7 Easy Steps: How to Start a Company in Bulgaria as a Foreigner (Your Ultimate Guide!)

Are you a visionary entrepreneur looking to expand your horizons and tap into a vibrant European market? Bulgaria might just be the perfect destination for your next business venture! With its strategic location, favorable tax policies, and supportive business environment, setting up a company in Bulgaria as a foreigner is not only feasible but also incredibly rewarding. This comprehensive guide will walk you through the essential steps, ensuring a smooth and successful launch for your Bulgarian enterprise.

Introduction: Why Bulgaria? Your Gateway to European Business

Bulgaria, an active member of the European Union since 2007, has steadily emerged as a top choice for international entrepreneurs and investors. Located at the crossroads of Europe and Asia, it offers unparalleled access to a market of over 500 million consumers. Beyond its geographical advantage, Bulgaria boasts a stable economy, a highly skilled workforce, and a growing innovation ecosystem, making it an attractive hub for various industries, from IT and outsourcing to manufacturing and tourism.

Benefits of Setting Up Your Business in Bulgaria as a Foreigner

Deciding to establish your company in Bulgaria comes with a host of advantages that are hard to overlook:

• Lowest Corporate Tax Rate in the EU: Bulgaria offers a flat 10% corporate income tax, which is among the most competitive in the European Union, significantly boosting your profit margins.
• Strategic Location: Its position in Southeast Europe provides easy access to the EU, Balkan, and Black Sea markets.
• Skilled and Cost-Effective Workforce: Access to a well-educated and multilingual labor pool at competitive costs.
• Stable Economy and EU Membership: Enjoy the stability and benefits of operating within the European Union framework, including simplified trade and investment.
• Low Cost of Doing Business: Operating costs, including office rent, utilities, and administrative fees, are considerably lower compared to many other EU countries.
• Simplified Company Registration: The process for company formation is relatively straightforward and efficient.

Step 1: Choose Your Business Structure Wisely

The first crucial step in starting your company in Bulgaria is to select the appropriate legal structure. Your choice will depend on factors such as the number of founders, liability preferences, and the scale of your intended operations.

Understanding the Popular OOD/EOOD (Limited Liability Company)

For most foreign entrepreneurs, the Limited Liability Company (LLC) is the most popular and recommended option. In Bulgaria, this comes in two forms:

• OOD (Obransko Otdgovorno Druzhestvo): A Limited Liability Company with two or more partners.
• EOOD (Ednolichno Obransko Otdgovorno Druzhestvo): A Single-Person Limited Liability Company, ideal if you are the sole founder.

Both OOD and EOOD structures offer limited liability, meaning your personal assets are protected from business debts and obligations. They are relatively easy to set up and manage, making them suitable for small to medium-sized businesses.

Exploring Other Company Types: Sole Proprietor, Joint Stock Company

While OOD/EOOD are predominant, other options exist:

• Sole Proprietor (ET – Ednolichen Targovets): This is suitable for individuals who wish to operate a business under their own name. However, it does not offer limited liability, meaning your personal assets are not protected. This option is generally less common for non-EU foreigners due to residency requirements.
• Joint Stock Company (AD – Aktsionerno Druzhestvo): This structure is typically chosen for larger enterprises that plan to raise capital through public offerings or have numerous shareholders. It involves more complex registration and reporting requirements.
• Partnerships (SD, KD): General (SD) and Limited (KD) partnerships are also available but less common for foreign single or small groups of entrepreneurs.

For the purpose of this guide, we will focus primarily on the OOD/EOOD structure due to its popularity and suitability for most foreign investors.

Step 2: Prepare Your Essential Documents and Minimum Capital

Once you’ve decided on your company type, gathering the necessary paperwork and understanding financial requirements is the next critical phase.

Key Documents Required: Passport, Address Proof, and More

To register an OOD/EOOD, you will typically need the following documents:

• Valid Passport: A copy of your valid passport (and for all other founders/managers, if applicable).
• Proof of Address: A document confirming your residential address.
• Articles of Association (Statute): This is the founding document outlining the company’s rules, objectives, capital, management, and shareholder rights. It must be prepared in Bulgarian.
• Declaration of Consent: A declaration by the manager(s) agreeing to manage the company.
• Specimen Signature: A notarized specimen signature of the company manager(s).
• Power of Attorney: If you are using a representative (e.g., a lawyer) to handle the registration process on your behalf, a notarized Power of Attorney is required.
• Bank Certificate: A certificate from a Bulgarian bank confirming the deposit of the minimum share capital.

