Setting Up a Company in Bulgaria: Understanding Legal Forms EOOD, OOD, AD, EAD and More

Published on October 17, 2026 and written by Cyril Jarnias

Setting up a company in Bulgaria is attracting more and more European and international entrepreneurs. 10% corporate tax on profits, low setup costs, direct access to the EU market: on paper, the framework is attractive. But to take advantage of these benefits without getting caught in legal traps, you first need to choose the right company form.

This article provides a complete breakdown of the main legal forms for setting up a company in Bulgaria, explaining who they are for, how they actually work, and how to compare them pragmatically.

Overview of the Main Legal Forms in Bulgaria

Bulgarian law offers a fairly wide range of legal vehicles. For a foreign investor or a business founder, the forms actually used on a daily basis are concentrated around a few major families.

On one side, limited liability companies, very flexible and inexpensive, embodied by the EOOD (single member) and the OOD (multiple members). On the other, joint-stock companies, more burdensome but tailored for raising capital and large-scale projects: the AD (joint-stock company) and its single-member variant, the EAD.

A First Framework for Understanding: Capital, Size, and Objectives

The general logic can be summarized as follows: EOOD and OOD serve as a “Swiss Army knife” for small and medium-sized enterprises, subsidiaries, family businesses, or service companies. AD and EAD are the “big capital” form: heavy investments, industrial projects, multiple investors, or prospects of stock exchange listing.

The table below summarizes some key parameters.

The key to choosing is to cross-reference three dimensions: available capital level, need for flexibility in ownership and transfer, and growth or fundraising ambitions.

EOOD and OOD: The “Standard” Path for SMEs and Subsidiaries

The EOOD and OOD forms overwhelmingly dominate the Bulgarian entrepreneurial landscape. They correspond to the local equivalent of the LLC or GmbH, with one striking feature: the minimum capital is purely symbolic, set at 2 BGN, or approximately 1 euro.

EOOD: The Single-Member Limited Liability Company

The EOOD (“Ednolichno Druzhestvo s Ogranichena Otgovornost”) is a limited liability company with only one owner. This owner may be an individual or a legal entity (e.g., the foreign parent company in the case of a 100% owned subsidiary).

Legally, the EOOD is simply an OOD with a single member. The underlying rules are the same: same liability regime, same governance framework, same accounting and tax obligations. The difference lies solely in the number of shareholders.

In practice, this structure is highly popular:

– with individual founders who want to retain full control of their project,

– with foreign groups that want a simple 100% subsidiary to manage,

– with freelancers who want to separate their personal and professional assets without tying up significant capital.

The EOOD offers several concrete advantages. First, the owner’s liability is strictly limited to the contributed capital: if the company defaults, creditors can only go after the company’s assets. Second, governance is streamlined: a single person holds the powers of the general meeting and can also serve as management. Finally, the very low minimum capital lowers the entry barrier to the absolute minimum.

OOD: The Multi-Member Limited Liability Company

The OOD (“Druzhestvo s Ogranichena Otgovornost“) follows the same logic, but with two or more members. Each holds “membership interests” (дялове) representing a fraction of the capital, with no requirement for equal contributions: you can easily structure a 60/40, 90/10, or any other split.

This form has become the standard for:

– service or industrial companies created by several co-founders,

– family businesses,

– relatively closed joint ventures,

– subsidiaries where the parent company shares capital with a local partner.

The members are only liable for the company’s debts up to the amount of their contributions, which brings the OOD closer to other European structures like the “private limited company.” The company itself, however, is fully liable for its debts with its own assets.

Truly Limited Liability

One of the key arguments in favor of the EOOD and OOD is the protection of personal assets. Bulgarian law is explicit: owners are only liable up to the amount of their capital contributions. A member who invested 1 euro cannot be pursued beyond that amount for the company’s debts, except in cases of fraud or willful misconduct.

This limitation of liability is a stark contrast to the status of a sole trader (ET), where the individual is personally liable for all obligations with their entire estate, except for certain exempt assets. It also represents a clear advantage over working as a freelancer, which directly exposes personal assets.

