Relocating to Bulgaria to Start a Business: What You Should Know

Bulgaria, a member of the European Union (EU), offers a thriving environment for entrepreneurs, thanks to its favorable tax system, business-friendly regulations, and strategic location in Southeast Europe. With low operating costs, a well-educated workforce, and access to the EU market, Bulgaria is rapidly becoming a go-to destination for entrepreneurs considering relocation.

Whether you’re planning to start a tech startup, open a small retail store, or expand an existing business, Bulgaria presents ample opportunities for foreign investors. However, relocating to a new country for business purposes requires careful planning and understanding of the local business environment. This article explores key insights you need to know before relocating to Bulgaria to start a business, covering legal, financial, and operational considerations.

Why Choose Bulgaria?

Bulgaria’s advantages as a business destination are numerous, including:

Strategic Location: Situated at the crossroads of Europe, Asia, and the Middle East, Bulgaria provides easy access to a wide range of international markets. Its proximity to countries like Turkey, Greece, and Romania makes it an attractive location for trade and logistics.
Favorable Tax System: Bulgaria offers one of the most competitive tax regimes in the European Union. The flat corporate tax rate is 10%, one of the lowest in the EU, while personal income tax is also taxed at a flat rate of 10%. This makes Bulgaria particularly attractive to entrepreneurs and investors seeking to minimize their tax burdens.
Low Labor Costs: Compared to Western Europe, Bulgaria has some of the lowest labor costs in the EU, which can significantly reduce operating expenses, especially for businesses that rely on a workforce. The minimum monthly wage in Bulgaria is considerably lower than in countries like Germany or France, making it an appealing location for outsourcing and manufacturing operations.
EU Membership: As part of the European Union, Bulgaria offers businesses access to the EU’s single market, which has over 450 million consumers. This makes it easier for businesses in Bulgaria to trade with other EU countries without customs barriers or complicated regulations.
Skilled Workforce: Bulgaria boasts a highly skilled and multilingual workforce, with many employees fluent in English, German, French, and other European languages. The country has a strong emphasis on education, particularly in fields like IT, engineering, and medicine, making it an ideal location for technology and knowledge-based industries.
EU and International Funding: As an EU member, Bulgaria benefits from various EU grants and funding programs for businesses. This makes it easier for startups and SMEs (Small and Medium-sized Enterprises) to access financial support, whether it’s for research and development, international expansion, or infrastructure improvement.

Legal Framework for Setting Up a Business in Bulgaria

While Bulgaria is an attractive location for businesses, understanding the legal framework for setting up and running a company is crucial to ensure your business complies with local laws and regulations.

1. Choosing the Right Business Structure

The first step in setting up a business in Bulgaria is choosing the right legal structure. The most common business entities in Bulgaria include:

Limited Liability Company (LLC) or OOD (Obshchestvo s Ogranichena Otgovornost): This is the most popular choice for small and medium-sized enterprises. It provides limited liability protection for its owners, meaning their personal assets are protected in case the company runs into financial trouble. A Bulgarian LLC can be owned by one or more individuals and has relatively simple registration procedures.
Sole Proprietorship (ET): This is the simplest business structure and is suitable for individual entrepreneurs. However, it does not offer liability protection, meaning personal assets are at risk in the event of financial difficulties.
Joint-Stock Company (JSC): This structure is generally used for larger businesses, especially those looking to issue shares to raise capital. It has more complex legal requirements than an LLC.
Branch Office or Representative Office: If you are expanding an existing business from abroad, you can establish a branch or representative office in Bulgaria. However, these entities cannot conduct all activities that a local company can.

2. Registering Your Business

To officially register your business in Bulgaria, you need to follow the steps outlined below:

Company Name Registration: Choose a unique name for your business. The name must be approved by the Bulgarian Commercial Register, and you can search the registry to ensure it is not already taken.
Prepare Company Documents: For LLCs and JSCs, you need to prepare the company’s Articles of Association, which outlines the company structure, operational rules, and internal regulations.
Register with the Commercial Register: Submit the necessary documents (company name, Articles of Association, proof of address, etc.) to the Bulgarian Commercial Register. This can be done online or in person, and it usually takes between 2 to 7 days for approval.
Tax Registration: Once your company is registered, you will need to register for taxes with the National Revenue Agency (NRA). This includes obtaining a VAT number if your business turnover exceeds a certain threshold (currently €50,000 per year).
Open a Business Bank Account: A local business bank account is required for transactions, paying taxes, and handling company finances. Choose a bank and submit the required documents, including company registration papers, proof of address, and identification details of company directors.

3. Licensing and Permits

Depending on the type of business you plan to operate in Bulgaria, you may need to obtain specific licenses or permits. For example:

Retail or Food Businesses: If you are opening a café or restaurant, you must obtain a permit from the local municipality and ensure compliance with health and safety regulations.
Financial Services or Investment Firms: Businesses in financial services need to register with the Bulgarian Financial Supervision Commission (FSC).

It’s essential to check the specific licensing requirements for your industry to ensure full legal compliance.

Understanding Bulgarian Taxes

When relocating your business to Bulgaria, it’s essential to understand the tax system. Some of the key taxes include:

Corporate Income Tax: Bulgaria has a flat corporate tax rate of 10%, one of the lowest in the EU. This tax rate applies to both Bulgarian and foreign-owned companies.
VAT (Value Added Tax): The standard VAT rate in Bulgaria is 20%, applicable to most goods and services. If your business exceeds the VAT threshold of €50,000 in annual turnover, you will be required to register for VAT.
Personal Income Tax: For individual business owners, Bulgaria applies a flat tax rate of 10% on personal income.
Social Security and Health Contributions: Employers and employees must contribute to the Bulgarian social security system. Employers typically contribute around 19.8%, and employees contribute around 13.78% of their monthly salary.

B2B Hub: Helping You Relocate and Set Up Your Business in Bulgaria

Relocating your business to Bulgaria can be a smooth process with the right guidance and support. B2B Hub specializes in company formation in Bulgaria and provides tailored services to help businesses navigate the legal and regulatory challenges of establishing a presence in Bulgaria.

Our Services Include:

Business Registration: We handle all aspects of company registration in Bulgaria, from preparing necessary documents to submitting them to the Commercial Register.
Tax and VAT Registration: Our team will assist you with registering your business for taxes, including VAT, and ensuring compliance with Bulgaria’s tax laws.
Bank Account Setup: We can help you open a business bank account, ensuring your company can handle payments and transactions smoothly.
Legal and Accounting Advisory: Our experienced legal and accounting teams will assist you with compliance, tax planning, and managing business finances.
License and Permits Guidance: If your business requires specific licenses or permits, we provide expert advice on obtaining them.

By choosing B2B Hub, you can focus on growing your business in Bulgaria, while we take care of the legal, financial, and administrative requirements.

B2B Hub offers comprehensive company formation and corporate services in any jurisdiction of your choice.

For inquiries, please contact us at +44 770 018 3107, visit our website at b2bhub.ltd, or send us an email at reg@b2bhub.ltd.