How to start a business in Bulgaria
Bulgaria is a member of the European Union, NATO, and the Council of Europe; it is a founding state of the Organization for Security and Co-operation in Europe (OSCE) and has taken a seat at the UN Security Council three times. It is also notable for its biodiversity, its achievements in sports and science, and its historical influence on Slavic cultures through its Medieval literary schools and the Cyrillic script.
Cristian: Yanislav from SOFIA OFFICES is going to explain how to open a business in Bulgaria. Not everybody knows but Bulgaria has a 10% tax on income, which makes it a real bargain if you want to start a business with low taxes. So Yanislav, what are the main advantages if you want to open a business in Bulgaria?
Yanislav: The tax climate is definitely an advantage. The tax on profit is 10% flat, the dividend tax is 5% and the VAT (when applicable) is 20%. Of course Bulgaria is part of the EU which favors certain employment, residence and trade matters, but the main advantage is the fast developing business atmosphere due to the vast amount of foreign capitals and businesses moved/created in the country in the past 10 years.
Cristian: In a previous interview I found out that is very easy to open a business in Estonia. I wonder how difficult is to open a business in Bulgaria?
Yanislav: Depending on the type of the business. If the activity of the company is not related to any licenses or permits, the incorporation procedure itself takes about 5 days.
Cristian: Do you need to travel to Bulgaria to open a business or can it be done remotely?
Yanislav: A company can be incorporated remotely but this takes some extra time sometimes because of the remote opening of an initial share capital company bank account.
Cristian: Do you need to have an office in Bulgaria? And what about opening a bank account?
Yanislav: It is mandatory by the law for a company to have a registered address. This does not necessarily means that it must be a real office space. For instance we offer virtual office services in this regards which by now is the best solution for new businesses or as first step for foreign companies moving to Bulgaria before settling their own office, employees, equipment etc. Regarding the bank accounts – at the moment this is a bit of a peculiar matter at the moment. Banks are getting more and more “distrustful” and strict and you have to have a good reference from another bank or from the lawyer taking care of the company.
Cristian: Can you have access to the bank accounts online? In Romania for example you have to come in person each 2 years and update your personal details.
Yanislav: All of the banks in Bulgaria offer internet banking. Not all of the banks require personal presence after the company current accounts are set in order to update details. Even if such actions are required they can be settled if the respective attorney has a good cooperation with the respective bank. For instance one of the main priorities for us at the moment is the bank collaboration, because after all this is probably the most important part of the business structure.
Cristian: And what types of businesses are most suitable for such an arrangement?
Yanislav: All kinds of businesses can be suitable. Difficulties have companies that deal with crypto currencies, online gambling, binary options etc.
Cristian: What are the legal requirements when running a business in Bulgaria? How often do you need to fill papers, pay taxes and so on?
Yanislav: Mainly the incorporator must not be an insolvent person or currently not in a process of insolvency. As it concerns the second part of the question these are more accountancy relevant matters, but generally every company must prepare its annual financial statement at the end of the calendar year, pay its taxes and submit financial report for the respective year. VAT registered companies file monthly reports as well.
Cristian: Are there complications that can appear? How can you make sure you have your papers in order if you are not in Bulgaria? Anything that you could read in English?
Yanislav: This is up to the communication and collaboration between the business owner and the accountancy and law firm. In this regards is better the accountancy and the law firm supporting the respective company to work with English as well because all official government/administrative documents (and correspondence) are in Bulgarian.
Cristian: Can you sell to Europe from Bulgaria? Do you get a VAT ID?
Yanislav: The company incorporated in Bulgaria is a EU legal entity so there are no obstacles to get VAT and trade in the EU.
Cristian: So what would be the minimum income you should get to be able to pay all the costs?
Yanislav: The minimum profit the company must have is to cover its maintenance costs. Address registration (virtual office, rented space, etc.) and accountancy costs because even with zero balance at the end of the year a financial report must still be submitted.
Cristian: Is there a way to put the company on a temporary hold and re-use it later?
Yanislav: Company cannot be put “on hold”. It can cease activity and file zero balances for some time and then restart the activity.
Cristian: When can you take dividends and what is the procedure? Where do you pay the taxes?
Yanislav: Dividends can be obtained by the shareholders at the end of the financial year. They take a decision for distribution of the profit (or part of it) and the company pays 5% to the government upon this distribution.
Cristian: Can you have employees abroad? And where are the taxes paid?
Yanislav: Yes, a company in Bulgaria can have employees abroad but this is a very broad question. There are many options and respective taxes and expenses depending on the particular case (structure of the company, position on which the relevant employee is hired, jurisdictions of the sending and receiving country, nationality of the employee, education degree, etc.)
Cristian: Can you purchase a ready made company? Are there any benefits?
Yanislav: At the moment is way easier to incorporate a new company than to purchase a readymade one. There are no benefits and also is more expensive. Purchasing of a readymade company happens only when one entity buys a working business for some purpose.
Cristian: What about the postal correspondence?
Yanislav: We provide such service as part of our virtual office services.
Cristian: Any advices when doing business in Bulgaria?
Yanislav: Find a good law firm and advise with them!