Bulgaria - Y-tax Balkan

Foreign Direct Investments in Bulgaria

BananaBlitz — Sun, 24 Nov 2024 17:27:29 +0000

Foreign Direct Investments (FDA) in Bulgaria have seen important changes over the years. The country offers a welcoming environment for investors, including low taxes, affordable labor, and political stability. Bulgaria’s location in the European Union and access to key markets make it an attractive destination for business. This article will provide a comprehensive overview of Foreign Direct Investments in Bulgaria.

Foreign Direct Investments in Bulgaria: Trends, Growth, and Key Drivers

FDAs in Bulgaria have undergone significant changes. The highest level of investments peaked in 2007, reaching an all-time high of 13.88 billion United States Dollars. By the end of 2022, the cumulated stock of FDAs in the country reached 57.3 billion US dollars which corresponds with 64.4 percent of the country’s Gross Domestic Product. Foreign Direct Investment demonstrated in 2023 a very considerable increase, 28.1%, reaching 3.37 billion Euros and 3.62 billion USD, according to the Bulgarian Central Bank. Switzerland was the top importer of Foreign Direct Investment in 2023 at 396 million U.S. dollars, and Belgium followed at $354 million U.S. dollars. The technology, media, and telecommunications sectors attracted the most investment, with construction, real estate, and financial services also drawing significant interest. These developments identify a recovery in the foreign direct investment that is being fueled by individual countries and specific sectors.

Bulgaria’s Attractive Investment Climate

Bulgaria is an attractive destination for foreign investment because of a low corporation income tax and low labor costs. Foreign investments are not screened by the government, and there are no restrictions on foreign ownership or control of companies. Foreign investors receive the same treatment as local companies. The Invest Bulgaria Agency (IBA) assists foreign investors through information, administrative, and guidance instruments on incentive schemes. Bulgaria offers several advantages for investors. The cost of living is also quite low, an attractive option for business people and expatriates. As a member of the European Union, Bulgaria benefits from regular reform cycles that align with EU standards. The country has a strong defense against external economic shocks and enjoys political stability, which further supports a favorable investment climate. Bulgaria is known for its prudent tax regulations, earning a positive reputation in this regard. Additionally, the country has maintained a budget surplus since 2013. Its strategic location enhances its appeal, with easy access to major markets across North Africa, the Middle East, and the European Union, facilitated by the Danube River, five Pan-European corridors, and four key airports.

To read more about Bulgaria click here.

Supporting Foreign Investment

Invest Bulgaria Agency has a very important role in assisting investors, offering support both during the initial investment phase and throughout the process of establishing a business. The 2004 Law for the Promotion of Investment among foreign and domestic investors guarantees equal treatment. As a priority for economic growth, the government has made industrial production and the high-tech industry a strategic focus and has provided numerous incentives, such as land acquisition, infrastructure building, and workforce training through public-private partnership mechanisms. These activities place Bulgaria as a potential destination for foreign direct investments, in the field of high-tech and industrial.

To read more about investment opportunities in Bulgaria click here.

If you are interested in investing in Bulgaria, it is advisable to consult with a professional on investment opportunities that best suit your needs. Our firm specializes in international taxation, and our team is ready to assist with related matters. We can connect you with top professionals to support your business activities in Bulgaria if needed. Please feel free to contact us.

הפוסט Foreign Direct Investments in Bulgaria הופיע לראשונה ב-Y-tax Balkan.

Real Estate in Bulgaria

BananaBlitz — Sun, 21 Jul 2024 18:03:15 +0000

Bulgaria’s real estate market offers various investment opportunities, from seaside residential properties on the coast of the Black Sea to urban and rural areas. This article explores Bulgaria’s current real estate market trends and regulatory requirements to help readers make informed decisions when planning to invest in Bulgaria.

Can Foreigners Purchase Real Estate in Bulgaria?

Under Bulgarian law, foreign individuals and companies are eligible to buy properties. Non-agricultural lands can be purchased by EU citizens without the need to establish a company. However, in case of agricultural lands, all foreigners – including EU citizens, need to open a company in order to be able to purchase it.

