How to Start a Business in Bulgaria as a foreigner (British): Guide to Registering and doing Business

As a British national who is interested in starting a business in Bulgaria, you’ll need to navigate a few steps to get registered, open a bank account, hire employees, and understand the legal and tax requirements.

Bulgaria offers a business-friendly environment, with relatively low taxes and streamlined procedures.

This guide will provide you with everything you need to know about registering and running a business in Bulgaria as a Brit, including residency, banking, tax rates, and employee regulations. **However I advice you speak to a local solicitor and business advisor for current state of the changes and be UpToDate about any changes.

Table of Contents

1. Why Choose Bulgaria for Business?
2. Legal Structure Options for Businesses in Bulgaria
3. Step-by-Step Guide to Registering a Business in Bulgaria
   • 3.1 Registering a Limited Liability Company (LLC)
   • 3.2 Other Forms of Business Registration
4. Opening a Business Bank Account in Bulgaria
5. Residency Requirements and Visas for British Nationals
6. Hiring Local Employees
7. Taxation in Bulgaria
8. Ongoing Obligations and Compliance
9. Conclusion

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1. Why Choose Bulgaria for Business?

Bulgaria offers numerous advantages for entrepreneurs:

• Low Corporate Tax Rate: The corporate tax rate is a flat 10%, one of the lowest in the European Union (EU).
• Low Personal Income Tax: Personal income tax is also a flat 10%, making it advantageous for business owners.
• Access to EU Markets: Bulgaria is a member of the EU, offering access to the large European market.
• Low Operational Costs: Office rent, employee salaries, and general living costs are lower than in many Western European countries.

Additionally, Bulgaria’s growing economy and strategic location make it an attractive place to do business for British nationals who want to establish a foothold in Europe.

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2. Legal Structure Options for Businesses in Bulgaria

Before registering a business in Bulgaria, it is important to understand the legal structures available. The most common business entity types for foreign nationals are:

• Limited Liability Company (LLC or OOD): The most common choice for small to medium-sized businesses.
• Sole Trader (ET): Best suited for freelancers or sole proprietorships.
• Joint Stock Company (JSC or AD): Generally used for larger companies that require significant capital.
• Branch or Representative Office: Ideal for foreign companies wanting to establish a presence in Bulgaria.

For the purposes of this guide, we will focus on the Limited Liability Company (LLC), as it is the most commonly used structure by foreign nationals.

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3. Step-by-Step Guide to Registering a Business in Bulgaria

3.1 Registering a Limited Liability Company (LLC)

Here is a detailed guide to registering an LLC in Bulgaria:

Step 1: Choose a Company Name

• The company name must be unique. You can check the availability of your desired name via the Bulgarian Commercial Register.
• The name must be in Cyrillic script, but you can also register the Latin equivalent.

Step 2: Prepare the Required Documents

You’ll need the following documents:

• Memorandum of Association (for single-owner companies) or Articles of Association (for multi-owner companies).
• Founding Minutes (detailing the creation of the company).
• Proof of Capital Deposit: The minimum capital required to start an LLC is BGN 2 (approximately €1). This amount must be deposited in a Bulgarian bank account.
• Declaration of Consent from the appointed managers.
• Proof of Legal Address in Bulgaria: You’ll need a Bulgarian address for registration, which can be your office or a virtual office.
• Copy of the Passport of the owner(s) and appointed manager(s).

Step 3: Deposit the Initial Capital

• You must open a temporary bank account in Bulgaria where you’ll deposit the initial share capital. This account is converted into a permanent business account after registration.

Step 4: Submit Documents to the Bulgarian Commercial Register

• All documents must be submitted electronically to the Bulgarian Commercial Register. You’ll need a qualified electronic signature to do this. Alternatively, you can hire a local legal firm to assist with submission.
• The registration process typically takes between 1-5 business days.

3.2 Other Forms of Business Registration

• Sole Trader: Easier to register, but the owner is personally liable for all debts. The registration process is similar to that of an LLC but requires fewer documents.
• Joint Stock Company: This structure is more complex and requires a minimum share capital of BGN 50,000 (€25,000).

