Starting a business in Bulgaria
02 November 2009by Ina Dimireva -- last modified 24 May 2012
An overview of the process of starting a new business in Bulgaria and useful information about the documents required.
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Legal requirements
Foreign citizens and enterprises may set up companies in Bulgaria under the same conditions as Bulgarian citizens and legally resident persons. The conditions are set out in the Bulgarian Commercial Code (TZ).
Legal forms of carrying on a business
The types of company most commonly registered by foreign citizens in Bulgaria are limited liability companies (OOD) and public companies (AD). The law provides for other forms of business activity as well, such as sole traders, although in this case the person wishing to register as a sole trader needs to have the status of a permanent resident in Bulgaria.
The rules of running a business
Companies wishing to go public have to meet the requirements of the Public Offering of Securities Act (ZPPTsK) which relates to the information they have to provide and records they must present. All entities licensed by the Financial Supervision Commission or which have obtained a trading permit under the Public Offering of Securities Act (ZPPTsK), Markets in Financial Instruments Act (ZPFI), and Companies with Special Investment Purposes Act (ZDSITs) have specific requirements.
To succeed, a new business needs a sound commercial strategy and secure financing.
Some standard requirements to be completed when setting up a business are the same as when opening a branch.
Registering a company
Commercial registration
To operate a business in Bulgaria you need to register with the Central Commercial Register kept by the Registry Agency of the Ministry of Justice.
You will also need to register any subsequent changes to the company, which includes shutting it down.
The aim of registration is twofold:
- to officially establish the company;
- to provide information by making the registration details available to the public.
Registering for VAT
Registration under the VAT Law is mandatory or voluntary. Every taxable person, whether establisehd in Bulgaria or not, who carries on taxable supplies of goods or services which are different from those where the tax is payable by the recipient must register for VAT.
Mandatory registration - any taxable person with a taxable turnover of BGN 50,000 or more within the 12 consecutive months preceding the current month must apply for VAT registration within 14 days of the end of the tax period.
- when supplying goods for assembly and installation - any person established in another Member State but not established in Bulgaria, and carries out taxable supplies of goods for assembly or installation on the territory of Bulgaria, or at his own cost, where the recipient of the supply is not registered for VAT; no more than 7 days before the date the supply arises.
- distance sales of goods - any taxable person who makes supplies of goods on the territory of the country in the form of distance sales; no more than 7 days before the date of the tax event of the supply, where the total value of distance sales during the current year exceeds BGN 70,000.
- intra-community acquisitions (IACs) - any non-taxable legal person or taxable person not otherwise registered carrying out IACs where the total value of the taxable IACs for the current calendar year exceeds BGN 20 000; no later than 7 days before the taxable supply event arises.
Optional registration anyone who does not meet the requirements for compulsory registration for VAT may voluntarily register for VAT.
Registration for ICAs - any taxable/non-taxable legal person who does not meet the requirements for compulsory registration for ICAs may voluntarily register for ICAs under this law.
Distance sales registration - any taxable person may register regardless of the total volume of distance sales carried out by informing the tax authorities of the Member States where he is registered for VAT purposes that he wishes the place of performance of the distance sales to be the territory of Bulgaria.
Registration at the tax administration's initiative - if a person fails to fulfil his duty to submit a tax registration application form on time, the tax administration will register him by issuing a registration order. The person then registers by submitting an application form to the competent Territorial Office of the National Revenue Agency.
Applications may be submitted online in person, by a person with statutory representative powers, a person with authority under the articles of association, an accredited representative, or a person explicitly named in a notarised power of attorney in accordance with the Tax and Social Security Procedure Code The revenue authority will verify the validity of the application within 7 days and issue a document allowing or refusing to carry out the registration.
VAT registration of foreign persons not established in the country but carrying out taxable supplies whose place of performance is in the country. Foreign persons must be registered through an accredited agent (with the exception of branches of foreign entities, which are registered under the general procedure). Procedure for providing an administrative service:
- Competent authorities - the territorial office of the National Revenue Agency with regard to: Applicants or taxable persons who are natural and legal persons;
- Documents required - application to register for VAT;
- Fees under Article 3(3) of the National Revenue Agency Law, the Agency charges for issuing and formalising documents and certificates.
Specific procedures
To register a public company in the Republic of Bulgaria, the Financial Supervision Commission must receive and approve the company prospectus.
The FSC issues licences or permits to operate as an investment agent, a management company, a company with special investment purposes, an investment company, to organise and manage a mutual fund or to operate a regulated securities market.
The procedures for issuing permits and licences and for approving prospectuses are set out in the the laws on the Public Offering of Securities, on Markets and Financial Instruments and on Companies for Special Investment Purposes.
Specific companies operating on the capital markets have special legal requirements regarding their capital, the organisation of their activity, management, internal control, providing the public and the Financial Supervision Commission with information, and are subject to special supervision under the Law on the Financial Supervision Commission.
Financial Supervision Commission
The Service Directive: One-stop shops
The Services Directive is a European law that aims to make life easier for businesses that wish to provide services in the European Union – in their home country or abroad. The Directive defines the rules that apply to entrepreneurs wishing to establish a business or perform temporary services in the EU/EEA area (the 27 EU member states, plus Iceland, Liechtenstein and Norway). It obliges member states to eliminate unnecessary bureaucracy, simplify formalities for businesses and make public administrations more efficient.
For the implementation of the Directive, each member state had to set up ‘Points of Single Contact (PSC)’, e-government portals which help businesses complete their administrative procedures on-line. The PSCs provide comprehensive information on all administrative matters related to setting up or expanding a services business in a given country. This includes for example:
- Which licences, notifications or permits do I need to obtain to start a business (at home or abroad)?
- What do I need to do when I want to offer my services abroad on a temporary basis?
- What do I need to do to apply for a licence? Which authority is responsible?
- Are the licences subject to a fee? What kinds of deadlines apply?
- Which acts and decrees apply in my sector?
- What do I need to do to establish, for instance, a restaurant or a shop? Or to work as a tour operator in another country without actually setting up a company?
- Where can I turn for personalised advice and further information?
With the PSCs, you no longer need to approach various authorities one by one!! The PSC allows you to find all relevant information and to send in your online applications to the responsible authority through one single contact point, the PSC. You can complete your administrative formalities electronically through the PSC. Just contact the PSC of the country that you want to do business in.
All PSCs are part of the European EUGO network; through a central website you can easily access all PSCs in Europe. Of course, the services of the PSCs are optional. You may always address yourself directly to the relevant authorities, too.
Points of single contact in Bulgaria
Resources
The national export portal has been set up to help Bulgarian businesses enter foreign market and successfully position themselves.
Programmes
Project 100 has the aim of developing a stable and competitive private sector by providing wide-ranging and relevant information for the start-up and development of micro and small enterprises in manufacturing and services in Bulgaria.
Source: Your Europe
