Bulgarian incorporation – a corporation with a mixed character and registration

Bulgarian incorporation are specific joint ventures registered in the form of commercial companies in the country. For the purpose of business interests and investments, joint ventures can be acquired and merged. Also they can be made as large groupings of companies. Particularly in the form of holding companies or consortia. In fact, the business environment in Bulgaria is very appropriate because of the low corporate and dividend tax. The registration fees are relatively low as well as taxation. The corporate tax has some of the lowest rates in Europe. The legal forms for setting up a company are different. The registration of a corporation with a mixed character has its peculiarities.

We will present you two good opportunities for foreign business development in the country:

• the creation of a commercial representation and
• the establishment of a branch of a company.

Foreign joint ventures with branch or representation in Bulgaria

The question of these two options is essentially the following: What is the status of the natural or legal person with foreign citizenship in the country? If a mixed-activity company is validly registered in the country of its operations, it can successfully open a branch or representation in Bulgaria. The trade representation must be registered in the Chamber of Commerce. Representation is not a legal entity. It does not operate in the country.  It only makes promotions, training, exhibitions or so here. It is not subject to taxation because it has no earnings. But when the representation of a firm takes part in business activities in the country, it is treated as a subsidiary company of the parent company abroad. Thus Bulgarian incorporation of this type is subject to corporate tax for its profits in Bulgaria.

Bulgarian incorporation wishing to carry out business activities in the country, in the form of a company branch, are registered in the Commercial Register. The registration is done in the order specified in the Commercial Law. Payment of a fee should be done and submission of the necessary documentation. The corporate branch of a foreign firm is not an independent legal entity. But it is a subsidiary with some independence from the parent company. The company’s accounting department has separate business books and a balance sheet from the parent company. But the management structure is the same, like the other capital companies registered in Bulgaria. Management is entrusted to a manager. Taxes of the company branch are taxed under Bulgarian laws. The foreign company pays corporate tax on their profits in the country!

Bulgarian incorporation has many faces. The opportunities for business development in the country are many. Both for foreign investors and Bulgarians. Register your business today to win tomorrow in Bulgaria, but do not forget to do it professionally!

What is necessary to know for Bulgarian company registration

Bulgarian company registration –is it good option or a new problem? A local guy hoping for a breakthrough. Or a foreigner trying to seize the opportunity in the heart of the Balkans. No matter who you are if you know the rules how to start а business. There are certain steps that cannot be avoided or cheated if your goal is to achieve Bulgarian company registration. The main or the ultimate goal probably outreaches the basics of very existence. But it is impossible to succeed anyway before learn the details of the legal frame.

A vital step is choosing the proper type of the firm. It could be:

• а sole proprietorship,
• а limited liability company or
• а joint-stock corporation

What is your kind largely depends on the funds you start with. The initial capital and the goals that are persuaded by the newfound entity are substantial. Any enterprise has to go through the phase of Bulgarian company registration so to be perceived as a Bulgarian company by the law. Law provides that firms have to be constituted as legal entities separately from its founders.

You must choose the name the new company.

If you are not sure that your alias is free for use, you can check it in the database. It is definitely not a hard thing to try it. You also need to be clear about the location of the office and the location of production zone. Setting all the paperwork to comply with the requirements of the state’s agencies – it is a tricky business too. We wouldn’t recommend to explore it independently if you are not aware what to do. Such experiment could turn into a huge waste of time. If you want to escape all the headaches of Bulgarian companies registration you could turn to us at www.BulgarianLaw.co. We are completely competent to guide you through the process.  Or at least to give you the right advice what to do.

Bulgarian Company Incorporation

Bulgarian company incorporation is for every one. Anyone can start a private company in Bulgaria. There is no difference whether the investor is a natural or a legal person. They both can start a company in Bulgaria.

The taxation of a company owned by a foreign individual is the same as that of a Bulgarian citizen. The Bulgarian tax system is very beneficial to foreign investors. Furthermore Corporate tax rate is only 10%. This is the lowest within the EU. The annual tax profit is the tax base for the tax that the company owes. The company has the right to receive the profits after taxation. Revenue is not considered in determining the profits subject to taxation.