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4. Opening a Business Bank Account in Bulgaria

Once your business is registered, you’ll need a permanent business bank account to manage operations. Popular Bulgarian banks for business accounts include:

• UniCredit Bulbank
• DSK Bank
• Raiffeisenbank
• Postbank

Steps to Open a Bank Account:

1. Visit the bank in person with:
   • Business registration certificate.
   • Passport and proof of address.
   • Business stamp (optional but common in Bulgaria).
2. Choose an account type: Many banks offer multi-currency accounts, which can be beneficial for businesses trading internationally.
3. Provide proof of the initial deposit: The amount of BGN 2 (or more) will be transferred from the temporary capital deposit account to your business account.

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5. Residency Requirements and Visas for British Nationals

Since the UK’s departure from the EU, British nationals no longer enjoy the automatic right to reside and work in Bulgaria. However, you can still live and run a business in Bulgaria by applying for the appropriate residence permits.

Short-Term Residence (up to 90 Days)

British citizens can stay in Bulgaria without a visa for up to 90 days within a 180-day period.

Long-Term Residence (for More Than 90 Days)

To stay longer, you will need to apply for a D Visa (long-term residence visa), which can lead to permanent residency. Here are the main categories that apply:

• Business Visa: If you establish a company in Bulgaria, you can apply for a residence permit based on your business activities.
• Investment Visa: If you invest a substantial amount in Bulgaria (e.g., through real estate or government bonds), you can apply for a visa.

To apply, you will need to show proof of your business activities, including your Bulgarian business registration and bank statements.

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6. Hiring Local Employees

When running a business in Bulgaria, you may want to hire local employees. Bulgaria has a skilled workforce, particularly in fields like IT, manufacturing, and tourism. Here’s what you need to know:

6.1 Employment Contracts

Bulgaria requires all employers to provide a written employment contract, which should include:

• Job title and duties.
• Salary and payment terms.
• Work hours and vacation days (minimum of 20 days annual leave).
• Notice periods and termination conditions.

6.2 Registering as an Employer

Before hiring employees, you’ll need to register your business with the National Revenue Agency (NRA) and the National Social Security Institute (NSSI) to ensure proper payment of social security and health insurance.

6.3 Social Security Contributions

As an employer, you will need to pay social security contributions for your employees. The rates are as follows:

• Employer Contributions: Approximately 18-19% of gross salary.
• Employee Contributions: Approximately 13% of gross salary.

These contributions cover health insurance, pension, and unemployment benefits.

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7. Taxation in Bulgaria

Bulgaria’s tax regime is one of the most competitive in the EU, making it attractive for foreign investors.

7.1 Corporate Tax

The corporate tax rate is 10%, applied on all profits earned by the company.

7.2 VAT (Value Added Tax)

The standard VAT rate in Bulgaria is 20%. Certain goods and services, such as hotel accommodation, may have a reduced rate of 9%. You must register for VAT if your annual turnover exceeds BGN 50,000.

7.3 Personal Income Tax

If you reside in Bulgaria for more than 183 days in a calendar year, you’ll be considered a tax resident and will need to pay 10% personal income tax on any worldwide income.

7.4 Dividends and Withholding Tax

Dividends distributed to individuals (including yourself as a business owner) are subject to a 5% withholding tax.

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8. Ongoing Obligations and Compliance

Once your business is up and running, you will need to adhere to the following obligations:

• Annual Financial Reporting: All companies must submit annual financial statements to the Commercial Register.
• Tax Filing: Corporate tax returns must be filed by March 31st of the following year.
• VAT Filing: If VAT-registered, you’ll need to file monthly or quarterly VAT returns.
• Social Security Contributions: Employee social security and health insurance contributions must be submitted monthly.

Failure to comply with these obligations can result in fines and penalties.

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9. Conclusion

Starting a business in Bulgaria as a British national is a relatively straightforward process, thanks to the country’s business-friendly policies and low taxes. With proper planning, including registering your business, opening a bank account, understanding residency requirements, and complying with local employment and tax laws, you can successfully establish and run a profitable business in Bulgaria.

In summary, Bulgaria offers British nationals an excellent environment for business growth, with access to the EU market