Governance: A Simple and Clear Structure

Organizationally, EOOD and OOD share the same architecture:

– a general meeting of members (or the sole member in the EOOD),

– one or more managers who direct and represent the company.

The manager(s) handle day-to-day operations and represent the company to third parties. The manager does not need to be a member and can be a foreign non-resident individual. If there are multiple managers, the articles of association may provide for joint or separate management.

Internal limitations on the manager’s powers, as set out in the articles or in company resolutions, are not automatically enforceable against bona fide third parties. If a manager exceeds internal authority to sign a contract, the contract may still be valid vis-à-vis the counterparty, but the manager’s liability to the company could be triggered.

Share Capital: An Almost Non-Existent Entry Barrier

One of the most striking specificities of the Bulgarian regime is the minimum capital level for limited liability companies: 2 BGN, the equivalent of about one euro. This reduction, brought about by legislative reform, has eliminated capital as a real obstacle to starting a business.

In practice, many founders still choose a slightly higher capital (e.g., 1,000 BGN) for image reasons, or to better reflect the scope of the project. But there is no legal obligation to do so.

In terms of procedure, the capital must be deposited into a blocked bank account in the name of the future company before the registration application is filed. The bank issues a deposit certificate that forms part of the file submitted to the Commercial Register.

Transfer of Shares: Controlled Flexibility

Shares in an OOD/EOOD are not freely transferable at any time like listed shares. Bulgarian law provides for a more “closed” regime: the transfer to a third party generally requires the consent of the other members, often by a majority of at least 75% of the capital, and an amendment to the articles of association. The transfer agreement must be signed with notarized signatures and registered with the Commercial Register.

Taxation and Administrative Burden: An Attractive Compromise

From a tax perspective, EOOD and OOD are subject to a flat 10% corporate income tax, one of the lowest in the EU. Dividends distributed to shareholders are taxed at 5%, unless exempted under the parent-subsidiary directive for certain EU groups. Overall, this creates an effective total charge of around 14.5% on distributed profits.

Accounting obligations remain standard: double-entry bookkeeping, annual financial statements, filing of accounts with the Commercial Register. A statutory audit is only required when the company exceeds certain size thresholds (revenue, balance sheet total, number of employees). For a “standard” SME, the audit requirement therefore remains occasional.

Regarding VAT, registration becomes mandatory once annual turnover reaches around 100,000 BGN, with an obligation to file monthly returns. Below that, registration remains voluntary.

In summary, the EOOD/OOD offers an interesting balance: limited liability, negligible capital, fast setup procedure (a few days to a few weeks), attractive taxation, and manageable formalities.

AD and EAD: Joint-Stock Companies for Large-Scale Projects

When a project requires heavy investments, the presence of many investors, the possibility of going public, or the establishment of differentiated share classes, Bulgarian law offers the form of the AD (“Aktsionerno Druzhestvo”), equivalent to a public limited company.

Its single-member variant, the EAD, allows combining the attributes of a joint-stock company with a single shareholder, for example, a foreign group structuring a subsidiary ready for a future capital opening.

AD: The Joint-Stock Company with Multiple Shareholders

The AD is a legal entity whose capital is divided into shares, each having a nominal value expressed in levs. At least two founders are required, whether individuals or legal entities, with no requirement for equal contributions.

The legal minimum capital is set at 50,000 BGN, or about 25,000 euros. Upon incorporation, at least 25% of the value of each share must be paid up. The balance can be paid later, within the timeframe set out in the articles of association, typically within two years of registration at the latest.

This capital requirement clearly places the AD in the category of “big” project structures: industries, infrastructure, financial groups, companies aiming for an IPO, or joint ventures between institutional players.

EAD: The Single-Shareholder Joint-Stock Company

The EAD follows the same regime as the AD but with a single shareholder. The sole holder can be an individual or a company, Bulgarian or foreign. The minimum capital and payment rules (50,000 BGN, at least 25% paid up at incorporation) are identical.

