Set up a company in Bulgaria

Strategic position, cost of living and favorable tax regime make the Balkan country one of the favorite destinations for entrepreneurs from all over Europe.
For several years now, many fellow Italian and European entrepreneurs have been heading east, towards Bulgaria, a country that until recently had never been considered an attractive destination:
poor in resources and know-how, cold, not particularly beautiful and yet inhospitable, no one dreamed of moving their investments to a place that in some ways (and perhaps rightly) was also considered dangerous.
However, things have changed.
Especially in the last fifteen years, the transformations brought about by the Internet and by growing globalization – and by international politics – have led to giant strides in many countries that until then had fallen behind, victims above all of political and government management to say the least questionable.
In the end, the economic boom also arrived in Eastern Europe: do we want to take advantage of it?
Why move from Italy to Bulgaria: some data and some numbers.
If the number of entrepreneurs who decide to take the plunge is so large (we are talking about more than 9,000 local businesses and 60,000 new jobs created by Italian companies), there must be a reason. But what are the reasons that push and support this migration?
Let’s see them together schematically and then let’s analyze the pros and cons of doing business in Bulgaria.
Bulgaria enjoys an excellent geographical position, strategic for trade between Europe and the Middle East.
Ratio between the Bulgarian currency (Lev) and the fixed euro, and between debt and GDP among the lowest in Europe.
Very competitive cost of labor, among the lowest on the continent.
Very favorable taxation, the flax tax is 10%, and in some areas with a high unemployment rate it even reaches 0%.
Investment incentives by both the Government and the European Union for the development of rural areas (a large part of the territory) and the competitiveness of the country.
Italy and Bulgaria: a recent but very fruitful history.
If we analyze the profits, Italy represents the second foreign entrepreneurial presence in the country, a commercial partner that is worth 4 billion euros (almost 10% of Bulgarian GDP) and more than 60 thousand new jobs created, with a presence which stands at just over 9 thousand companies with Italian participation in the area.
These numbers should be exceptional enough in themselves, if we consider that the Balkan country does not reach 7 million inhabitants, but what convinces us is above all the economic and social growth of Bulgaria, with a GDP that is proceeding quickly and is the fifth best of ‘Europe for growth in recent years. Industrial production grew by 5.8% in the last year and internal demand by 1.8%.
From Italy to Bulgaria, with no return.
Italian entrepreneurs, crushed by the burden of bureaucracy and taxes, look beyond national borders: Bulgaria is one of the most popular destinations for opening a new company, but not only for economic reasons.
In fact, Bulgaria is very close to Italy and well connected by air, even with low cost airlines, and has a cost of living among the lowest in Europe which is advantageously reflected in many aspects of our business, from the cost of the workforce to the real estate sector. Suffice it to say that the average salary in the capital is around € 400, while in other cities it also drops to € 200. With € 10 we can have dinner in a good restaurant in the capital, with € 100 a month we can rent an office in the center.
Having joined the European Community, Bulgaria enjoys political stability and in this sense offers guarantees to investors and foreign citizens regarding the free movement of goods and people, no residence permits or entry visas are needed, but at the time the failure to adopt the single European currency allows living costs to remain low and the Bulgarian government to have ample room for fiscal policy. If we take a look at taxes, in fact, we see that the rate is fixed at 10% for companies, for VAT numbers, for the income of individuals and legal entities. In some areas, then, it drops to zero to favor its development.
Even the bureaucratic procedures are very quick: opening a current account or taking up residence are immediate operations, but we will see later times, methods and costs to open a company in Bulgaria.
The only obstacle to point out is the language problem: Bulgarian is a language of Cyrillic origin, so it has a different alphabet than ours, so we will need a trusted consultant to translate the documents.
Types of companies in Bulgaria.
Bulgarian law regulates the different types of companies in a way that does not differ from our legal system. Let’s take a look at the main ones:
OOD, comparable to our Srl, is certainly the most chosen by Italian entrepreneurs, and can be made up of one or more partners, natural and / or legal persons. The minimum share capital is € 1, and the capital can be held by a foreign person even in full. To open an OOD it is necessary to submit an application (attention, written in Bulgarian) at the Registration Agency, or the equivalent of our Revenue Agency: within a maximum of 15 working days we will have the outcome of the practice, and at that point we will have to present the articles of association and indicate the corporate purpose of the company’s activity, in addition to the documents of the shareholders that make up the company, finally choose the name of the company, indicate the registered office in Bulgaria and open a current account at a Bulgarian bank (the essentially the same operations that we are required to do in our country).
AD, a joint-stock company, comparable to our Spa, can prove to be an excellent choice because it has no legal restrictions regarding the transfer of shares and its shareholders are not required to carry out commercial activities. The minimum share capital for setting up a CEO is 26,000 euros: 25% must be paid immediately, the rest within a maximum of two years. Let’s take a look at the corporate bodies required by law: the shareholders’ meeting, the board of directors consisting of at least 3 members or the board of statutory auditors and the Board of Directors. As for the time of establishment, on average they are around 15 working days.
TRO (Trade Representative Office) is a commercial branch that allows you to carry out promotional activities on behalf of a foreign company, but having no legal entity of its own, commercial activity is not allowed.
EOOD, a limited liability company
ET, sole owner.
SD, general partnership
KD, limited partnership
How to open a business in Bulgaria.
To open a company in Bulgarian territory, foreign investors enjoy a simplified registration process that we can complete directly without leaving Italy, just issue a power of attorney to a local consultant and provide all the required documents.
First we will have to register our new company and thus obtain a tax code, choose the name of the company following the same local criteria, and we will be required to open a special guarantee account at any Bulgarian bank. Obviously we will have to choose an address for the registered office, but if we operate remotely and have no intention of opening a physical office we will find an ad hoc space for a negligible annual amount.
Tax regime in Bulgaria.
The Bulgarian tax regime is certainly more favorable to entrepreneurs than the Italian one: the 10% tax on corporate profits attracts many investors from all over Europe. In some parts of the Balkan country the tax can be as low as 0% (yes, zero percent), for example in those rural areas where the unemployment rate is very high.
Entrepreneurs who have already taken the plunge report another consideration that should not be underestimated, namely that the Bulgarian tax is very correct and seeks to favor the inclusion and life of new companies, obviously unless attempts are made to tax evasion or scams. .
The 10% rate applies to all local companies, regardless of the origin of the shareholders, but we must be careful about dividends (tax at 5%) if we are not resident in Bulgarian territory and check what the legislation of our country provides on the matter. .
Final thoughts on opening a company in Bulgaria.
As we have seen, in general opening a new business in Bulgaria can prove to be very advantageous for Italian entrepreneurs: the strategic position halfway between Europe and the Middle East, the proximity and the excellent network of connections with our country, the cost of the extremely reduced life span and the favorable tax regime make Bulgaria a certainly attractive destination.
However, if you think it’s too expensive to set up your new business in Bulgaria, you can open a fully online UK company in London through our ltd24ore.com service.
Here are the advantages of opening a company in London with ltd24ore:

• online constitution without a notary;
• reduced cost of opening;
• online accounting and tax management service;
• preparation of the budget and the tax return included;
• free access to accounting software based on artificial intelligence;
• assistance via chat, e-mail, telephone;
• consultancy with tax experts.