decide about the form of business. According to the Bulgarian Foreign Investments Agency, a Limited Liability Company (LLC) is one of the most popular choices for small and medium businesses. There is also the option of a Bulgarian joint stock company (JSC) for large companies. An entrepreneur can also set up a sole proprietorship, a partnership, a representative office, a branch or a subsidiary. After that, the foundation documents must be executed in front of a notary, the minimum share capital must be deposited in a bank account, the notarized documents must be registered with the Commercial Register at the Registry Agency and not least, the entity must register for VAT.
TYPES OF COMPANIES
• A single entrepreneur can register a sole proprietorship. The entrepreneur is fully liable for the company’s debts and can beneficiate from the full profits of it. There is no minimum share capital required for this type of business and in case of liquidation, the owner don’t have separated liability from its business and his personal assets may be affected by this.
• The general partnership is formed by two or more members with unlimited liability, united under the same name and with the same economic purposes. Just like in the case of the sole proprietorship, the personal assets of the members can be affected by the liquidation processes. A general partnership is based on the partnership’s articles which must show: the name and address of each partner, the name of the partnership (the names of the partners followed by the termination SD) the amount contributed by each partner the modality the losses and profits will be divided between them.
• Similar with the general partnership is the limited partnership which is formed by two or more partners which can be general (this type of partner is fully liable for the entity’s liabilities and have full decisional powers and don’t need to contribute with a fix amount to the capital)and the silent partner(which has a liability limited to its contribution to the capital, don’t have a decisional power and in case of liquidation has its personal assets protected). This type of partnership is also based on the partnership’s articles. The name of this type of limited partnership must contain at least one general member’s name followed by the termination KD.
• The Bulgarian limited liability company is a form of business especially established by the small and medium companies and it is formed by members with the liability limited to their contribution to the company’s capital. Unlike other jurisdictions, there is no need to submit a minimal share capital at incorporation. The main documents of a limited liability company are the Articles of Incorporation and the Memorandum of Association (the last one in case only one shareholder is involved). The company of this type is managed by a director appointed by the general meeting of the shareholders (considered the highest instance in the entity). The name of the company must be unique and followed by the termination OOD.
• A joint stock company in Bulgaria it’s a type of company designed for major businesses and which must be incorporated by at least two individuals or corporate bodies. The name of the company must be unique and followed by the termination AD. Unlike the limited liability company, this entity must provide a minimum share capital of 50000 BGN (a closed joint stock company) or 100000 BGN (for open joint stock companies) divided into shares with nominal value of 100 BGN. At the base of each joint stock company sits the by-laws of the company, containing the name and the registered address of the company, its purposes, details regarding the capital stock and shares, the name of the advantaged members and type of advantages, the modality of appointing the board of directors and the supervisory board, transforming or liquidating the entity.
INCORPORATION PROCEDURE IN BULGARIA
In the beginning, the entity’s representative must execute the minutes of the constituent meeting of the shareholders or the general meeting of the general partners. After that it is mandatory to obtain a notary certified statement of consent and signature specimen of the manager, and a certified copy of the articles of incorporation or the partnership agreement. A certificate from a bank stating that at least 70% of the minimum required capital has been paid must be obtain before starting the actual entity registration. The certified statement of consent and signature specimen of the manager must be notarized.
The actual registration consists in depositing the notarized foundation deeds, minutes of the meeting of incorporation and the bank certificate stating the share capital to the Commercial Register at the Registry Agency process which takes around four working days.
After that, the entities must fill an application to the National Revenue Agency followed by the foundation deed, the bank account document or a document attesting the contributions value, an excerpt from the Commercial Register in order to get the VAT number. This process doesn’t take longer than 12 working days.
The whole process of Bulgarian company incorporation performed by a Bulgarian Law Firm
takes around two working weeks.
ECONOMY OVERVIEW IN BULGARIA
Situated in the Center of Balkan Peninsula, on the road between Europe and Asia, Bulgaria has a lot of advantages to offer to the foreign and local investors. The main developed sector is the service sector represented by the tourism, Bulgaria being an attractive holiday destination due to its advantageous prices and beautiful landscape. Other developed sector is the agriculture.
The population is highly educated English speaker, this leading a reputable workforce. The major advantages granted by the Bulgarian government are the taxation system- one of the lowest from EU with a profit tax of only 10% and the small withholding taxes on dividends paid to non–residents of 5 %, and withholding taxes on interests paid to non-residents up to 10%. All the above can be minimized or even exempt by the vast network of double taxation treaties signed by Bulgaria so far.