Almost all legal business entities that are available in the European Union are also available in Bulgaria. The Bulgarian Trade law is based on the German one.

Generally, we recommend to foreigners with small or mid-size businesses to use the most popular OOD/EOOD type of company. This is the Bulgarian version of the popular Limited Liability Company and the responsibility of the owners is limited to their share into the company’s registered capital (the minimum required by the law is 1 EUR). The owner can be one person (EOOD) or many (OOD). The liability of the owners is limited to their share capital. If you are interested in other type of entity please contact us.

Yes, we have long term cooperation with Hristev & Cherpokov Law Office and for all legal issues we work together with them.

No, we do not provide such services. You can look on Google.

Yes, at any time, no problem.

Yes, no problem.

Yes, no problem.

Yes. Without any limitations.

Absolutely no, but keep in mind that every company should have registered address. Usually this is the office address of the company. In case you don’t need an office in Bulgaria we provide registered address. It includes receiving, forwarding and sending mails and calls on your behalf. If you need one, please contact us for a quote.

No limitation.

Our flat fee is EUR 399 and it is an all-inclusive price. If you have a monthly subscription accounting services contract with us and prepay the subscription for 6 or more months then our registration fee is waived for you. If you don’t want to prepay for our accounting services we will reimburse 50% of the fee at the 13th month of your subscription period with us and 50% at the 25th month.

Let’s be honest. You can find many other companies who will do this procedure for less. We are dedicated accounting & tax firm with a personal touch to our clients. We’re going to provide you services at a superior level – above and beyond your expectations. Way beyond. This is why we have long lasting relationships with all of our clients.

10% flat rate. You can read more about taxation in Bulgaria here.

10% flat rate. You can read more about Bulgarian taxation here.

Regardless you have or do not have activities you still need to prepare and submit an annual financial report and annual tax return. If the company is registered with VAT register then you will need to submit VAT returns every month. This is the only fixed cost you will have, usually we charge +- EUR 500. Please contact us for a quote.

The total amount for the employer is 17.4% of the income, please read details here.

The process of establishing a limited liability company is fairly easy for locals who are familiar with the procedures. The application can be done via Internet however the web platform is only available in Bulgarian language the person applying would need to have a digital signature certificate. In addition, the applicant needs the proper set of documents signed, a bank account in a Bulgarian bank with the registered capital deposited and finally – to pay the government fee.

We, at Olsen and Partners, set up companies on behalf of our clients; we have an in-house attorney who takes care of all the documentation and the submission.

How does it work?

1. Once you decide to create a company in Bulgaria, we need a digital (scanned) color copy of the passports of the intended owners, as well as a digital color copy of the manager’s passport, if different than the owners; the name of the company you wish to use (we will verify, if it is available); the amount of the registered capital; the activities you wish to have listed in the articles of incorporation and the registered address. If you don’t currently have an office in Bulgaria or you don’t plan on leasing one in the near future we can help you with our virtual office service. Please note that this is not a service we offer to the general public but only for clients who have a long term monthly subscription accounting service contract with us. We will provide you with a registered office for a nominal monthly fee once you become our client. If you would like to know more about our registered office service please contact us.
2. Once you email us the above documentation, we will prepare the application documents in a timely manner.
3. The owners and the manager need to sign all the documents. Two of the documents must be signed by the manager in front of a notary. You have three options: a) To sign in front of the notary in Bulgaria. In this case the manager of the company will also open the bank account. We can arrange everything for you to be done in one day. b) To sign in front of a Bulgarian consulate in your home county. This is good option if you live in a city where Bulgaria has an embassy / consulate or nearby. We can arrange for you an appointment at the Consulate. Please check here if there is an Embassy or Consulate in your city. c) To sign in front if a notary in your home country and to have an Apostille on the documents. Please check here what Аpostille is. Then we need to legalize the documents in Bulgaria which takes additionally up to 10 days and costs about EUR 70.
4. The owner must open a bank account in a Bulgarian bank and to deposit the registered capital (minimum EUR 1). If you are not present in Bulgaria we can do this with a Power of Attorney.