Apartments in Bulgaria are available to foreigners without restrictions on land ownership, because they are part of residential buildings. However, non-EU investors who want to purchase properties with land, should establish a company first.

Real Estate Bulgarian Market Forecast

The residential real estate sector in Bulgaria is currently valued at $303.40 billion, and is predicted to increase at 2.53% from 2024 to 2028. By the end of 2028, it is predicted to reach $434.30 billion.

Real Estate Transactions Taxation

Acquisition of Real Estate Taxation- In Bulgaria the transfer tax fee is 2%, the registration fee is 0.1%, while notary fees are variable. Usually, these costs are covered by the buyer unless agreed otherwise. Foreign buyers must register with the BULSTAT registry shortly after their purchase and submit a tax registration form within 2 months. If the seller is registered for VAT, a 20% VAT is added to the sale price.
Real Estate Ownership Taxation and Related Fees- In Bulgaria, property owners must pay an annual real estate tax of 0.15% of the property’s assessed value. This tax payment can be divided into 4 (four) separate payments throughout the year, or in a single payment with a small discount. Municipalities also charge garbage collection fees, which can be a percentage of the property’s value or a combination between this percentage and a fixed sum. These fees are usually paid simultaneously with the real estate tax.
Real Estate Rental Taxation– In Bulgaria, rental income is subject to a 15% withholding tax. Companies can deduct this tax, while individual landlords should pay it directly. Office or holiday rentals may be subject to VAT if their yearly income exceeds BGN 50,000, whereas residential properties are VAT-free. Landlords can register for VAT if their rental income exceeds BGN 25,000 in order to reclaim VAT paid on property expenses.
Real Estate Sale Taxation – In Bulgaria, when a real estate is sold, a 15% tax on the profit should be paid. This tax varies on the buyer’s residency and the property’s type. Sellers who are VAT-registered should add 20% to the sale price.

Real Estate Investment Areas and Price Ranges

In Sofia, the average price for two-bedroom apartments in Q3 2023 was about €1,600 per square meter, while a three-bedroom apartment cost is €1,800 per square meter. Bulgaria’s construction sector witnessed a 1% growth in production last May, however real estate sales increased in the second quarter of 2023 in cities like Sofia, Varna, Plovdiv, and Burgas.

Investor interest is strong in Sofia and popular cities like Varna, Plovdiv, and Burgas. Bulgaria offers attractive advantages for real estate investments such as low-cost life expenses, low-interest lending rates, and a large number of tourist attractions, making it desirable for both national and international investors.

Are you interested to invest in real estate market in Bulgaria? Our firm specializes in international taxation, and our team is ready to assist with any related matters. If needed, we can connect you with top professionals to support your business activities in Bulgaria. Please feel free to contact us.

הפוסט Real Estate in Bulgaria הופיע לראשונה ב-Y-tax Balkan.

Personal Income Tax in Bulgaria

BananaBlitz — Thu, 18 Jul 2024 13:05:43 +0000

Bulgaria’s personal income tax system is known for its simplicity and convenience, based on a flat taxation policy applied to different income sources. Bulgarian Tax Authority, known as National Revenue Agency ensures to provide tax transparency and accountability for the taxpayers. This article offers a comprehensive overview of personal tax in Bulgaria.

Personal Income Tax Rates

Bulgaria has a standard flat tax rate of 10%, which is applied to all types of income. The tax is regulated by the means of the Personal Income Tax Act (PITA). According to the Act, individuals pay personal income tax on their gross income minus any mandatory social security contributions they make at their own expense.

The tax is imposed to both residents and non-residents. You can read more on the residence criteria in Bulgaria here. While residents are taxed on their worldwide income, non-residents are taxed only on the income earned from Bulgarian sources.

