A foreign company may chose to open a company in Bulgaria whose shares will be kept in totality or partially by it. This type of company is called subsidiary. A subsidiary has its own capital and management bodies and it’s considered a separated legal entity.
There are two popular forms a subsidiary may take in Bulgaria
: as a limited liability company
or as a joint stock company.
How is an LLC formed in Bulgaria?
A limited liability company is formed by at least one shareholder with a symbolic minimum share capital of 1 Euro, while the joint stock company must be formed by at least two shareholders, with a minimum share capital of at least 25,000 Euros. There is no need for the subsidiaries opened in Bulgaria to have resident shareholders or managers.
Support for certain businesses in Bulgaria
The Encouragement of Investment Act provides support for certain types of business
if the following conditions are met: the investment implementation doesn’t exceed three years or the investments are made for the improvement of the creation of products and services and provide new jobs. A subsidiary registerd in Bulgaria
has the same tax regime as a local company. The VAT must be paid monthly if the annual turnover exceeds 50,000 BGN.
The National Revenue Agency must receive the accounts of the subsidiary annually. Double tax treaties
may be applied on capital gains or dividends, interests and royalties. Unlike a branch
, there is no obligation to submit the financial statements of the foreign company at the National Revenue Agency.
The obligations of a Bulgarian subsidiary
Before registration, the Bulgarian company must deposit the minimum share capital in a bank account, especially opened for the future financial operations. Below are a few steps to consider for establishing a subsidiary in Bulgaria:
- Subsidiaries established in Bulgaria must submit at the Commercial Registry an application containing the address of the registered office and details regarding the subsidiary’s representative.
- Along with the application, the foreign company must also provide the contract between the subsidiary and the parent company.
- The consent with a specimen of the signature of the subsidiary manager (notarized) and the decision of opening a subsidiary taken by it must be prepared.
- The last step before starting business in Bulgaria is registering for VAT, but only if there are predictions that in the future the annual turnover will exceed 50,000 BGN.
The process of registration of a subsidiary normally takes about eighteen days, but the process depends entirely on the correctness of the provided documents.