Once you arrange the set of all the documents to be signed as we described above all you need is to send them to us via email. We will take care of the rest for you. You will have your company ready within 5-7 business days. If you need a Certificate of Good standing please let us know.

We would then need a Power of Attorney to represent a company in front of the tax authorities. It should be signed by the manager before a notary, please see p. 3 above, the same options are available. This POA cannot be done before the company is registered in the Trade register. We cannot file for EU VAT number on your behalf without this POA. The same for the company bank account: if you need one in Bulgaria you should come here or send us notarized POA after the company is registered. It cannot be done prior to registering the company. Here you can find more information about Bulgarian banks and how to open bank account in Bulgaria.

This is relatively easy process if you have all required documents, some of them with Apostille. You can find more about that here. If you have any doubts please contact us, your questions doesn´t bother us.

No, only the manager will pay.

The cost depends on what kind of activity you have had in the past, how many employees, etc. Generally it takes minimum of 6-8 months but it could take longer. Also you might face a tax audit. The minimum cost would be EUR 800 if you haven’t had too much activities in the past.

A beneficiary of an income for the purposes of applying DTATs is a natural or legal person that: (i) has the right to dispose of the income, (ii) is bearing the risk of the activity by which the income is realized and (iii) is not a company which is designed to direct the income.
A company which is designed to direct the income is a company which: (i) is controlled by natural or legal persons which would not have had the same tax preferences if the income was realized by themselves, (ii) has no economic activity other than management of the assets by which the income is being realized and (iii) does not have at its disposal assets, capital or manpower which is adequate to its economic activity or does not have control over the assets by which the income is realized.

The power of attorney (PoA) is used in Bulgaria when there is a need to appoint a person (natural or legal) to perform legal actions on behalf of another person called “the principal” (the person who issues the PoA). This type of document can be particularly useful for foreign entrepreneurs who have businesses in Bulgaria but cannot be in the country to sign important documents. It is recommended that the appointed individual is trustworthy because the legal actions which are performed on the basis of the PoA have direct legal effect in the legal sphere of the principal. In other words – the principal is deemed obliged by the legal actions of the representative. For some legal actions the appointed person must be an attorney-at-law. For others, the PoA must be explicit, meaning that it should contain the specific and concrete actions which the representative might perform (differentiating it from the general PoA which contains phrases such as “… shall be deemed empowered to perform all legal actions which are considered necessary and appropriate …”). In some instances the power of attorney in Bulgaria must be notarized in order to be deemed valid.

Our company formation experts in Bulgaria can help you with any legal procedures and provide you with support concerning the drawn up of a power of attorney and notarizing it when necessary.

The content of a power of attorney

The empowered person may receive the right to perform any legal actions on behalf of the principal. The content of a power of attorney is thus adjustable according to the specific needs and nature of the concrete transaction or the specific type of business which is conducted in Bulgaria. A power of attorney might be issued as a general one or may serve only for a specific purpose – e.g. concluding a contract. Therefore, in Bulgaria, individuals may choose to draw up a general type of PoA that allows them to appoint a person that shall administer their affairs when they will no longer be able to do so.

In general, a Bulgarian PoA includes the rights for: extrajudicial representation, representation before all courts of law or arbitral tribunals (the representative must be an attorney-at-law) and any administrative authorities, entering into agreements, including arbitration agreements, entering into settlements, receiving and issuing payments, securities, dealing with matters regarding debt collection and litigation in Bulgaria, representation in inheritance matters and even representation in criminal matters (the representative must be an attorney-at-law).

Drawing up a power of attorney

A power of attorney in Bulgaria must contain complete and correct identification information regarding the empowered person as well as the principal. It must also contain the place and date when it is issued. It should be borne in mind that the document should contain only the principal’s signature but not of the empowered person. As already mentioned, the signature should be notarized in some rather frequent cases. The easiest way when the latter is needed is to sign the document before a Bulgarian notary or a Bulgarian consulate in your home country. However, it must be underlined that when the document is to be notarized before the Bulgarian consulate, the document has to be drawn up in Bulgarian language. If any of the aforesaid actions cannot be performed for some reason, you may sign the PoA before a notary in your home country but in this case you will need to perform additional actions to legalize it in Bulgaria. However, this option will take some weeks or months (depending on whether an Apostille stamp might be put on the document) and you will entail additional costs. Read here more about what Apostille is.