– setting up a subsidiary with a corporate governance structure,

– preparing for a future capital increase by leaving the door open to new shareholders,

– or complying with regulatory requirements that mandate the joint-stock form.

Liability: Protection Limited to Contributions, with One Caveat

As with the OOD/EOOD, the liability of shareholders in an AD/EAD is limited to their contributions. The company, however, is liable for its debts with all its assets. In the event of bankruptcy, shareholders lose at most the invested amount, without their personal assets being directly at risk.

However, there is an important nuance concerning public debts (tax and social security). The Bulgarian Tax and Social Security Procedure Code provides, in Article 19, that individuals who manage or control the debtor may, in certain cases, be held personally liable with their own assets for unpaid public obligations, if they have deliberately hindered their recovery through action or omission. This is not a general challenge to limited liability, but a targeted corrective mechanism in cases of culpable behavior.

Capital and Shareholding: The Power of Free Transferability

The central characteristic of the AD/EAD lies in the nature of the securities: they are shares (акции) that are freely transferable, unlike the membership interests of an OOD.

This difference in legal technique has very concrete consequences:

Since 2018, Bulgarian law has strengthened transparency by prohibiting bearer shares. The capital of joint-stock companies is now represented solely by registered shares, which implies:

– the entry of each shareholder in a share register kept by the company or a central depository,

– compliance with increased transparency obligations regarding anti-money laundering and the concealment of ownership.

Governance: More Sophisticated Structures

The AD/EAD must necessarily establish a governance architecture that is more formal than that of OOD/EOOD. Bulgarian law offers two models:

– a one-tier system: a general meeting of shareholders and a board of directors (3 to 9 members), which handles both management and representation,

– a two-tier system: a general meeting, supplemented by a management board responsible for day-to-day management, and a supervisory board in charge of oversight.

Certain regulated activities (banks, insurance, for example) are required to adopt the two-tier structure. For most commercial companies, the one-tier model remains more common, as it is operationally simpler.

Directors and members of governing bodies are subject to a heightened liability regime. They must act in the interest of the company and all shareholders, and can be held liable for damages caused by faulty management. Under certain conditions, a minority of shareholders representing a percentage of the capital can initiate a derivative action for liability.

Advantages and Disadvantages of the AD/EAD Forms

Joint-stock companies offer a set of undeniable benefits:

– a high capacity to mobilize capital through the issuance of shares and possibly bonds,

– the possibility of accessing financial markets, notably the Bulgarian Stock Exchange,

– an image of solidity and credibility with banks, institutional partners, and major contractors,

– great ease of transfer and circulation of securities, conducive to projects involving many investors.

In return, they involve:

– a high minimum capital (50,000 BGN, of which at least 25% paid up at incorporation),

– more complex governance (boards, meetings, possible committees),

– higher operating costs (board of directors, statutory auditors, extensive reporting),

– heavier transparency and publication obligations than those of limited liability companies.

In other words, the AD/EAD is justified when the needs in terms of capital, shareholder flexibility, or institutional framework far outweigh the additional administrative and financial cost.

Comparing EOOD/OOD and AD/EAD: Four Decisive Axes

To choose between these major families of legal forms, several comparison axes are decisive: capital, governance, transfer of securities, and financing strategy. The following points help structure this analysis.

1. Minimum Capital and Available Resources

The first criterion is arithmetically simple:

– EOOD/OOD: 2 BGN minimum capital, or about 1 euro. The capital can of course be higher, but that’s a strategic choice, not an obligation.

– AD/EAD: 50,000 BGN minimum capital, about 25,000 euros, with the obligation to pay up at least 25% of each share at the time of creation.

This single parameter de facto excludes the AD/EAD form for a large number of micro-enterprises or projects launched with limited means. Conversely, in sectors where significant capital is required anyway (finance, insurance, heavy industry, etc.), the constraint becomes less relevant.

2. Governance and Administrative Complexity

In terms of internal organization, the step is also very different.

