Incorporating company

Legal framework

The primary piece of legislation governing the types, corporate structure and governance is the Commerce Act 1991. It also regulates the requirements for the establishment of commercial companies in Bulgaria.
Requirements and procedure for registration in a centralised electronic-based register of commercial legal entities operating under Bulgarian law and of changes in the corporate status of such entities are regulated in The Commercial Register Act 2008.

 

Establishing a company

The procedure for incorporation of a company in Bulgaria is the same for both local and foreign persons. Bulgarian law does not restrict 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 individuals.
 As of 1 January 2008 all types of commercial companies and all branches of foreign commercial companies are incorporated by way of registration in the Commercial Register administered by the Registry Agency with the Ministry of Justice. This is a one-stop shop registration upon which the registered entity obtains a unified identification code which serves for all commercial, tax, social security, statistics and other public purposes. The company is identified by that code throughout its entire existence. No further registration is required from newly incorporated companies and branches to start effectively performing their business activity.
Useful link: Registry Agency http://www.registryagency.bg/?lang=en
Useful link: Commercial Register http://www.brra.bg/ (available only in Bulgarian)

 

Types of companies

According to the Commerce Act Bulgarian law recognizes the following types of commercial companies:

  • general partnership;
  • limited partnership;
  • limited liability company (“LLC”) or one-person-owned limited liability company;
  • joint stock company (“JSC”) or one-person-owned joint stock company;
  • company limited by shares

All of the above organisations are recognized as separate legal entities. Regardless of the nationality of its founder(s), each entity registered in Bulgaria is considered a Bulgarian legal entity and should be governed in compliance with the effective Bulgarian laws and regulations.
In addition to the five types of commercial companies mentioned above, business may also be conducted in one of the following organisational forms:

  • sole trader;
  • holding;
  • branch;
  • trade representative office (“TRO”);
  • co-operative

In accordance with Bulgarian legislation, sole traders, partners in general partnerships and unlimited partners in both limited partnerships and companies limited by shares have unlimited personal liability to the company’s creditors.
In contrast, the shareholders’ exposure in limited liability companies and joint stock companies, as well as the liability of limited partners in limited partnerships and in companies limited by shares is capped at the amount of their shareholding in the company’s capital.

 

Procedure for registering a company

You can find detailed information about the procedure for registering a limited liability company, a joint-stock company, a branch and a representative office here.

 

VAT registration

Pursuant to Bulgarian legislation the following transaction should be VAT taxable:

  • each taxable supply of goods or services effected for consideration;
  • each intra-Community acquisition effected for consideration, whereof the place of transaction is within the territory of the country, by a person registered under this Act or by a person in respect of which an obligation to register has arisen;
  • each intra-Community acquisition of new means of transport effected for consideration, whereof the place of transaction is within the territory of the country;
  • the importation of goods;
  • each intra-Community acquisition whereof the place of transaction is within the territory of the country of excisable goods.


Under Bulgarian legislation taxable person shall mean any person who independently carries out an economic activity, whatever the purpose and results of that activity.

Non-taxable persons should be these which are not a taxable within the meaning given above and which effects intra-Community acquisition of goods. The intra-Community acquisition of goods is defined in details in the Value Added Tax Act.

Read more on the Bulgarian VAT System here.

 
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