If there are no provisions in the document stating otherwise, a power of attorney’s effect will not expire until the death, loss of capacity to act (due to mental illness) or the termination of the legal entity of either the principal or the empowered person.. However, the power of attorney might be revoked at any time at the sole discretion of the principal. A time-limited power of attorney might also be issued for affairs that have a limited duration.

If you want to open a Bulgarian company, a power of attorney is the tool you need in order to empower another person to deal with all incorporation procedures, including any necessary banking activities.

For any matters regarding company registration in Bulgaria, please feel free to contact our experts.

Depends on what is your activity, usually for small businesses and startups “limited liability company (Ltd.)” is the best option.

The total amount for the employer is 17.4% of the income, please read details here.

There are no legal restrictions for the terms of the civil (service) contracts.

The right of using the annual paid time off has nothing to do with any absence due to pregnancy or maternity leave. Therefore, the number of days each employee can use as a paid annual time off cannot be reduced and these days are accumulating during the period of pregnancy or maternity.

The right of using the annual paid time off has nothing to do with any absence due to sickness or any other medical leave. Therefore, the number of the days each employee can use as a paid annual time off cannot be reduced and these days are accumulating during the period of sickness.

The minimum amount of insurable earnings (MAIE) is the amount used as a base for calculation of the social contributions. The amount varies due to the position and economic activity of the employee. If the earnings before taxes are less than MAIE, the social contributions are calculated based on MAIE. If the earnings before taxes are higher than MAIE, the social contributions are calculated based on the earnings before taxes but not exceeding the maximum amount of insurable earnings.
The amounts of MAIE and the maximum amount of insurable earnings are determined by the State Budget of RB Act. Currently (2015), the maximum amount of insurable earnings is 2600 BGN. For amounts exceeding this limit no social charges are due.
For more information about the amounts please contact our payroll specialist they would love to answer your questions and discuss with you your issues.

The base salary is stipulated in the labor contract. If you add all additional payments made on top of the base salary you receive the gross salary. Often the gross salary is used as a base for calculation of different compensations as per Labor Code in Bulgaria – compensations for non-used annual leave or such paid by the employer when terminating labor contracts.

The minimum monthly salary (MMS) is determined by law and it is the same for everyone, regardless of their profession. It is the minimum amount of the salary received by a full-time (8 hours daily / 40 hours weekly) employee monthly. MMS currently is 360.00 BGN and from July 1. 2015 will be 380.00 BGN. The minimum amount of insurable earnings (MAIE) varies due to position (job) of the employee and economic activity of the employer. It is the minimum base amount for calculating the social contributions.

For more information about the amounts please contact our payroll specialist they would love to answer your questions and discuss with you your issues.

Can you recommend me a bank in Bulgaria to work with?

No, we cannot make such recommendation. Because your hard earned money is involved we do advise you to be careful when selecting a bank. Our only recommendation is to pick a well-known foreign owned bank. Domestically owned banks are more vulnerable to a loss of depositor confidence because of their corporate governance weaknesses and potential related-party lending (Fitch rating agency, July 2, 2014, read more here).

For your convenience we provide here a short list of the foreign banks that are present in Bulgaria. Please note that the comments regarding the online banking are based on our own experience and this does not suggest that the rest of the banks don’t provide good online banking. It simply means we have not worked with the rest.

Unicredit Bulbank is the biggest Bulgarian bank in terms of assets, owned by the leading European financial group Unicredit. The online banking is easy and very user-friendly.

DSK bank is the oldest Bulgarian bank, owned by OTP bank. The online banking is easy and very user-friendly.

Societe generale is owned by the French bank Societe Generale.

Procreditbank is owned by ProCredit group – led by its Frankfurt-based parent company, ProCredit Holding. The online banking is easy and very user-friendly.