In an AD/EAD, on the other hand, the setup includes:

– a general meeting of shareholders with stricter agenda and convening rules,

– a board of directors or a management board/supervisory board pair,

– more detailed internal procedures, often accompanied by internal regulations,

– heavier internal and external control obligations, with frequent recourse to statutory audit.

This sophistication is what makes the joint-stock company attractive to institutional investors, but it significantly increases the day-to-day management burden.

3. Transferability of Securities and Shareholder Flexibility

Another structuring difference: how the capital stake is represented.

In an OOD/EOOD, membership is represented by membership interests. Transfer to a third party is strictly regulated: it requires the consent of the other members, a notarized deed, and an update of the articles of association filed with the Commercial Register. This rigidity protects the “closed” nature of the company but hinders the rapid entry and exit of investors.

This freedom of transfer of securities makes the AD/EAD the preferred form for:

– joint ventures involving several groups,

– companies that plan to frequently open or change their shareholder base,

– structures aiming for an IPO or successive funding rounds.

4. Financing Strategy and Growth Ambitions

The last axis, perhaps the most strategic: how the company plans to finance its growth in the medium and long term.

EOOD/OOD is suitable when:

– the project is carried by one or a few stable members,

– financing needs can be covered by self-financing, bank credit, or contributions from a limited number of partners,

– there is no plan to multiply investors, bring in private equity, or use financial markets.

AD/EAD makes full sense when:

– the company plans to attract various investors over time,

– raising capital through shares or bonds is an integral part of the roadmap,

– the free transferability of shares and the ability to create differentiated classes of securities become necessary levers.

The following table illustrates this difference in philosophy.

Branch and Representative Office: Alternatives Without Share Capital

Alongside these forms of companies with legal personality, Bulgarian law allows foreign companies to establish themselves using lighter structures: the branch and the representative office. They are sometimes considered as alternatives to an EOOD/OOD or EAD/AD subsidiary.

The Branch: A Direct Extension of the Parent Company

The branch (klon) is an emanation of a foreign company in Bulgaria. It does not have its own legal personality: legally, it is the same entity as the parent company, operating through a permanent establishment on Bulgarian territory.

In practice:

This formula is often chosen for: the advantages it offers.

– testing a market at lower cost before possibly creating a subsidiary,

– executing a one-off project where the parent company wants to be directly a party to contracts (e.g., public tenders),

– avoiding tying up capital in a separate Bulgarian entity.

The Representative Office: Presence Without Commercial Activity

The representative office forms another category: it cannot carry out any revenue-generating commercial activity. It is used solely for prospecting, marketing, institutional representation, or market research.

It has the following characteristics:

– no capital requirement,

– inability to issue commercial invoices, therefore no taxation on profits,

– lighter accounting and reporting obligations compared to an operational company,

– liability borne by the foreign parent company, as with a branch.

This format is well suited for companies that want to establish a foothold in the Bulgarian market to observe, network, participate in trade fairs, but are not yet ready to carry out true commercial activity.

Registration Procedure: Common Points and Specificities

Even if the forms differ, the architecture of the steps to set up a company in Bulgaria follows a common pattern, highly centralized around the Commercial Register, kept by the Registry Agency under the authority of the Ministry of Justice.

Key Steps for EOOD/OOD and AD/EAD

The incorporation of a company generally goes through the following phases:

1. Choosing a company name The company name must be unique in the Commercial Register and officially written in Cyrillic alphabet, even if a Latin alphabet version is used for communication. It must include the abbreviation corresponding to the form: “EOOD”, “OOD”, “AD”, or “EAD” as applicable. You can check the availability of the name for free on the register’s website and, if necessary, reserve it in advance for a low fee.

2. Determining the form and governance structure The founder(s) choose the form (EOOD/OOD or AD/EAD) according to their needs. They define the capital allocation, the appointment of the manager(s) (manager for OOD/EOOD, directors for AD/EAD), and the internal decision-making rules.

4. Opening a capital account and depositing the share capital Before registration, a specific bank account called a “capital account” is opened in the name of the company being formed. The members deposit the required capital (minimum 2 BGN for OOD/EOOD, 50,000 BGN for AD/EAD, with the legally required percentage paid up at incorporation). The bank issues a deposit certificate, which is essential for the file.

