Rent a car business in Bulgaria
No specific licenses or permits are required in order to start a rent a car business in Bulgaria (a circumstance, confirmed after an inquiry with the competent authorities). Such are required for the transportation of cargo within the country and abroad. The renting of cars to persons, who are going to drive them on their own, or by third parties cannot be qualified as transportation of passengers. This means that the investor should be prepared to incorporate a new company, or purchase an already existing one, through which to implement this particular activity, and he would not have to initiate any procedures for the issuing of licenses or permits before the competent Bulgarian administrative authorities.
If, however, the provision of a qualified driver, who on his part is an employee of the company, is added to the provided service, then issuing of the respective license would be required. Considering all this, the following action plan should be applied, in order to get the necessary legal requirements satisfied and achieve the implementation of the desired economic results.
Firstly, the incorporation of a commercial company is needed, through which the respective activity –car-renting, would be performed and developed. The most convenient legal organizational form is a limited liability company. According to the Bulgarian legislation, there is no problem foreign nationals to be owners of the capital of a Bulgarian commercial company, as long as they have the funds to cover the initial capital deposit, which is of a minimum value of 1 EUR. The entire procedure on incorporation and registration of a commercial company takes no more than 7 days. It is advisable that within the company scope of activities is explicitly indicated that the company shall conclude deals on renting cars.
Secondly, the company would need to have headquarters and management address on the territory of Bulgaria, and it is not necessary that it owns that property. This is needed in regard to the ability to conduct correspondence with the local tax and other authorities, as well as due to the requirement for publicity. Having in mind that the scope of activity is related to the renting of cars, it would be necessary those first to be purchased and registered before the competent Bulgarian authorities. It is possible the vehicles, which would be rented out to be rented from a third party. Furthermore, it is necessary that the vehicles comply with all technical legal requirements and all additional documents according the Bulgarian legislation are obtained, such as a vignette fee, annual technical inspection, civil liability insurance, and last but not least, the annual tax of the vehicle.
As mentioned above, all cars need to have a civil liability insurance, the price of which is defined in accordance with the technical specifications of each vehicle. Nonetheless, it is highly recommended that the vehicles also have a full ‘Casco’ insurance, which covers events, such as theft and various damages to the vehicle. Apart from that, in each car rent contract clauses should be included for the provision of a security deposit by the renter, which would guarantee the company that the other party would fulfill its obligations under the contract in good faith. The rent contracts are the main tool, through which the commercial activity of the company shall be implemented, respectively on their basis the profit (dividends) shall be accumulated. This means that they need to be prepared extremely carefully and to include clauses, which would guarantee the interest of the lessor (the company), due to likelihood of the occurrence of property damages, as consequence from the action of the parties, renting the respective vehicle or by third parties.
The rent contracts should include the following essential considerations:
- The main thing, which the parties agree on is the relationship between them, which arise due to the motor vehicle – its type and purpose, as well as the price, which shall be paid to the lessor.
- Parties to the contract could be both people and companies, and this does not affect in any way its content.
- The rights and obligations of the parties connected with the provision of a vehicle within the agreed terms, its return and payment of the price.
- The duration of the contract is agreed freely between the parties, which could also decide the contract to be for an unlimited term.
In addition to the general clauses there is possibility for amendments related, for example, to additional rights and obligations of the parties, distribution of obligations related to the maintenance of the vehicle, payment of fees, etc. Also, clauses related to the re-renting of the vehicle may be included. Last but not least, a penalty may be foreseen in case of default of the contract and clauses related to resolution of potential litigation. Practice shows that for each rent contract, general conditions are prepared, which are an inseparable part of the contract. Thus, additional guarantees are provided for the protection of the interests of the lessor.