Raiffeisen bank is owned by Raiffeisen Bank, Austria.

United Bulgarian Bank is owned by National Bank of Greece, the oldest and largest among Greek banks.

Again, please don’t consider this short list as our recommendation. We simply share our opinion and experience. Please carefully research and select a bank that will serve your needs best.

Here you can find the full list of all licensed banks in Bulgaria.

How to open a bank account in Bulgaria?

Opening a bank account for a Bulgarian or EU company or individual is fairly easy. For foreign companies, the process is more complicated but nevertheless possible.

If you are opening an account for an offshore company the process is complicated and many of the banks just won’t deal with offshores. If this is your case please feel free to contact us and we can review your case.

Generally, the manager of the company is required to be present at the bank in order to open a company account. There are some banks however that can open an account with POA.

We provide assistance with opening bank account for our long term clients only.

Yes, it is.

To our knowledge no decision has been issued by the courts relating to the interpretation of DTATs. Although not binding, academic papers might be considered by the courts as source of inspiration.

No commentaries have been issued by the relevant Bulgarian national authorities.

The national revenue agency has issued numerous rulings concerning interpretation of DTATs. At present there are no court rulings relating to the interpretation of DTATs. Any Court rulings that may be issued would supersede tax administration rulings.

Yes, under the Bulgarian legal order international treaties (such as DTATs) have supremacy over domestic legislation, including internal tax legislation. Hence, if a DTAT contradicts internal tax provisions, it is the international taxation treaty which would be applied.

They have to be interpreted in accordance with EU law where there is a conflict between a DTAT with a European Country and EU law. However, as per Article 351, para 1 of the Treaty on the Functioning of the EU and the relevant case law of the Court of Justice of the EU, while still in force, a bilateral treaty (such as DTAT) which is concluded before the accession of the Member State in the EU shall not be affected by EU law and Member States may apply it until it is renegotiated or denounced even if it contradicts EU law. Keep in mind that most of the DTATs were concluded before January 1st, 2007 when Bulgaria joined EU.

Domestic tax legislation and tax treaties are interpreted literally. Where the wording of the legislation is not explicit reference to the intention of the legislator is made. Still all means of legal interpretation are used.

No.

A beneficiary of an income for the purposes of applying DTATs is a natural or legal person that: (i) has the right to dispose of the income, (ii) is bearing the risk of the activity by which the income is realized and (iii) is not a company which is designed to direct the income.
A company which is designed to direct the income is a company which: (i) is controlled by natural or legal persons which would not have had the same tax preferences if the income was realized by themselves, (ii) has no economic activity other than management of the assets by which the income is being realized and (iii) does not have at its disposal assets, capital or manpower which is adequate to its economic activity or does not have control over the assets by which the income is realized.

No.

No.

Yes, there is a special procedure in the Bulgarian tax procedure code which must be followed regarding the implementation of DTATs.

In order for a non-resident to rely on a DTAT in Bulgaria the following preconditions must be met:
1. The person (natural or legal) shall be a resident in a country which is a party to a DTAT with Bulgaria.
That precondition has to be proved by a statement issued by the tax authorities in the country where the person concerned is residing.
2. The person shall be a beneficiary of the income.
3. The person shall not have place of business or establishment in Bulgaria which is connected with the income.
The second and the third requirements have to be declared by the person that requires application of the DTAT.
4. The special conditions under the particular DTAT shall be met if such are present.

The final precondition shall be established by official documents such as public register certificates. In case this is not possible in the case at hand (for example because such public register does not exist in the contracting state) – by other proof in writing.

The person shall also provide proof regarding the type and amount of the income which varies depending on the specific income type (e.g. dividends, contractual relations, interests).

Those preconditions are to be established in a procedure which depends on the amount of the income. If the income is less than 500 000 BGN (around 255 645 Euro) per year per contractor, then the person must provide all necessary documents for the application of the DTAT before its local contractor and no approval by the national revenue agency for the application of the DTAT is required.