All documents originating from outside Bulgaria must be apostilled (or legalized) and officially translated into Bulgarian by a certified translator.

Understanding the Minimum Share Capital Requirements

One of Bulgaria’s most attractive features is its incredibly low minimum share capital requirement for an OOD/EOOD. It is set at just 2 Bulgarian Leva (BGN), which is approximately 1 Euro. This minimal barrier to entry makes it exceptionally accessible for entrepreneurs with limited starting capital.

Finding a Registered Office Address in Bulgaria

Every Bulgarian company is legally required to have a registered office address within the country. This address will be listed in the Commercial Register and used for all official correspondence. Options include:

• Renting an Office Space: A traditional solution if you plan to have a physical presence.
• Virtual Office Service: Many service providers offer virtual office solutions, providing you with a registered address and mail forwarding services without the need for a physical office space. This is a cost-effective and popular option for foreign entrepreneurs.

Step 3: Secure Your Company Name and Open a Provisional Bank Account

With your documents ready, it’s time to name your company and set up the initial financial groundwork.

How to Check and Reserve Your Unique Company Name

Before you can register your company, you need to ensure your chosen company name is unique and available. You can check the availability through the Bulgarian Commercial Register (Registry Agency) online portal. While you cannot formally “reserve” a name for an extended period, the check helps prevent rejection during the registration process. It’s advisable to have a few alternative names ready, just in case.

Opening a Provisional Capital Account for Your Company

To deposit the minimum share capital, you will need to open a provisional bank account (also known as a capital deposit account) in a Bulgarian bank in the company’s name. The bank will require the company’s draft Articles of Association and your personal identification documents. Once the capital is deposited (BGN 2 for OOD/EOOD), the bank will issue a certificate confirming the deposit, which is a mandatory document for the Commercial Register application.

Step 4: Register with the Bulgarian Commercial Register (Registry Agency)

This is where your company officially comes into existence.

Navigating the Application Process: Forms and Declarations

The main authority for company registration in Bulgaria is the Commercial Register at the Registry Agency. The application involves submitting a set of forms (e.g., Form A4 for OOD/EOOD) along with all the prepared documents, including:

• Application Form A4.
• Articles of Association.
• Bank certificate for the deposited capital.
• Notarized specimen signature(s) of the manager(s).
• Declaration of Consent by the manager(s).
• Declaration of the true beneficial owner.
• Proof of payment of the state fee (currently around BGN 110 for online application, BGN 220 for paper submission).
• Notarized Power of Attorney (if applicable).

It is highly recommended to engage a local lawyer or registration agent to ensure all forms are correctly filled out and all documents are in proper order, avoiding delays.

What to Expect During the Registration Period

Once your application is submitted, the Commercial Register typically processes it within 1-3 business days. If there are any discrepancies or missing documents, the agency will issue a request for additional information or corrections. Once approved, your company will be officially registered, assigned a Unified Identification Code (UIC), and its details will be publicly accessible in the Commercial Register database.

Step 5: Fulfill Your Tax and Social Security Obligations

After successful registration, you need to ensure your company complies with Bulgarian tax and social security laws.

Obtaining Your Tax Identification Number (BULSTAT)

Upon registration with the Commercial Register, your company automatically receives a BULSTAT identification number. This is a unified identification code used for tax, social security, and statistical purposes. It’s your company’s main identification number for official interactions with state authorities.

When and How to Register for VAT in Bulgaria

VAT registration in Bulgaria can be either mandatory or voluntary:

• Mandatory Registration: Your company must register for VAT if its taxable turnover exceeds BGN 100,000 (approximately EUR 51,000) within any consecutive 12-month period.
• Voluntary Registration: Even if your turnover is below the threshold, you can opt for voluntary VAT registration. This might be beneficial if your clients are mainly VAT-registered businesses or if you plan to engage in international trade, as it allows you to reclaim VAT on your purchases.

VAT registration is done with the National Revenue Agency (NRA).

Understanding Social Security Contributions for Employers and Employees

If your company plans to hire employees in Bulgaria, you will have obligations related to social security contributions. Both employers and employees contribute to various funds, including pension, health, unemployment, and professional risk funds. The rates vary, and it’s essential to comply with these regulations from the first day of employment. An accountant can provide detailed guidance on payroll and social security obligations.