How does a Bulgarian company incorporation work?

The procedure is fast and simple. This is because of the Public Register. The procedure does not go through court. It goes only to the Registry Agency. It is not needed to provide all documents at every stage in order to prove the circumstances of the company. The law forbids the same authorities from demanding this. Moreover everyone can refer to the Registry Agency at any time online. To check who are the owners and managers.

The investor opens a bank account and pays the capital. The capital can be BGN 2. Therefore law allows you to register a limited liability company with a capital of only BGN 2.

Required is the conclusion of the articles of incorporation and the appointment of managers. A bank account is then opened and the capital is paid.

The process requires the deposit of notary certified foundation deeds and bank certificate. The final step is the submission of all papers.

With a law firm submitting the documents and incorporation can be done from a distance. Thus saving time and costs.

Changes on the horizon for Bulgarian company registration

Bulgarian company registration

The only permanent thing is change, they say. A rule strong like a century old tree today but can be completely out of fashion tomorrow. The frame of Bulgarian company registration for the most part reminds of still water. However as we know there are bubbles and circles here and there. Some changes in legislation emerge on the horizon.  These concern the formation of a business entity. And this is not a rumor but a word from an official government source.

The changes will not concern the very foundation of Bulgarian company registration. Furthermore they will not alter the nature of the basic types of legal entities. Future plans to modify the law are targeted against some forms of abuse of VAT registration. Recent revision on the seaside resorts indicated violations of the law. These were attempts of traders to keep their profit in the dark to avoid submission to the tax agency. Not that VAT registration is some terrible event but in many cases, for small-scale businesses, it’s more profitable to go on without it.

Anyway, VAT registration is compulsory for every firm or individual gaining from independent economic activity who has an annual turnover above 50 thousand leva (50 000 BGN). This is calculated in the span of the last 12 months. And some businessmen on the verge of that threshold try to invent ways to escape such mandatory Bulgarian company registration. It is not clear what will be the nature of forthcoming changes in the law. However it is unlikely to expect some real shakedown. What we will probably see are just simple alterations.

In any case at BulgarianLaw.co, we always advise our clients to stick strictly to the rules of legislation. And we guarantee that our team is up to date of every alteration of the rules anytime.

It’s better to set up a company in Bulgaria than working for tips

Both options mentioned in the headline of this article are valid when it comes to gain some extra money. A contractor, a freelancer or just a person in need of additional income – you are not banned from pushing forward as an individual but for numerous reasons, it’s preferable to set up a company in Bulgaria.

Certain activities oblige the person or the group running it to register some form of business entity. Anyway, the Bulgarian legislation allows some professions and crafts to be practiced more freely and outside of employment in someone else`s company. This means that it is not mandatory to create a firm. Farmers and stock breeders, craftsmen and artists, journalists and writers, photographers and cameramen, translators and teachers, lawyers and notaries, accountants and financial consultants, real estate agents, and inventors – all these occupations do not require inevitably to set up a company in Bulgaria.

Company in Bulgaria – isn’t it too difficult?

But in case you know a person from some of the branches mentioned above, ask them. Ask what of the following statements is closer to the truth? Is it or not frustrating to wait for a fee or a tip as an individual for weeks.  Or even months. Just because the company that hired you meets some issues to put that expense in the book in a proper way accordingly to the law. And isn’t it easier to run your activity through some form of legal entity? Issuing an invoice for certain work or service is the preferred option. It is preferred for many firms counting on outsourcing some of their jobs.

There are some concerns indeed when it comes to the matter to set up a company in Bulgaria. For a proper start better lean on an expert – at BulgarianLaw.co we have professionals to help you. You also have to find an accountant to check your firm for being clean in the face of the law – we can support your activity in that field too.

