Foreign Company Regulations in Bulgaria

Published on September 30, 2025 and written by Cyril Jarnias

In the face of increasing globalization, Bulgaria stands out with its attractive regulations for foreign companies, offering enticing business opportunities. With its EU membership and strategic position in Eastern Europe, the country has established a set of laws and mechanisms aimed at encouraging foreign investment while ensuring rigorous legal security. Recent reforms, focused on simplifying administrative procedures and tax optimization, have strengthened Bulgaria’s appeal as a prime destination for businesses looking to establish themselves in Europe, while adhering to international standards. However, investors must skillfully navigate these complex regulations to maximize potential benefits, which requires a thorough understanding of this dynamic legal framework.

Basics for Registering a Foreign Company in Bulgaria

Types of Companies Available for Foreign Investors

Foreign investors in Bulgaria have several options for establishing their business presence. The most common structures are:

• Limited Liability Company (OOD) – equivalent to an LLC
• Single-Member Limited Liability Company (EOOD) – for a single owner
• Joint-Stock Company (AD) – similar to a corporation
• Branch of a foreign company

OOD and EOOD are particularly popular due to their flexibility and very low minimum share capital, set at only 2 BGN (approximately 1 euro). These structures offer limited liability to members, making them attractive for small and medium-sized businesses.

Legal Requirements for Foreign Companies

Bulgarian legislation does not impose major restrictions on foreign investors. Foreign companies can hold up to 100% of the capital of a Bulgarian company. There are also no residency or nationality requirements for shareholders and directors.

However, companies must comply with certain obligations:

• Have a registered address in Bulgaria
• Appoint a local representative if the managers do not reside in the country
• Maintain accounting records in compliance with Bulgarian standards
• Register for VAT if turnover exceeds 50,000 BGN (approximately 25,000 euros)

Administrative Procedures and Required Documents

Company registration in Bulgaria is done with the Commercial Register. The process includes several key steps:

1. Choose and reserve a unique company name 2. Prepare incorporation documents (articles of association, deed of incorporation) 3. Open a bank account and deposit the share capital 4. Obtain notarized signatures of representatives 5. Submit the registration application to the Commercial Register

Required documents include:

• Company articles of association
• Minutes of the constitutive assembly
• Signature specimens of directors
• Legal compliance declarations
• Proof of share capital deposit

For foreign companies, these documents must be translated into Bulgarian and, in some cases, apostilled.

Role of the Commercial Register and Registration Timelines

The Bulgarian Commercial Register plays a central role in the registration process. It reviews submitted documents, verifies their compliance, and proceeds with company registration.

The standard registration timeline is 3 business days from the submission of a complete application. An expedited procedure is available for an additional fee, allowing registration within 24 hours.

Registration Fees and Associated Costs

Registration fees in Bulgaria are relatively modest. The main costs include:

• Name reservation: approximately 15 euros
• Standard registration: 55 BGN (approximately 28 euros)
• Expedited registration: 110 BGN (approximately 56 euros)
• Notary fees: between 50 and 100 euros depending on the number of documents

Costs for document translation and potentially for lawyer or consultant services should also be anticipated.

Tax Implications for Foreign Companies

Bulgaria offers an attractive tax regime for businesses. The main tax rates are:

• Corporate tax: 10%
• VAT: 20% (with a registration threshold of 50,000 BGN)
• Dividend tax: 5% (0% for EU companies under certain conditions)

Foreign companies operating through a branch in Bulgaria are taxed only on profits generated within the country.

Support and Incentives for International Investors

The Bulgarian government offers various incentives to attract foreign investment, including:

• Tax relief for investments in high-unemployment regions
• Employee training subsidies
• Facilitated access to industrial land in certain areas

The Bulgarian Investment Agency provides support to foreign investors, offering information, advice, and assistance in navigating administrative procedures.

Concrete Example: EOOD Registration by a French Entrepreneur

A French entrepreneur wanting to create an IT consulting company in Bulgaria chose the EOOD form. The process took approximately 3 weeks total:

• 1 week for document preparation and translation
• 1 week for bank account opening and capital deposit
• 3 days for registration with the Commercial Register
• 2-3 days for obtaining the VAT number

The total cost, including legal and translation fees, amounted to approximately 1,000 euros. The entrepreneur was able to start operations immediately after registration, benefiting from an advantageous tax rate and easy access to the European market.

Differences Between Subsidiary and Branch in Bulgaria

Legal Definitions in Bulgaria

In Bulgaria, a subsidiary is a separate legal entity with its own legal personality. It is created in accordance with Bulgarian commercial law and can engage in activities different from those of its parent company. In contrast, a branch is considered a direct extension of the foreign parent company, without separate legal personality.

Establishment Process

To establish a subsidiary in Bulgaria, a complete registration process with the Bulgarian Commercial Register must be followed. This involves drafting articles of association, appointing a board of directors, and depositing minimum capital. Creating a branch requires a simpler procedure, mainly involving registration of the parent company’s details and appointment of a local representative.

Tax and Accounting Obligations

Bulgarian subsidiaries are subject to corporate tax at a rate of 10% on their worldwide profits. They must maintain complete accounting records and file annual accounts with the Commercial Register. Branches, on the other hand, are taxed only on profits attributable to their activities in Bulgaria. Although they must maintain accounting records, their reporting obligations are generally less burdensome.

Legal Liability

A subsidiary’s liability is limited to its own capital. The parent company is not directly responsible for its Bulgarian subsidiary’s debts, except in cases of fraud or abuse of law. In contrast, a branch has no separate legal liability, and the foreign parent company is fully responsible for all obligations incurred by its branch in Bulgaria.