On the contrary, when the income is more than 500 000 BGN, then a special procedure before the national revenue agency shall be initiated. That procedure ultimately ends either with an approval for the application of the DTAT or with a refusal which might be appealed. Figuratively speaking in the first case it is the local contractor which has to be convinced that the DTAT is applicable while in the second case it is the national revenue agency.

To our knowledge no decision has been issued by any Bulgarian court related to the interpretation of DTATs. The MC is not available in the local language, neither its official translation.
Resolving disputes resulting from DTATs

Article 1 of the DTAT specifies the persons covered by the DTAT. Per OECD Model to benefit from the treaty you must be a resident in one or both of contracting states. A certificate of residency from the other Tax Authority is sufficient to prove residency in the other country. Residency in Bulgaria may be examined. In cases of dual residency the DTAT is followed. The beneficiary shall also prove the legal ground for receiving the income – for example if the legal basis is a contract – a written contract or, if such does not exist, another evidence (for example an invoice for the payment under the contract).

According to the DTATs signed from Bulgaria any disputes must be resolved under a mutual agreement procedure. No practical experience yet on the matter.

When adjudicating on the matter, the Judges bear in mind that provisions of DTATs supersede domestic legislation. However, if income of a person is not even potentially subject to tax under domestic legislation, the application of the DTAT has no relevance as tax is charged under domestic legislation. Thus, assessing whether the DTAT applies would be deprived of its meaning which is namely to evaluate if the person has rightfully paid (or is about to pay) taxes in Bulgaria or not.

Can I get Apostille in Canada?

No. Apostille certificates can only be issued in countries that have signed and ratified the Hague Convention of 5 October 1961. Canada was not a signatory to this Convention, and therefore Apostille certification is not possible for Canadian public documents. Find out here what you can do instead of Apostil.

The primary federal authority designated to carry the authentication process out in Canada is the Authentication and Service of Documents Section (JLAC) of the Department of Foreign Affairs and International Trade.

Can I get Apostille in United States?

Yes, you can. United states have signed and ratified the Hague Convention of 5 October 1961. You can obtain Apostille for your official notarized documents or certificate of good standing for your company and many other documents.

If your document is not issued from a state or government authority you can notarize it by fisrt going to a public notaryand then you obtain the Apostille. If you are an expat living abroad you may get your document notarized by appearing in person at the closest American Embassy. Call ahead to ensure you have all of the documents ready before your visit.
The Apostille in US is issued by the Secretary of State. The apostille may be obtained by going to the Secretary of State’s office in person or sending your notarized document to your Secretary of State’s office. Be sure to check your Secretary of States website for the proper procedure to have your document apostilled as details differ from state to state. If you go in person you may have your document apostilled and returned to you in the same day. If you mail in your documents this process will take 7-30 days and cost you around $30USD depending on the state and method of postage.

Here you can find the list with contact details for all US states.

If you are in a hurry or simply don´t like all the buraucracy you can use a service provider to help you with the process. Some of our clients have recommended these agents however we have not worked with them directly and this is not our endorsement for them: apostilla.com  and nynotaryforyou.com. You can also use Google to search for other similar service providers. Usually, these service providers can do everything on your behalf and even ship the documents worldwide. You just need to send them the original documents that need Apostille and pay for the service.

What if my country hasn’t signed the Apostille convention?

Here you can find a list of countries which have signed the Hague Convention.

If you home country haven’t signed the Hague convention and does not have Apostille certification, public documents must undergo a three step process of 1. Notarization, 2. Authentication, and 3. Legalization in order to be usable in foreign countries. Notarization, Authentication, and then Legalization is a process designed to relieve foreign authorities from the burden of having to verify the authenticity of the documents with which they are presented.

In other words, a person who wants to use a public document outside of his/her home country which hasn’t signed the Hague convention, must have some official proof that the document is an authentically legal document before he or she presents it to a foreign court or other authority. The authentication process is carried out by a designated government authority. The rules of authentication and legalization vary depending on the country and the situation.

You should check with the consulate or embassy of the country you are visiting and find out what documents you need to bring with you and what kind of authentication they require.

