17 Dec Setting up a company in Bulgaria
Author: Doychin Ivanov, attorney-at-law
In our communication with foreign clients, we receive often questions on how to set up a company in Bulgaria. The most widespread kind of a company in Bulgaria probably by far is the limited liability company, the so-called OOD. The second kind of company used in Bulgaria is the joint stock company, the so-called AD.
We at Ivanov & Yonkova Law Firm provide corporate legal advisory services to companies in relation to corporate changes, internal corporate relations, preparation and conclusion of commercial transactions, settlement of commercial disputes, and others. We also specialize in mergers and acquisitions. You may find further information on our services here.
Below you may find some of the basic information for the registration procedure of OOD.
Upon sending us specific questions we are here to provide further detailed advise on the OOD, as well as on the AD.
How to register a limited liability company in Bulgaria
The procedure comprises in general the following stages:
- Provision of information and data for the name of the company, the amount of the share capital (at least EUR 1), the name/s of the Managing Director/s, the shareholders, the address, business activity, etc.
- Preparation of the necessary documents
- Signing of the documents
- Certification of some of the documents before a Notary Public (preferably in Bulgaria) – the declaration containing the sample of the Managing Director’s signature (the so-called Specimen)
- Opening a service bank account at a Bulgarian bank in the name of the company and deposition of the initial share capital therein
- Submission of the signed and certified documents to the Bulgarian Commercial Register
- Transformation of the service bank account into a current bank account in the name of the newly established company
From our experience, we can inform you that the procedure of opening a service bank account at a Bulgarian bank is the most difficult part of the job and it takes a while. It all depends on the internal bank risk management checks procedures on the shareholders and their business activity and the business activity of the company – in process of registration.
In Bulgaria it is not possible that a company has no address. Therefore, important part of the registration procedure requires finding an office of the company at a real physical address.
How long does it take to register a company in Bulgaria
In terms of the time frame, we can inform you that the preparation of the paperwork usually takes up to 1 day as of the provision of the minimal necessary initial information.
Then the opening of a service bank account and deposition of the share capital therein may last at least 5 business days with no explicit deadline. The bank will require filling in of an application and a couple of declarations by the shareholders and copies of their valid passports.
Once the service bank account is opened and the share capital is deposited therein, the registration procedure before the Bulgarian Commercial Register takes up to 2 business days.
How much does it cost to set up a company in Bulgaria
We usually charge EUR 550 net of VAT for our part of the procedure – preparation of the registration documents and their submission to the Bulgarian Commercial Register.
For representation services before a Bulgarian bank our attorneys’ fee rate is EUR 250.
Should the procedure fail to be finished due to rejected application for opening of a bank account by the bank, we shall reimburse 30 % of the paid attorney’s fee.
Supplementary to that there are the following other fees:
- EUR 30 – state fee for the Bulgarian Commercial Register
- EUR 5 – 10 – fee for the Notary Public in Bulgaria for certification of the sample of the the Managing Director’s signature
- EUR 10 – 30 – fees for the opening of the service bank account and upon registration of the Company at the Bulgarian Commercial register fees for the transformation of the service bank account into a regular current bank account
- EUR 50 – 80 – fees for translation services, if needed
Upon registration of the company, an accountant will be needed, as well. The accountant will be in charge of submission of the relevant declarations to the Bulgarian tax authorities.
Under the Bulgarian VAT Act all traders (companies or natural persons) are obliged to register for VAT purposes when they acquire turnover in the amount of BGN 100,000 (approximately EUR 50,000) for the last 12 consecutive months.
Prior to that VAT registration is only voluntary and if the relevant traders desire to do so they can register for VAT purposes even before acquiring the above said turnover amount.
If the company becomes VAT registered from the start or afterwards, the accountant’s fees will be higher and charged on a monthly basis.
Currently, for VAT registered companies depending on the work volume the accountant’s monthly fees may vary within EUR 300 – 700.
If the company is not VAT registered, then the accountant’s fees may be on an annual basis or on two or three shorter periods. In this case the accountant will only have to sum up the financial information and prepare the annual financial statement of the company.
Currently, for non-VAT registered companies again depending on the work volume, the accountant’s annual fees may vary within EUR 300 – 700.
The team of Ivanov and Yonkova Law Firm remains at disposal for provision of legal opinion and answers to any supplementary questions regarding the present or any other topic, you may have.
The present article does not represent legal opinion or advice on specific case or situation.
Author: Doychin Ivanov, attorney-at-law
Ivanov and Yonkova Law Firm