Step 6: Navigate Visa, Residency, and Work Permit Considerations (Crucial for Foreigners)

This step is particularly important for non-EU citizens looking to establish and operate their business in Bulgaria.

Exploring Visa D and Long-Stay Residency Options for Entrepreneurs

For non-EU citizens, the journey usually begins with obtaining a Visa D (Long-Stay Visa). This visa allows you to enter Bulgaria with the intent of applying for a long-term residence permit. Several grounds exist for obtaining a long-term residence permit as an entrepreneur:

• Company Registration: If you establish a company that employs at least 10 Bulgarian citizens for a minimum of 6 months, you can apply for residency.
• Investment: Significant investments in the Bulgarian economy can also qualify you for residency (e.g., investing in specific economic sectors, purchasing real estate above a certain value, or investing in state bonds).
• Trade Representative: Registering as a trade representative of a foreign company that has been operating for at least two years.

The process involves submitting an application and supporting documents to a Bulgarian embassy or consulate in your home country for Visa D, and then applying for a residence permit at the Ministry of Interior’s Migration Directorate once you arrive in Bulgaria.

Understanding Work Permit Requirements for Foreign Employees

If you, as a foreigner, intend to work in your newly established Bulgarian company (e.g., as a manager), and you are not an EU citizen, you will typically need a work permit in addition to your residency permit, unless your residence permit is specifically granted on the grounds of employment. Similarly, any non-EU foreign employees you wish to hire will require work permits. The process for obtaining a work permit is handled through the Bulgarian Employment Agency and usually requires demonstrating that no suitable Bulgarian or EU citizen is available for the position.

Step 7: Post-Registration Essentials for Long-Term Success

Registering your company is just the beginning. To ensure long-term success and compliance, several post-registration steps are vital.

Hiring Professional Accounting Services: A Smart Move

Bulgarian accounting and tax laws can be complex. Engaging a professional local accountant is not just a smart move; it’s often essential. An experienced accountant will help you with:

• Monthly bookkeeping and financial statements.
• Tax declarations (corporate tax, VAT, payroll taxes).
• Payroll management and social security contributions.
• Annual financial reporting and audits.
• Compliance with all Bulgarian financial regulations.

This will free up your time to focus on growing your business while ensuring you remain fully compliant.

Obtaining Necessary Licenses and Permits for Your Specific Business

Depending on the nature of your business activities, you may need specific licenses, permits, or registrations from various municipal or national authorities. For example, businesses in food services, tourism, finance, healthcare, or transportation require additional clearances. It’s crucial to research and obtain all necessary operational permits before commencing activities to avoid legal issues and penalties.

Understanding Bulgarian Labor Laws and Employment Regulations

If you plan to hire employees, a thorough understanding of Bulgarian labor laws is paramount. This includes drafting employment contracts, adhering to working hour regulations, managing leave entitlements, and understanding termination procedures. Bulgarian labor law is designed to protect employees, and non-compliance can lead to significant fines. Again, a local legal or HR consultant can be invaluable here.

Bonus Tips for a Smooth Start and Flourishing Business in Bulgaria

Beyond the formal steps, these tips can help you integrate and thrive in the Bulgarian business landscape:

Leveraging Local Expertise: Lawyers and Business Consultants

Do not underestimate the value of local expertise. From navigating bureaucratic procedures to understanding cultural nuances, a reliable team of lawyers, accountants, and business consultants fluent in both English and Bulgarian can be your greatest asset. They can save you time, money, and potential headaches.

Networking and Integrating into the Bulgarian Business Community

Building connections is key to success anywhere, and Bulgaria is no exception. Attend industry events, join chambers of commerce (e.g., American Chamber of Commerce in Bulgaria, British-Bulgarian Business Association), and utilize online platforms to connect with other entrepreneurs and professionals. Networking can open doors to partnerships, clients, and invaluable local insights.

Conclusion: Your Bulgarian Business Journey Starts Now – Seize the Opportunity!

Starting a company in Bulgaria as a foreigner is a straightforward and rewarding process, especially with the right guidance. From its attractive tax rates and strategic location to its skilled workforce and welcoming business environment, Bulgaria offers a fertile ground for entrepreneurial growth. By following these seven easy steps and leveraging local expertise, you can confidently embark on your Bulgarian business journey. The opportunities are vast, and your success story in the heart of Europe awaits!