The new role of Bulgarian companies – education

Perhaps old as trade itself, hand in hand approach of learning and working occurs to be reinvented by Bulgarian companies. Especially  in the recent years. The number of firms investing in the education of individuals is growing. It is to fill the gap of missing qualified personnel. It turns out that universities and professional high schools are not good enough. If the country do not produce cadres needed by businesses. As a matter of fact, the educational system and the business have different agendas. However the problem is that both can’t go and look to entirely distinct directions.

And since academic structure happens to be slow and clumsy regarding alterations of perspective, the change was galvanised by the trade. Lots of Bulgarian companies – actually whole branches, constantly complain about the lack of trained employees. Many already made at least one move beyond complaining and started educating their future personnel. Some rely on state’s support, other exclude such option and go by own means of needs and knowledge.

Is there any reason to link the Bulgarian companies and the education?

A simple example of the first trend could easily be found in the IT sphere. Not one but numerous software academies already operate in Bulgaria.Their goal is to tutor more and more people to meet  the ever-growing demand of the industry. The cooperation with the state makes it easier for Bulgarian companies to train new labor force. In last few years the so-called dualistic education grows in popularity. It is a form of partnership between the state and the business in professional high schools. In the last two years of secondary education students not only study in the school but also work for some of the firms participating in the project.

Well, our expertise at BulgarianLaw.co is the law, not HR issues. Just keep in mind that Bulgarian companies have to overcome the lack of trained personnel before you decide to start one by yourself.

What branch to choose if you want to set up company in Bulgaria?

Set up company in Bulgaria – what is the reason? One that you have obtained knowledge and experience of. Going somewhere blindly might make all your funds vanish with no positive result if you or the people you trust don’t have more than a clue how to swim in the water and where lifeboat in case you need it. Sure, the passion for success also contributes substantially when growing in business, that’s the fuel, but before put up some gas and oil better beware of the way the whole vehicle is driving. That’s the bottom line to set up a company in Bulgaria and practically anywhere else.

Probably most of you know a case of such failure when one is full of eagerness to make it and adds to it a pinch of a hunch of what’s successful and outstanding in a certain time or in foreseeable future. Well, a key ingredient is missing – the wisdom. Sure you have to have look, sometimes it compensates for lack of experience but only as an exception to the rule. So here it goes the story – few guys from a neighboring country set up a company in Bulgaria for stem cell preservation. Growing niche in recent years undoubtedly and they started it when the market was really almost in a virgin state. The passion was there, the money was on the table but they never knew the requirements of the law especially for strictly regulated branch such as medicine and biochemistry and didn’t have the wise men to lead them.

To set up company in Bulgaria – does it make sense?

So these guys went out of the business losing almost everything but at the edge were smart enough to sell the firm to professionals – a professor of medicine and his associates. The new crew turned things around and recently the company is developing rapidly in the right direction. Before going to trust the hunch to set up a company in Bulgaria, check if you know the game. At BulgarianLaw.co we also can give some precious piece of advice.

FSet up business in Bulgaria – starting a business in Bulgaria by foreign and Bulgarian citizens

Set up business in Bulgaria – is it easy? How to establish, register and form a company in the country. There are a few things you should know before proceeding to register a company in Bulgaria. The first is the legal form of your business. The differences between OOD, AD, BD and others are significant. It is necessary to consult with a law firm on the matter! However let’s see a little more about the registration of companies in the country by Bulgarian and foreign investors.

Set up business in Bulgaria – what do we need to know?

The choice of legal form is the first thing that business entrepreneurs in Bulgaria face. Typically, the most popular commercial companies in the country used for registration are OOD.  AD and it’s derivative EAD are difficult for maintenance. They are typically capital companies.  The foreign businessmen also may found a commercial branch in the country . There are things related to subsidiaries and their management. Then, having chosen a legal form for your company, Set up business in Bulgaria faces the choice of a company name. You can save it by paying a fee. Also you can look at the e-commerce registry, whether your name is free and go to sign up with it!

Your choice must be OOD or EOOD because it has a minimum initial capital and a limited liability. You need to create a new bank account. In it you will lodge the initial capital, which minimum is 2 leva. Here is a catch – you can only prove with an import note the existence of an account and capital! You do not need an Initial Capital Certificate. If you ask for such certificate the bank will charge you a lot. Set up business in Bulgaria continues with the filing of company registration documents.It is good to use a specialized law firm that will do it for you  in the best way possible. Why? Just because they know the laws better.