You should also find out whether the country requires a particular document to be translated into it the country’s officiallanguage, in which case you will have to notarize a translated version of the document and get that translated document authenticated and legalized as well.

You should also, find out, from the consulate or embassy, whether the country requires authentication by a federal or provincial authority. Your home government authority will then certify the authenticity of the notary public’s seal and signature by comparing the seal and signature to the seal and signature that they have on file for that particular notary public.

The authority will issue a certificate of authentication for the document, which is attached to the document to prove that the notarization is genuine. Next, comes the process of legalization. You must present the authenticated document to the consulate or embassy of the country where you intend to use the document, along with the certificate of authentication, and any such application forms and proofs of identity as the consulate or embassy may require. The consulate or embassy certifies its recognition of the fact that the document is an authentic, usable legal document, it is eligible for use in that country.

Once all is the steps are completed, you will have the original document, the certificate of authentication, and the certificate of legalization. All of these must be in your possession for the document to be usable in the country to which you are traveling.

Does my bank share information with IRS?

Almost all foreign financial institutions nowadays are connected with IRS and share information about the foreign bank accounts of US residents. You can check here if your bank is on the IRS list and find more information about FATCA.

Does US banks share information with foreign governments ubder FATCA?

Under current law, US financial institutions are not required to gather as much information about their non-US clients as is required for foreign financial institutions under FATCA who must report about their US clients to the US government. But this will change soon. FinCEN (the Treasury Department’s Financial Crimes Enforcement Network) proposed rules trying to level the playing field and making sure the US can give partner countries the same type of information that the US will be receiving about US customers in foreign financial institutions.

FinCEN proposed rules on July 30 requiring US financial institutions to collect “Customer Due Diligence” information. The FinCEN proposed rules are aimed at non-US persons who have not been tax compliant in their home countries and who are using their US financial accounts to hide income from their home governments. The full Treasury announcement can be accessed here and the proposed rules can be accessed here .

The information required under the proposed rules mandates the identification of the true beneficial owners of US financial accounts. One of the main goals for obtaining this information will be so that the USA can comply with the US government’s obligations to any countries with which it has a “reciprocal” Intergovernmental Agreement (IGA) under the Foreign Account Tax Compliance Act (FATCA). A “reciprocal” IGA is a Model 1A IGA. With a “reciprocal” IGA, the US is generally required to exchange information about accounts held in US financial institutions by citizens or residents of the IGA partner countries. The reciprocal IGA also incorporates a policy commitment by the US to implement rules and support legislation that would provide for equivalent levels of information exchange. A full list of countries having IGAs and the type of IGA can be accessed here.

What is FATCA?

The provisions commonly known as the Foreign Account Tax Compliance Act (FATCA) became law in March 2010.

• FATCA targets tax non-compliance by U.S. taxpayers with foreign accounts
• FATCA seeks reporting:
  • Directly by U.S. taxpayers about certain foreign financial accounts and offshore assets;
  • By foreign financial institutions (banks, mutual funds, hedge funds or private equity funds and certain types of insurance companies that have cash value products or annuities) about financial accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers hold a substantial ownership interest.
    The objective of FATCA is the reporting of foreign financial assets; withholding is the cost of not reporting.

What an US individual must report to IRS?

U.S. individual taxpayers must report information about certain foreign financial accounts and offshore assets on Form 8938 and attach it to their income tax return, if the total asset value exceeds the appropriate reporting threshold.
If the total value is at or below $50,000 at the end of the tax year, there is no reporting requirement for the year, unless the total value was more than $75,000 at any time during the tax year. The threshold is higher for individuals who live outside the United States. Thresholds are different for married and single taxpayers.

NB!!! Taxpayers who do not have to file an income tax return for the tax year do not have to file Form 8938, regardless of the value of their specified foreign financial assets.

Alert: The reporting requirement for Form 8938 is separate from the reporting requirement for the FinCEN Form 114, Report of Foreign Bank and Financial Accounts (“FBAR”) (formerly TD F 90-22.1). An individual may have to file both forms and separate penalties may apply for failure to file each form.