Types of business in Bulgaria

The types of business organizations, most often used in Bulgaria are Limited Liability Company (LTD/LLC), Joint Stock Company (JSC), branch and trade representation.

  1. Limited Liability Company (LLC/LTD)

It is the business type most popular among investors and entrepreneurs because of the minimum capital requirements, simplified structure and management. LLC can be established by one or more persons – individuals and/or legal entities. Shareholders in LLC may be Bulgarian and/or foreign individuals and/or legal entities.

The minimum share capital of Bulgarian LTD is 2 BGN (two Bulgarian Leva), which is equal to approximately 1 EUR (1 Euro).

The company shares may be transferred by a notarized contract for transfer of shares. Transfer of shares is possible between shareholders or to a third party.

The company is governed by a Manager. This position may be occupied by one or more persons. Only a natural person may be appointed as a manager of LTD. The manager can be a shareholder or a third person and there are no restrictions for his/her nationality.

  1. Joint Stock Company (JSC)

JSC is another widely used type of business organization and startup. The most intriguing for investors are the lack of legal restrictions on the transfer of shares and the lack of personal commitment of shareholders in the company activity. This type of company could be founded by one or more Bulgarian and/or foreign individuals and/or legal entities.

The minimum registered capital for registration and operation of JSC is 50 000 BGN (fifty thousand Bulgarian Leva), which is equal to approximately 26 000 EUR (twenty six thousand Euro). For certain types of activities, such as banking or insurance activities, a higher minimum capital is required. At the moment of company formation at least 25 % of the value of each share must be paid. This means that the minimum for starting the company registration is 12 500 BGN, as the remainder of total capital (37 500 BGN) shall be paid within two years.

The company is governed by Board of Directors (in one-tier system) or by Supervisory Board and Management Board (in two-tier system). It is required at least 3 persons to participate in the governing body.

Shares of a joint stock company are tradable instruments. The shares may be:

  • registered shares or bearer shares;
  • common shares or preferred shares;
  • stock shares or dematerialized shares;

The transfer of registered shares must be recorded in the book of registered shareholders of JSC. In most cases, the acquisitions of shares by new shareholders doesn’t meet with special difficulties.

  1. Branch

Opening a branch is one of the ways for the realization of business operations of a foreign company in Bulgaria. Foreign companies registered as traders in the country where they are established are able to organize their business in Bulgaria by registration of branch of a foreign trader.

Branch of a foreign trader is being created with registration in the Commercial Register. After its formation, according to Bulgarian legislation, the branch of a foreign company is not an independent legal entity but it has a certain degree of independence from the parent company. There is a requirement for the branch to have independent accounting and to draw up separate balance sheet. Assets and liabilities of the branch are considered as assets and liabilities of the parent company.

The branch is governed by a Manager. Regarding the taxes, as place of business (a permanent establishment) of the branch of foreign company shall be considered Bulgaria. For tax purposes the foreign parent company will be liable to corporate tax on profits from the activity of the branch in Bulgaria.

  1. Trade representative office (TRO)

A foreign person or legal entity may register a trade representative in Bulgaria, provided that it is entitled to conduct business under the national law of its home country. Trade representative office (commercial representation) is being registered in the Bulgarian Chamber of Commerce and Industry.

TRO is not a separate legal entity and cannot carry out business activity. Thus, commercial representation aims to carry out activities such as promotions, exhibitions, demonstrations, training or advertising of products and services. Therefore, in general TRO does not generate any income and it is not a subject to corporate tax in Bulgaria.

If TRO is involved in business activities in the country it can be classified as “a permanent establishment” for the purposes of taxation and the foreign parent company will be liable to corporate tax on profits in Bulgaria made as a result of business activity of the TRO.

Acquiring BG citizenship by investment

 I. Under Art. 12 of Bulgarian Citizenship Act

The physical person :

  1. Must be an adult;
  2. Before no less than 5 years has been given permit for permanent or long-term residence in Bulgaria;
  3. Has not been convicted of a crime by Bulgarian court or is not prosecuted for such a crime, unless rehabilitated;
  4. Has an income or occupation that enables him to live in Bulgaria;
  5. Is skillful at Bulgarian language;

Permit for long-term residence – requirements (LFRB art. 24, para 1, items 19, 20):

  • Visa D;
  • Investment of no less than 600 000 BGN or  investment in economically disadvantaged regions of no less than 250 000 BGN plus opened at least 5 workplaces for Bulgarian citizens;

Permit for permanent residence – requirements (LFRB art. 25, para 1, items 16, 17):

  • Investment of no less than 500 000 BGN plus opened at least 10 workplaces for Bulgarian citizens;

Or

  • Acquired permit for long-term residence and keeping the investment over 5 years;

II. Under Art. 12a of Bulgarian Citizenship Act

Permit for permanent residence – requirements (LFRB art. 25, para 1, items 6, 7, 8, 13):

