Many people associate Bulgaria simply with fun in the sun. It’s not the first country that comes to mind when considering setting up a business abroad – and that’s a real shame. In the recent years, Bulgaria has become a sound choice for opening a business. Let’s have a look at some of the main advantages of operating out of Bulgaria.Bulgaria is the 14th largest European country. It is located in south-eastern Europe, and borders the Black Sea, Romania, Serbia and Macedonia as well as Greece and Turkey. Bulgaria is spread over a territory of 110,994 square kilometres and is home to more than seven million people.
The most prominent economic fields in the country are agriculture, power engineering, and heavy industry. Bulgaria is also a member of the European Union, NATO and Council of Europe.
If you are involved in any of the following industry sectors, you may be eligible for a government grant to help you on your way:
– Production of electricity from renewable sources
– Computer technologies
– Research and development
– Education or human health care.
Other sectors worth a mention in the Bulgarian business market are electrical engineering, mechanical engineering, electronics, automotive part manufacturing and chemical industry. If you are planning to set up a company related to chemical industry, food and agriculture, tourism or machine building – to name a few, please check the local government website for a full list – then you will need to obtain the appropriate permits. If you are unsure whether or not you need a permit, consult with a local solicitor.
Bulgaria has an enticing tax scheme, with one of the lowest corporate income taxes in Europe. The personal income tax is also low. It’s also worth knowing that Bulgaria has signed agreements to avoid double taxation with the UK, Turkey and Russia and several other countries. This means that a company operating both in Bulgaria and another signatory country will pay taxes only in the place from which that income is generated. In Bulgaria, a company is taxed based on its profit at a rate of 10 percent.
Other costs for companies in Bulgaria are salaries and social benefits for the employees. However, the country has a lower minimum wage than other EU countries, as well as low social insurance costs.
In addition, there are no running costs for companies in Bulgaria. To clarify, if a company was registered but no business activity had taken place, it is not subject to financial obligations. However, the legal entity is required to submit an annual tax return. This process is surprisingly simple and can be outsourced to an accounting company or done internally.
The country not only has low labour costs but also a skilled and multilingual workforce. The main foreign languages spoken in Bulgaria are English, German, French, Spanish and Russian. An estimated 22 percent of the population have a university degree, and about seven percent have an engineering degree.
Anybody who has reached the age of 18 can register a company in Bulgaria, regardless of their citizenship status. When it comes to setting up a limited liability company in Bulgaria, a symbolical minimum required capital is two BGN, which equates to one British pound. The entire registration process, from start to finish, will generally last a couple days. For more complicated cases, the process may last a couple of weeks.
The most common types of companies in Bulgaria are the limited liability company (for small or medium-sized businesses), the joint-stock company (for larger businesses), or branches of a foreign company (an extension of the foreign legal entity). Companies need to be registered with the Commercial Register. Certain fees apply for this process, details of which can be found here (English version available). There are also quite a few electronic services and online forms you can use, but currently most of them are only available in Bulgarian.
Another notable advantage to opening a business in Bulgaria is that you don’t have to be physically present in the country during the process. You are allowed to use a power of attorney and instruct a local solicitor to make all the arrangements on your behalf.
So, just to summarise the main advantages of registering your company in Bulgaria:
– It has the lowest operational cost in EU;
– There is a highly skilled labour force;
– It has a low total average monthly compensation.
Firstly, you should bear in mind that in Bulgaria, you can only register a company under a name written in Cyrillic. You can only add a Latin name if it has an exact Cyrillic match. You are required to check whether your chosen company name is available, meaning there must be no company with the same name already registered.
One important point to remember is that the documents for the company registration must be written in Bulgarian. You can also use bilingual documents, but the translation in Bulgarian is a must. This will need to be done by a qualified translator.
One final point is worth a mention; companies are permitted by Bulgarian law to use the services of an outsourced accountant once per year.
Have you run a business in Bulgaria? Share your experiences in the comments below or answer the questions here to be featured in an interview!