Types of Income Taxable

In Bulgaria, the Personal Income Tax Act specifies the taxation of various types of income, each taxed on their gross income less any mandatory social security contributions they make at their own expense. Main types of income include:

Income from Employment
Income from Business Activities.
Income from Rent or Other Remunerative Provision for the Use of Rights or Property
Income from the Transfer of Rights or Property

Tax Deductions

Individual taxpayers can benefit from various deductions and allowances to reduce their personal income tax base. Among the deduction policies, we can notably mention the possibility of individuals to deduct the interest paid on mortgage loans for the first BGN 100,000 of the loan, following certain conditions. As well, another deduction is applied for children or disabled children where parents can benefit from a reduction of the total annual tax base in the following categories: (i) BGN 6,000 in case of one child; (ii) BGN 12,000 in case of two children, and (iii) BGN 18,000 in case of three and more children. In addition, tax incentives in the amount of BGN 12,000 per a disabled child are available under certain specific conditions.

Another deduction policy includes reduction for the payments made during the year for work done for the improvements and/or repair of a real estate up to BGN 2,000.

For the income deriving from business activities, the rules provision a 60% deduction on farmers’ income who produce unprocessed agricultural products. A 40% deduction applies to income form agricultural products, forestry, hunting, fishing products, etc.

Finally, a 25% deduction is applied to income from practicing a free profession, except for those related to law.

Foreign Tax Relief

If a Double Tax Treaty (DTT) is in place between Bulgaria and another country, the taxpayers are eligible for a tax credit for taxes paid on income earned outside their respective territories. The amount of this tax credit is limited to the amount of tax that would be due if the same income were earned within the respective entity.

It is important to understand the specifics of the country’s taxation policy and become familiar with Bulgaria’s tax system to ensure a smooth tax experience. Our firm specializes in international taxation, and our team is ready to assist with any related matters. If needed, we can connect you with top professionals to support your business activities in Bosnia and Herzegovina. Please feel free to contact us.

הפוסט Personal Income Tax in Bulgaria הופיע לראשונה ב-Y-tax Balkan.

Tax Incentives in Bulgaria

BananaBlitz — Tue, 16 Jul 2024 15:33:24 +0000

Bulgaria uses tax incentives aiming to promote economic growth, attract foreign investment, and increase competitiveness. With one of the EU’s most attractive corporation tax rates, it stimulates company development. These incentives are oriented at high-tech industries, research, and small and medium-sized businesses, promoting innovation and technical progress. This article analyses Bulgaria’s tax exemptions policy and how they potentially strengthen its economic climate.

Corporate Tax Incentive in Bulgaria

In specific situations, tax incentives allow for lower corporate income tax to a certain amount for agricultural operations, offering extra deductions for employing long-term unemployed, disabled, or elderly individuals, and potentially allowing a full refund of the corporate income tax for investments in regions with high unemployment.

Individual Tax Incentive in Bulgaria

Personal Deductions

Bulgaria offers a wide range of tax deductions that address various financial and personal conditions. These include deductions for approved charitable donations, where the total donated amount must not exceed 65% of an individual’s yearly taxable income. Furthermore, full deductions can be claimed for mandatory social security contributions made within Bulgaria or other EU/EEA nations, as long as necessary documentation is provided.

In addition, voluntary contributions directed towards pension and unemployment funds, as well as specific health and life insurance payments, are eligible for deductions, but there are restrictions that apply. Married couples, including those from other EU/EEA states, who are young, can deduct mortgage interest expenses on loans up to the first BGN 100,000.

Tax deductions for children significantly reduce the yearly tax bill for parents or guardians, and the amount of deduction increases as the number of children grows. Furthermore, there are special advantages for children with disabilities that provide even more tax relief. These advantages can be used in advance during particular months of the year, minimising the monthly taxable amount. However, procedures are in place to prevent separate parties from making repeated claims for the same kid, and any benefits that are mistakenly claimed must be refunded.

Tax Relief for Individuals Who Use Non-Cash Methods for Payment of Their Expenses

Individuals in Bulgaria who make payments using non-cash payment methods may be eligible for tax reduction under certain conditions. To qualify, people must obtain all taxable income via bank transfers throughout the tax year and spend at least 80% of their money in non-cash methods. Furthermore, there should be no unpaid public liabilities while completing the yearly tax return. The tax relief offered is equivalent to 1% of the entire tax due for the year, with a maximum limit of BGN 500. This relief, like other tax deductions, is conditional on the individual having no unpaid public obligations at the time of submitting their tax return.