Operational Control and Flexibility

A subsidiary offers greater operational autonomy. It can diversify its activities and make independent decisions, although the parent company retains ultimate control as the majority shareholder. A branch is more directly controlled by the parent company, which may limit its flexibility but allows closer supervision of operations.

Establishment Scenarios

A foreign technology company might choose to establish a subsidiary in Bulgaria to develop software, thus benefiting from autonomy to adapt its products to the local market while taking advantage of the favorable tax regime. On the other hand, an international bank might opt for a branch to maintain direct control over its financial operations in Bulgaria, while relying on the parent company’s reputation and resources.

Cost and Resource Implications

Establishing a subsidiary typically requires a larger initial investment, including minimum share capital and incorporation fees. Maintenance costs are also higher, with stricter accounting and audit requirements. A branch can be set up with fewer resources, but it may lead to higher compliance costs for the parent company in the long term, as it must manage operations remotely.

Legal Obligations for Foreign Companies in Bulgaria

Legal Requirements for Foreign Companies in Bulgaria

Foreign companies wishing to operate in Bulgaria must comply with several specific legal requirements. Registration with the Bulgarian commercial register is a crucial step. This process involves submitting documents such as the company’s articles of association, minutes of the constitutive assembly, and signature specimens of directors, all translated into Bulgarian and certified by a local notary.

Establishing a Local Presence

Although having a physical office in Bulgaria is not mandatory, appointing a tax representative is highly recommended, and even necessary in some cases. This representative acts as an intermediary between the company and Bulgarian tax authorities, ensuring compliance with local tax obligations.

Tax Obligations

Foreign companies operating in Bulgaria are subject to various tax obligations:

• VAT: Starting January 1, 2025, VAT registration becomes mandatory when annual turnover exceeds 166,000 BGN (approximately 85,000 euros).
• Corporate tax: A fixed rate of 10% applies to profits of tax-resident companies in Bulgaria.
• Withholding tax: A rate of 5% applies to dividends distributed to non-residents.

Financial Reporting and Compliance

Foreign companies must prepare and submit annual financial reports in accordance with Bulgarian accounting standards. These reports must be filed with the commercial register no later than March 31 of the following year. Additionally, companies exceeding certain thresholds may be subject to mandatory audits.

Compliance with Labor Laws

Foreign employers must comply with the Bulgarian Labor Code, which governs employment contracts, working hours, leave, and workplace safety. It is important to note that foreign employees may require work permits, unless they are EU/EEA citizens.

Personal Data Protection

Companies operating in Bulgaria must comply with the EU General Data Protection Regulation (GDPR) as well as the Bulgarian Personal Data Protection Act. This involves implementing adequate security measures and appointing a data protection officer in certain cases.

Concrete Examples of Procedures

– VAT registration: Companies exceeding the turnover threshold must register within 7 days of exceeding it. – Corporate tax declaration: Must be submitted no later than March 31 of the year following the fiscal year. – Dividend withholding tax: Must be calculated, withheld, and paid by the distributing company before the end of the month following the quarter in which the distribution decision was made.

Non-compliance with these obligations can result in significant financial penalties and operational difficulties for foreign companies in Bulgaria.

Establishment Process for a Foreign Company in Bulgaria

Establishment Process for a Foreign Company in Bulgaria

The process of establishing a foreign company in Bulgaria involves several key steps and important considerations. Bulgaria offers a favorable environment for foreign investors, with simplified procedures and relatively low costs.

Choice of Legal Structure

Foreign investors can choose from several legal forms to establish their presence in Bulgaria:

• Limited Liability Company (OOD): Most popular structure, with minimum share capital of 2 BGN (approximately 1 EUR)
• Single-Member Limited Liability Company (EOOD): OOD variant with a single owner
• Joint-Stock Company (AD): For larger projects, with minimum capital of 50,000 BGN
• Branch: Extension of a foreign company, without separate legal personality

Registration Steps

1. Company name reservation: Availability check and reservation with the Bulgarian Commercial Register.

2. Preparation of incorporation documents: Drafting of articles of association, shareholder decision minutes, and other required documents.

3. Opening a bank account: Deposit of share capital in a Bulgarian bank.

4. Registration with the Commercial Register: Submission of registration application with all required documents. Processing time is typically 3 business days.

5. Obtaining tax identification number (BULSTAT): Registration with the National Revenue Agency.

Legal Requirements and Approvals

Foreign companies must comply with the same legal requirements as local businesses. This includes:

– Appointment of a legal representative in Bulgaria – Obtaining a registered office address in Bulgaria – VAT registration if turnover exceeds the set threshold (50,000 BGN)

For certain regulated activities, specific licenses or permits may be required.

Timelines and Costs

The complete company establishment process in Bulgaria can take between 2 and 4 weeks. Costs vary depending on the chosen structure and professional services used, but can be estimated between 1,000 and 2,500 EUR, excluding share capital.

Tax Aspects

Bulgaria offers an attractive tax regime with:

– Corporate tax rate of 10% – Standard VAT rate of 20% – Tax treaties with many countries to avoid double taxation

The choice of legal structure can have significant tax implications, particularly regarding profit repatriation.

Common Challenges and Practical Tips

Foreign companies may encounter certain challenges when establishing themselves in Bulgaria:

– Language barrier: Although English is widely used in business, many official documents are in Bulgarian. – Administrative complexity: Despite simplification efforts, some procedures may seem complex to foreigners. – Cultural differences: Understanding the nuances of Bulgarian business culture can be crucial for success.

Practical tips:

– Engage a local lawyer or specialized consultant to navigate the establishment process – Allow sufficient time for document translations and certifications – Familiarize yourself with local business practices and build strong relationships with Bulgarian partners – Consider using registered office services to simplify initial administrative management

By following these steps and considering these factors, foreign companies can effectively establish their presence in Bulgaria, thereby benefiting from EU market access and a favorable tax environment.