6. Submitting the registration application to the Commercial Register All documents are submitted, either in paper form or, most often, electronically using a qualified electronic signature certificate. The Registry Agency checks the file’s compliance with the Commercial Act and the legislation on the register. If everything is in order, registration is generally granted within one to three business days.

7. Obtaining the Unique Identification Code (UIC) Upon registration, the company receives a Unique Identification Code (UIC), which serves as both a registration number and a tax and statistical reference. From that point, the company acquires full legal personality and can act in court, hold assets, enter into contracts, and hire staff.

8. Post-registration steps The company must then register with the tax authorities (automatic registration or supplementary declaration), consider the need for VAT registration based on its activity and projected turnover, set up its accounting, and, if applicable, comply with sector-specific obligations (licenses, notifications to labor or health inspectorates, etc.).

How to Actually Choose Your Legal Form in Bulgaria?

Faced with these options, the central question remains: which form best suits a given project? Rather than starting from a “theoretical ideal” model, it is more useful to reason by scenarios.

Project Carried by a Single Entrepreneur or a Single Parent Company

When a single player holds the capital, the choice first comes down to a dilemma between EOOD and EAD.

– If capital needs are modest, the structure should remain light, with few governance and reporting obligations, the EOOD is almost always the best option. It allows you to register a subsidiary or operating company with negligible capital, simplified management, and low administrative cost.

– If the subsidiary needs to be ready to later welcome investors, to issue different classes of shares, or if the activity is in a sector where the joint-stock form is mandatory or strongly recommended, the EAD may be chosen despite the higher capital constraint. It offers greater scalability for capital structuring.

SME Project with Several Stable Members

In the case of a company created by several co-founders, or a family business, where you want a stable core of members, possibly with regulated exit mechanisms, the OOD is generally the best choice:

The AD is not excluded in principle in such a context, but its costs and constraints are usually not justified if the project is not intended to widely open its capital or raise funds from multiple investors.

Large-Scale or Fundraising-Oriented Project

For companies aiming from the outset for significant size, international development, or the use of institutional investors, the AD form (or EAD initially) becomes more natural:

The cost in capital (50,000 BGN) and governance (boards, audit) is then considered the price to pay for this flexibility and credibility.

Simple Market Test or Limited Presence

When the objective is only to test the Bulgarian market, to have a local address for business contacts, or to respond to a few tenders without deploying a full structure, several options are available:

– Branch: allows carrying out commercial activity, but directly engages the parent company for debts. Interesting for one-off projects and maintaining legal unity;

– Representative office: provides a regulatory presence for marketing, public relations, or market research, without being able to invoice or generate revenue. A pre-establishment tool rather than a true economic activity.

When the market test turns into a lasting presence, most groups migrate to a subsidiary in the form of EOOD or OOD to benefit from limited liability and better integration into the local economic fabric.

In Summary: Aligning Capital, Governance, and Growth Strategy

Setting up a company in Bulgaria primarily involves choosing a legal form that is consistent with the business model, ownership structure, and development ambitions. The key takeaways are as follows:

– EOOD/OOD: default solution for the majority of entrepreneurs and investors. Symbolic capital, limited liability, simple governance, attractive taxation. Perfect for small and medium-sized enterprises, subsidiaries held by a single group, family businesses, or service structures.

– Branch and representative office: complementary instruments for testing the market or maintaining a presence at lower cost, but without the protection of limited liability for the parent company.

Beyond the numbers and texts, the challenge is to align the company form with the intended trajectory: a structure that is too heavy unnecessarily hinders a small project; a form that is too simple can conversely impede fundraising or rapid expansion. The strength of Bulgarian law lies precisely in the range of tools made available, allowing you to evolve your structure—for example, by converting an OOD into an AD—as the company grows and its needs become more complex.

Sources

• PwC Tax Summaries — Bulgaria (reviewed 02/08/2026)

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Cyril Jarnias

Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.

On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.

Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.

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