Tax Relief for Improvements and/or Repairs of Real Estate Property in Bulgaria

Bulgaria offers tax exemption to local and EU/EEA residents for real estate upgrade or renovation, reducing the yearly tax base to BGN 2,000, subject to certain application requirements.

Business Deductions

In Bulgaria, individuals with income from various professions and activities, are allowed to deduct allowed pre-estimated statutory expenses from their taxable income. Freelancers, civil contractors, notary officers, physicians, dentists, and other private practitioners can choose to deduct 25% of their gross income, although they might be required to register for VAT if their income exceed certain thresholds.

Furthermore, royalties, rental income, and income from agricultural activities, including tobacco production, qualify for statutory deductions at rates of 40%, 10%, and 60%, respectively.

Foreign Tax Relief

Bulgaria provides Double Taxation Treaties to prevent the double taxation of income earned abroad. In the absence of a treaty, Bulgarian tax residents can still get unilateral tax credits for the taxes paid on income from other countries. The unilateral credit is calculated individually for each source country following a ‘per-country limitation’ policy.

Thinking about investing in or relocating to Bulgaria? Our firm specializes in international taxation, and our team is ready to assist with any related matters. If needed, we can connect you with top professionals to support your business activities in Bulgaria. Please feel free to contact us.

הפוסט Tax Incentives in Bulgaria הופיע לראשונה ב-Y-tax Balkan.

Business Activity in Bulgaria

BananaBlitz — Wed, 26 Jun 2024 11:01:07 +0000

Bulgaria, located in Southeast Europe on the Balkan Peninsula, holds a strategic position connecting Europe and Asia, making it a favorable country for foreign investments. The commercial benefits of Bulgaria, which will be detailed further in this article, position it as an attractive investment destination across a wide range of industries. This article provides a general overview of the business environment and activity in Bulgaria.

Bulgaria’s Economic Prospects and Investor Guidance

Currently, Bulgaria is experiencing significant growth in software development, technical support, and business process outsourcing and as an EU member, Bulgaria allows free exports of goods and products to all other member states.

Additionally, the country has over 40 trade agreements with more than 80 countries. For instance, Bulgaria and the United States of America have signed the Agreement on Trade Relations, and through this agreement both Countries aim to adopt mutually advantageous and fair rules governing their trade and ensure a predictable commercial environment.

Moreover, Bulgaria has Free Trade Agreements with: China, Turkey, North Macedonia, Israel, Albania, Serbia and other countries. These agreements help Bulgaria to improve production efficiency and innovation, while supporting economic development and overall driving economic growth.

Furthermore, Bulgaria is considered an appealing option for investors seeking low-cost opportunities, thanks to governmental incentives for new investments, such as:

Extra incentives for investors undertaking large projects with significant social and economic impact. These projects often need special support to ensure they comply with the law and meet deadlines.
Additionally, specific incentives include: forming public-private partnerships with relevant government bodies and academic institutions to secure skilled labor; exemptions from local taxes and fees for changes in land use; and cash grants of up to 25% or 50% (depending on the region) for investments in manufacturing, and up to 50% for education and research projects.

Worth noting, Bulgaria provides financial assistance for the construction of essential physical infrastructure components necessary for project complexity and completeness. Usually, this includes the funding of new or repaired roads owned by municipalities or other public bodies. Once approved, these funds are disbursed directly to the infrastructure owner. Furthermore, the country boasts some of the most affordable labor costs in the European Union (EU) and maintains low, consistent corporate and income tax rates.

Investment Advantages and Trade Policies in Bulgaria

The Constitution of Bulgaria ensures that both foreign and local individuals and entities have equal rights when conducting economic activities. Foreign investors can establish or join companies in Bulgaria, while same rights and responsibilities as local investors. Furthermore, Bulgaria’s 2004 Investment Promotion Act guarantees equal treatment for national and foreign citizens or entities.