Today’s electronic submission of registration documents is linked to a number of benefits that you should be aware of. Only legalized office with a valid electronic signature can submit electronic documents. So by using it – you save money from fees. Paper documents can be filed in all Registry Agency offices. Furthermore these do not need to be filed at the address of the trading company. Then submitted documents are processed within three business days. Electronically you can see whether you have registered the business in Bulgaria properly.

Set up business in Bulgaria for foreign citizens has a little more peculiarities.

The company can register remotely or locally. Remote sign-up involves procedures for issuing a power of attorney and certifying a specimen, which is nevertheless enforceable. However in case of direct registration of the company in Bulgaria by foreign persons, the main feature is the preparation of documents for registration in two languages and their certification in a notary. Set up business in Bulgaria today and gain from its many benefits in the future.

Shortcuts and hurdles of the Bulgarian incorporation

What are the Shortcuts and hurdles in Bulgarian Incorporation? Investors lose around a month of working hours just to comply with the requirements of administration. Bureaucracy still is one of the main obstacles on the path of Bulgarian incorporation. Despite the government claims in putting efforts and ideas to ease regulations for the business. 175 hours every year are spend in different procedures and obligations imposed by the state, says a report from a non-government economic institute. Calculated in working hours, this statistic is almost 22 working days lost for productive activity or 960 leva money loss.

Well, it is not all bad news for the companies in the country. Especially for the ones that about to be formed. The same report compares what is the average time necessary for the administration to give a „Go“ to a new firm from the moment of submission of information to the agency to the minute of approval and activation. Bulgaria incorporation is faster than the same process in other former socialist territories like the Czech Republic and Slovakia. When talking about Shortcuts and hurdles in Bulgarian Incorporation this is something that is worth noting.

The number of newfound companies rises 1-1,5 percent every year another report says, relying on official statistics.

Anyway, large portions of fresh firms never reach their 5 year anniversary. A big number of enterprises bankrupt soon after they are created by the process of incorporation. The percentage of companies making it after the 5 year term has shockingly dropped down to only 5 percent in 2015. And though the situation got better last year, a number of sums owed by the firms in the country increases.

There are no easy shortcuts in business – hurdles appear everywhere, not only in Bulgaria. The prospects of a future company depend on finding the appropriate formula for distribution of resources. BulgarianLaw.co can not offer magic tricks but can give customers years of expertise in the field.

Hot or cold – when is the right time to start up a company in Bulgaria

Proclaimed as some kind of endless sea of opportunities for up and going enterprises Bulgarian economy might run out of fresh air soon. Perhaps in a span of few years.

The country is driving hot recently and the growth will continue for sometime in the future. However this will stop around the beginning of the next decade. Such prognosis was made by the finance minister himself. A foretelling of this kind might cause many people who are about to start up a company in Bulgaria to give up.

A person who is always hesitating about the next step would consider the statement from a high standing clerk from the government in that manner. The risky type, on the other hand, would prefer to jump into the action. “Let’s go for it before it gets cold, the time is right till it’s hot”. Actually, these are the extremes of two poles of thinking and do not represent the whole spectrum of business mentality. But more important – the words of soon to be colder economy draw the bigger picture, not the nuances. Macroeconomic processes have their influences on the micro business level but if the change is not drastic it would make that much of a difference.

So if you choose the right segment of the market. Starting a company in Bulgaria wouldn’t make you freeze.

Starting in the low or waiting for it to make a breakthrough actually isn’t a bad strategy. If you have the funds and expertise when you have set high but still attainable goals and go consistently after the plan. Sometimes the hot air might burn you out – when a certain niche of the market gets oversaturated, many late starters or wannabes get broke. The team of BulgarianLaw.co is aware of such tendency and tries to prevent its clients from bad decisions. The environment plays an essential role when considering to start up a company in Bulgaria is not the only premise.