  • Investment of over 1 million BGN or  increase of the investment with this amount through the acquisition of:
  1. shares in Bulgarian commercial companies, traded on a regulated Bulgarian market;
  2. shares and treasury bonds and derivative instruments issued by the State or by municipalities, with a residual maturity not less than 6 months;
  3. ownership rights over an isolated part of the property of a Bulgarian commercial company with more than 50 percent state or municipal participation in the capital under the Act of Privatization and Post- privatization Control;
  4. shares or stocks owned by the state or municipalities in a Bulgarian commercial company in compliance with the Act of Privatization and Post- privatization Control;
  5. Bulgarian intellectual property – objects of copyright and related to it rights, patent-protected inventions, utility models, trademarks, service marks and industrial design;
  6. rights under concession contracts on the territory of the Republic of Bulgaria;

or

  • Deposit of 1 million BGN in a licensed credit institution in Bulgaria under fiduciary management for a period not less than five years;

or

  • Investment in the capital of Bulgarian company which shares are not traded on a regulated market of no less than 6 million BGN;

or

  • Performing activities and certification under the Investment Promotion Act – implementing and/or maintaining an investment which has received a certificate for class А, class B, or priority investment project;

The physical person :

  1. Must be an adult;
  2. Before no less than 5 years has been given permit for permanent or long-term residence in Bulgaria;
  3. Has not been convicted of a crime by Bulgarian court or is not prosecuted for such a crime, unless rehabilitated;
  4. Has an income or occupation that enables him to live in Bulgaria;

 III. Under Art. 14a of Bulgarian Citizenship Act

The physical person :

  1. Must be an adult;
  2. Has not been convicted of a crime by Bulgarian court or is not prosecuted for such a crime, unless rehabilitated;

A) Before no less than 1 year has been given permit for permanent residence in Bulgaria under LFRB art. 25, para 1, items 6 or 7 and has increased the investment under the same conditions to 2 million BGN or  has invested in the capital of Bulgarian company no less than 1 million BGN for implemented priority investment project;

or

B) Before no less than 1 year has been given permit for permanent residence in Bulgaria for performing activities and certification under the Investment Promotion Act – implementing and/or maintaining an investment which has received a certificate for class А, class B, or priority investment project. During this year the investments performed and put into exploitation are maintained above the minimum score for certificate for class А;

Permit for permanent residence – requirements (LFRB art. 25, para 1, items 6, 7):

  • Investment of over 1 million BGN or  increase of the investment with this amount through the acquisition of:
  1. a) shares in Bulgarian commercial companies, traded on a regulated Bulgarian market;
  2. b) shares and treasury bonds and derivative instruments issued by the State or by municipalities, with a residual maturity not less than 6 months;
  3. c) ownership rights over an isolated part of the property of a Bulgarian commercial company with more than 50 percent state or municipal participation in the capital under the Act of Privatization and Post- privatization Control;
  4. d) shares or stocks owned by the state or municipalities in a Bulgarian commercial company in compliance with the Act of Privatization and Post- privatization Control;
  5. e) Bulgarian intellectual property – objects of copyright and related to it rights, patent-protected inventions, utility models, trademarks, service marks and industrial design;
  6. f) rights under concession contracts on the territory of the Republic of Bulgaria;

or

  • Deposit of 1 million BGN in a licensed credit institution in Bulgaria under fiduciary management for a period not less than five years;

If you have any questions regarding the acquiring of Bulgarian citizenship, do not hesitate to contact us.

What you should know about business name reservation in the commercial register?

  Business name (known as a firm) is the name under which the trader carries his occupation and shall be signed. It must correspond to the truth, not be misleading and does not undermine public order and morality. Every firm has content prescribed by the law which may include indication of the sphere of activity, the persons involved and freely chosen supplement. The trader is obliged to write firm’s name in Bulgarian, as he could additionally inscribe it in a foreign language.

  The trader has an exclusive right over the firm. It can only be used by the trader who has made the registration. It can’t be identical or similar to a trade mark or earlier registered company. The firm can be changed upon request of the trader who has made the registration.

  Firm’s name reservation shall have effect for six months and prevents another trader to be entered in the commercial register under the same firm. The reserved firm cannot be estranged and transferred.

  Everyone can reserve a firm before submitting the application for registration but the trader must be entered in the commercial register within six months.

  Required documents :

  • Application for firm’s reservation;
  • A document certifying the representative authority of the applicant (when the application is submitted by a representative of the person concerned);
  • A document for paid state fee;

  You can check whether the chosen name is unique and does not repeat another already registered on the website of the Commercial Register – www.brra.bg. Using the English version, you should select section “References”, then “Rights over company”. In the field “Business name” you are typing the name of the company you wish to register. If an inscription in red “No results found” appears, this means that probably the name is available and can be used.

  To be completely sure that the name is free, you need to check also Bulstat Register – http://bulstat.registryagency.bg/. Since the access to it is limited and requires payment, Global Consult Europe can perform this check for you.