Investors interested in investing in industrial and service projects can apply for an ‘Investment Project Certificate’ from the Ministry of Economy in Bulgaria. This certificate provides investors administrative and financial benefits, such as partial reimbursement of social and health insurance contributions, expedited administrative services, and financial support for technical and professional development.

The Investment Promotion Act and its implementation guidelines outline the process for obtaining certification and identifying priority sectors for the country. Certificates are awarded based on objective criteria related to the type of investment and sector priority, without consideration of investor nationality, ensuring fair allocation of investment preferences.

Other Tax incentives include

Partial reduction of corporate income tax for engaging in agricultural activities;
Extra tax deductions for employing long-term unemployed, disabled, or elderly individuals;
Reimbursement of up to 100% of the corporate income tax for investments in areas with high unemployment;
Lowest Corporate and personal income tax rates both at 10 %;
0% capital gains tax for investments in 152 municipalities with high unemployment;
Dividends and liquidation shares have a 5% tax rate, except for EU companies which are exempt;
Additionally, equipment imports for projects over 5 million EUR, creating 50 or more jobs, are VAT exempt for two years.

Bulgaria has signed around 70 (seventy) Double Tax Treaties with other nations. Bulgaria, with its competitive salary levels among the lowest in Europe, presents an opportunity for firms seeking to lower labor costs. Moreover, its workforce is highly skilled, motivated, and bilingual, making Bulgaria a more cost-effective location for businesses, enabling them to hire skilled staff while paying lower rates. Overall, Bulgaria’s low business costs, including rent, utilities, and labor, enhance local profitability and appeal to foreign investors.

It is important for individuals and companies, before proceeding with investment, to be aware of the legal and financial procedures. Our firm specializes in international taxation, and our team is ready to assist with any related matters. If needed, we can connect you with top professionals to support your business activities in Bulgaria. Please feel free to contact us.

הפוסט Business Activity in Bulgaria הופיע לראשונה ב-Y-tax Balkan.

Corporate Income Tax in Bulgaria

BananaBlitz — Sun, 23 Jun 2024 18:26:50 +0000

Corporate income tax in Bulgaria is applied to the taxable profits of both domestic and foreign legal entities operating within Bulgaria. For legal entities not registered in Bulgaria or without a physical presence in the country, tax is levied solely on income generated from Bulgarian sources.

Residency for Tax Purposes

A corporation is considered a tax resident of Bulgaria if it is legally established within the country. Regarding Permanent Establishments of foreign entities, such as branches, are treated as distinct entities, similar to Bulgarian residents, for taxation and accounting purposes.

Corporate Tax Scope of Application

Corporation taxes in Bulgaria are applied to:

Profits generated by legal entities residing in the country;
Profits generated by resident legal entities that are not engaged in commerce, including religious organizations, from various transactions outlined in Article 1 of the Commerce Act, as well as from renting out movable and immovable property;
Profits earned by non-resident legal entities through a permanent establishment within Bulgaria;
Profits generated from games of chance activities.

Taxable Subjects

As per general rule, the following categories are subjected to the Corporate Tax:

Resident legal entities – commercial corporations;
Resident legal entities that are not engaged in commerce;
Resident unincorporated associations and social insurance funds;
Non-resident legal entities conducting business activities within Bulgaria through a permanent establishment;
Non-resident unincorporated associations conducting business activities within Bulgaria through a permanent establishment.

Tax Rate and Tax Period

As outlined by the Bulgarian authority, the rate for corporation tax is set at 10%. The corporate tax is calculated based on the tax profit, which serves as the tax base.

Meanwhile, the corporation tax assessment is based on the calendar year. For newly incorporated taxable entities, the tax period starts from their incorporation date and extends until the end of the year.

Reductions, Retentions, and Exemptions from Corporation Tax

Tax Exemption Policies – Subjects than can benefit from corporate tax exemption include collective investment schemes, national investment funds, and special purpose investment companies alongside to higher education institutions, the Bulgarian Academy of Science, the Agricultural Academy. In addition, the Bulgarian Red Cross, and game organizers subjected to stamp duty under the Gambling Act, are exempt from corporation tax.

