Setting Up a Company in Bulgaria
Do you need a Bulgarian company lawyer?
DO YOU NEED A COMPANY OR WOULD LIKE TO START A NEW BUSINESS ?
Our clients asked us how they could do a company formation in Bulgaria. The procedure of company registration in Bulgaria is quite formal and requires specific documents to be prepared by a qualified company lawyer in Bulgaria.
One of the most interesting questions about the company start-up in Bulgaria is regarding the company registration itself.
Some of the business activities require to set up a specific company for management the whole process of developing of projects or productions.
As company lawyers in Bulgaria would like to inform our clients that this is not a simple job. This company does not just produce goods or provide services. Instead, it owns shares in another company.
Regulation for holding companies is essentially matching the regulation for any other company in Bulgaria; however, in certain cases they may benefit from preferences in the tax system.
Our legal team of company & corporate lawyers in Bulgaria can help you in establishing a holding company and the timely start-up of your business ventures.
There are several options that can be chosen as the most common of them are:
- “Single person Limited Liability Company ” (EOOD) – an entity with one single owner with limited responsibility
- “Private Limited Liability Company” (OOD)– owned by two or more partners with limited responsibility
- “Sole Owner” (ET) – a simplified entity form which is appropriate for very small ventures (full owner’s responsibility)
- “Freelance” – a personalized individual registration
- “Public Limited Company” (AD) – joint stock company – a commercial company with share capital owned by its members
- “Branch in Bulgaria” – Foreign legal entities registered abroad can register a branch in Bulgaria
Legal procedure of setting up a Bulgarian company
The process of establishing a limited liability company is fairly easy for locals who are familiar with the procedures. The application can be done via Internet however the web platform is only available in Bulgarian language the person applying would need to have a digital signature certificate.
In addition, the applicant needs the proper set of documents signed, a bank account in a Bulgarian bank with the registered capital deposited and finally – to pay the government fee.
The setting up a company in Bulgaria can be explained as an easy process for registration of public limited company or a private limited company.
Different requirements apply for different company types, such as the minimum amount of capital, the number of founding members, etc.
For example, the holding companies in Bulgaria are usually established by investors for the purpose of buying, managing and selling commercial interest, bonds and patents in Bulgaria, purchasing and managing shares of foreign legal entities, as well as providing financing for the companies it manages.
Bulgarian holding companies are mandated by Commercial Law in Bulgaria to invest at least 25% of their capital stock in a subsidiary. A holding company in Bulgaria has to own at least 25% of the capital of the subsidiary and has to represent 50% of the management board of the subsidiary as a minimum.
Special provisions for holding companies in Bulgaria
Bulgarian holding companies are not allowed to acquire or invest in a non-domestic legal entity in Bulgaria. Although holding companies in Bulgaria are allowed to acquire shares in real property companies, holding companies are not allowed to purchase real property which will not be used directly by that holding company.
Certain measures for financing other companies refer to holding companies. This means that holding companies are allowed to finance companies which are under their control, but the loan amount in total may not exceed specific values.
Some holding companies in Bulgaria are taxed in the same manner as other local companies. The corporate tax rate in Bulgaria is 10%, and all dividends payable to non-residents are subject to a 5% withholding tax, anything applied under a different provision notwithstanding.
Bulgaria has signed treaties for avoidance of double taxation with more than 68 countries in order to avoid double taxation.
Bulgaria is a reliable country to establish a private companies, due to the special regime for dividend payments. Dividends received by a holding company in Bulgaria may be subject to tax exemption, if the company which makes the payment (as an example – the owned subsidiary) is a company established in a country member of EU or EEA.
This withholding tax exemption on dividends applies for income from dividend received by a Bulgarian company from another legal entity incorporated in the country as well.
IMPORTANT : nder Bulgarian law there are no restrictions as to the size of the foreign participation in the capital of a Bulgarian company and, therefore, up to 100% of the registered capital of a local company can be held by foreign persons.
Our Bulgarian team of commercial & company lawyers provide you with the information necessary bout holding companies in Bulgaria and the particulars of taxation in the country.
If you would like to know more about other types of setting up legal companies in Bulgaria, or if you would like to understand more about the process of establishing a company in Bulgaria, please do not hesitate to contact us on + 359 897 90 43 91 or send us an e-mail to info@lawyer-bulgaria.bg.
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