On the other hand, Bulgaria implements tax incentives when hiring unemployed individuals, awarding scholarships, and employing people with disabilities.

Tax Retention Policies – As per the law, in Bulgaria social and health insurance funds can retain 50% of corporation tax. Taxable entities engaged solely in manufacturing activities in municipalities with unemployment rates 25% higher than the national average may retain up to 100% of corporation tax;

Additionally, agricultural producers registered as taxable entities may retain up to 60% of corporation tax upon receipt of the final identification number of aid from the state aid register of the European Commission.

It is important for corporations, to be aware of the legal and financial procedures of taxes. Our firm can provide support when seeking professional tax consultancy services. Contact us, and we will be able to guide in the subject matter.

הפוסט Corporate Income Tax in Bulgaria הופיע לראשונה ב-Y-tax Balkan.

Inheritance, Estate, and Gift Tax in Bulgaria

BananaBlitz — Thu, 20 Jun 2024 12:37:42 +0000

Different countries have different rules regarding the application of inheritance, estate and gift tax. In the case of Bulgaria, taxes depend on the relationship between the deceased and the heir(s). This article aims to provide a comprehensive overview of Bulgaria’s inheritance, estate, and gift taxes.

Application of Inheritance Tax

Bulgaria imposes inheritance tax to properties passed down by a Bulgarian citizen, no matter where the property is located, and as well to properties in Bulgaria bequeathed by a deceased foreign citizen. This includes assets, possessions, rights, and debts at the moment of the inheritance operation.

In Bulgaria, the inheritance tax is paid by the heirs and legatees named in the will or by law. However, surviving spouses and direct descendants are generally exempt from this tax. The value of property, is assessed in Bulgarian Lev at the beginning of the inheritance process, except for exempt assets.

How Different Assets are Valued

The estate of any deceased individual, except those exempts from taxation, is assessed according to its value at the beginning of the succession, in the following manner:

Real estate in Bulgaria is valued based on its assessed tax value according to local laws;
Foreign currency and precious metals are valued using the central exchange rate of the Bulgarian National Bank;
Securities are valued at their fair market value, or if that is hard to determine, at their nominal value;
Vehicles are valued at their insured value;
Other movable assets and rights are valued at their fair market value;
Businesses or shares in companies are valued at their fair market value, or according to their accounting records if determining fair market value is difficult;
For real estate located in another EU member state or country, its value is determined by a document from the relevant authority of that country, translated accurately into Bulgarian. The Municipal Council then sets the tax rate for each heir or legatee.

The tax rate is set by the Municipal Council for each heir or legatee. For siblings and their children- the tax is levied at rates between 0.4% to 0.8% for each portion over BGN 250,000. For everyone else- the tax ranges from 3.3% to 6.6% for each portion over BGN 250,000.

Within six months of the commencement of succession, the taxable individuals or their legal representatives must submit a declaration to the municipality where the deceased person last lived. If one heir submits the declaration on time, it benefits all the other heirs as well. In this declaration, heirs must list the inherited estate, specifying its type, location, and value. The tax must be paid within two months after receiving the notice.

Exemptions from Inheritance Tax

The following categories are eligible to benefit from inheritance tax exemption:

Estates of individuals who died serving the Republic of Bulgaria, in duty-related incidents, industrial accidents, or natural disasters;
Estates left to the State or municipalities;
Estates designated for organizations like the Bulgarian Red Cross, registered religious groups, or cultural centers;
Everyday household items; small agricultural tools;
Libraries and musical instruments;
Unclaimed pensions of the deceased; estates of Bulgarian citizens abroad if inheritance tax was already paid in that country;
Ordinary household items, small farm tools, libraries, and musical instruments are exempt from tax if they are inherited by direct relatives, a spouse, or siblings.

If you are seeking guidance on the relevant inheritance procedures and taxes, our firm can support. For assistance and detailed insights into Bulgaria’s property and gift tax regulations, please feel free to contact us.

הפוסט Inheritance, Estate, and Gift Tax in Bulgaria הופיע לראשונה ב-Y-tax Balkan.

Opening a company in Bulgaria

BananaBlitz — Tue, 04 Jun 2024 12:53:41 +0000

Foreign investors, whether individuals or entities, have the same opportunities as local residents to establish various types of companies in Bulgaria. There are no legal restrictions for foreign investors, whether they are from EU member states or non-EU countries. Each type of company in Bulgaria has unique characteristics and benefits, for which we will give you detailed information in this article.

Types of business entities in Bulgaria

Choosing the legal form for your business depends on various factors, including your business goals, the number of partners, and tax considerations. The most common legal forms in Bulgaria are:

Sole Proprietorship
Limited Liability Company
Joint-Stock Company

Sole proprietorship: A sole proprietorship (SP) in Bulgaria can be established by any Bulgarian or foreign individual residing in the country. The SP’s trade name must include their full first and last names, or first and middle names, and must be unique nationwide. This is the simplest legal form, with no capital requirement and no need for partners.

Limited Liability Company in Bulgaria can be formed by one or more Bulgarian or foreign individuals or legal entities. The company’s name must include “Limited Liability Company” or “Ltd.” and be unique nationally. The company is managed by a General Assembly of shareholders and one or more managers, who must be individuals. Foreigners can also serve as managers. The minimum capital requirement for an Ltd. is BGN 2, with each partner’s share being at least BGN 1. Partners can make both cash and non-cash contributions, with non-cash contributions needing valuation by three independent experts.

Joint stock company: A Joint-Stock Company in Bulgaria has a capital stock divided into shares, with a minimum capital of BGN 50,000. Founders can be individuals or legal entities. Registration requires a minimum 25% capital payment.

Company Registration Procedure

The Commercial Registry in the country is administered by the Registry Agency operating under the Ministry of Justice. The business registration requirements and procedures for the companies are uniform irrespective of whether the company shareholders are Bulgarian or foreign citizens. Applications for inclusion in the Commercial Register can be submitted through paper or electronic forms, following the conditions outlined in the Law on Electronic Documents and Electronic Signatures.

All applications and their attachments must be presented in Bulgarian. However, documents in any official language of the European Union are accepted, provided they are accompanied by a certified translation into Bulgarian.

Benefits of registering a company in Bulgaria

Opening a company in Bulgaria provides advantages such as low corporate tax rates (10%), EU membership for access to the single market, and a stable currency (Bulgarian Lev). The country’s strategic location at the crossroads of Europe and Asia offers business opportunities, supported by well-developed transportation infrastructure. Bulgaria’s lower cost of living results in reduced operational expenses, and its skilled workforce, particularly in IT and engineering, offers competitive costs.

The government offers various incentives for foreign investment, and the simplified company formation process eases administrative burdens. English proficiency in the business community facilitates communication, while the country’s high quality of life and cultural richness make it an attractive location for investment.

There are numerous factors to take into account before establishing a foreign company. Our office offers comprehensive guidance and recommendations, considering all relevant aspects, and provides professional support throughout the entire process.

הפוסט Opening a company in Bulgaria הופיע לראשונה ב-Y-tax Balkan.

Opening a bank account in Bulgaria

BananaBlitz — Sun, 17 Mar 2024 19:06:01 +0000

Bulgaria is an EU member state, located in the heart of Balkans. Its strategic location, the favorable tax regime and highly skilled work force attract international interest.

If you’re thinking about moving or investing in Bulgaria, one of the topics that you should keep in mind is opening a local bank account.

Foreigners and locals alike can open bank accounts in Bulgaria, this process requires the submission of several documents and forms, which will be detailed below, it is important to note that the list of partial and may vary according to the bank you’ll chose.

Bulgaria is home to a notable number of banks, both local and international, most of which offer similar services. Thus, the main criteria for choosing a bank should be the fees and charges associated with different transactions.

The Banking Sector in Bulgaria

The Bulgarian National Bank (BNB), is a member of the European System of Central Banks. The BNB independently regulates and supervises banks, conducts research, and analyses statistical data. It directly reports to the Parliament and maintains a fixed exchange rate of 1 EUR = 1.95583 BGN.

The country has more than 20 different banks, including branches of foreign banks, among which are Estonian, French, and Dutch banks.

Banks play a dominant role in Bulgaria’s financial system, representing 83% of total financial sector assets. Other financial entities, such as insurance, leasing, and investment funds, have limited influence and are relatively small.

In recent years, the banking sector has shown consistent growth in both loans and deposits, supported by a relatively low level of financial depth, which presents a favourable backdrop for substantial future expansion. Despite these positive indicators, a notable challenge persists in the form of Non-Performing Loans (NPLs). Although there has been a significant reduction since 2014, the NPL level remains relatively high.

Banking Services in Bulgaria

Bulgarian banks often provide a variety of standard services, including:

Retail banking
Business banking
Private banking
Online banking
Brokerage services
Institutional banking
Investment banking
International transfers
Capability to handle accounts in foreign currencies

Types of bank accounts in Bulgaria

Bulgarian banks offer a variety of account types, designed to meet the specific requirements of individuals and businesses, including the following:

Current accounts
Payment accounts
Savings accounts
Deposit accounts

Choosing a Bank in Bulgaria

Selecting a stable and reputable bank is crucial because it ensures the safety and security of your financial assets. A bank with a solid reputation and financial stability offers peace of mind, knowing that your investments are well-protected and managed by trustworthy professionals. The major banks in Bulgaria comprise:

UniCredit Bulbank AD
United Bulgarian Bank AD
Eurobank Bulgaria AD
First Investment Bank AD
Central Cooperative Bank AD
DSK Bank AD

Most banks offer similar services, so an important aspect of choosing a bank to open an account in, is the different fees and changes and the availability of branches and ATMs.

Opening a Private Bank Account in Bulgaria

In Bulgaria, both residents and non-residents can open bank accounts, though the required documentation can vary, especially for non-residents. Commonly needed are a valid ID (for example, a passport), proof of address, and sometimes proof of income or employment.

Some banks may require filing in questionnaires or declarations, request detailed information regarding your tax residency status, the nature of our relationship with the bank, among other pertinent details. The bank retains the authority to authenticate identification data, solicit supplementary documentation, and adhere to regulations pertaining to anti-money laundering.

It’s advisable to contact the bank directly for specific requirements and any applicable restrictions, as the specific documentation needed can vary depending on the bank of choice.

Opening a Business Bank Account in Bulgaria

When registering a company in Bulgaria, opening a business bank account is mandatory and is part of the company incorporation process. While the process can be as simple as opening a private account, a business account requires more documentation and involves additional bureaucratic steps. Before opening a business bank account, assess the services offered by the bank, particularly if the company has international dealings or foreign shareholders.

To open a business bank account in Bulgaria, several documents are required for both local and foreign entities. For legal entities, such as companies under Art. 357 of the Obligations and Contracts Act or other legal entities, the following documents are needed:

Official identity document of the person/s representing the entity or the authorized person to operate the account.
Notarized power of attorney, if applicable, with the signatures of the authorizer/s.
Personal identification data and specimen signatures of persons authorized to operate the account, either certified by a notary or in the presence of an authorized bank employee.
Articles of incorporation/company agreement/statutes specifying management bodies and their power of disposition over property.
Resolution authorizing persons to operate the account, certified if presented as a photocopy.
Document certifying the registration of the entity, including a Unified Identification Code (UIC) for registered entities or a certified copy of articles of incorporation and a current registration certificate for non-registered entities.
Information about the actual owners of the entity as per the Law on Measures against Money Laundering.
For entities subject to licensing or registration, a copy of the relevant license, permit, or registration certificate.
Additional documents or information requested at the bank’s discretion.

Entities not registered in the Commercial Register and the Register of non-profit legal entities should periodically provide documents certifying their current status. Failure to submit required documents within 30 days may result in the bank closing the account.

Our firm specializes in international taxation and our team is happy to assist with any relevant matters, and if necessary, connect you with the relevant stakeholders to support your ongoing business activities in Bulgaria. Please feel free to contact us and schedule an introductory meeting

הפוסט Opening a bank account in Bulgaria הופיע לראשונה ב-Y-tax Balkan.