Legal forms and taxation of business in Bulgaria

Bulgaria allows foreign entrepreneurs to register one of the following legal forms:
  • 1
    Individual entrepreneur (Edinolichen trgovets)
    Both a Bulgarian and a foreigner citizen residing in the country on the basis of a residence permit may become an individual entrepreneur
  • 2
    Limited Liability Company (ООD)
    A company of this type can only be opened by two or more persons. A single individual or legal entity may open EOOD. The minimum authorized capital is 2 leva, which is equivalent to 1 euro
  • 3
    Joint Stock Company (AD/EAD)
    Joint Stock Company is the most complex legal form with the minimum authorized capital of 50,000 leva. A company of this type can be opened by one individual or legal entity. The number of founders is not limited by law. The extent to which owners have influence over company decisions is determined by the number of shares they own. The minimum value of one share is 1 lev.
OOD/EOOD is the most reliable legal forms for successfully running a business.
We recommend choosing this type of company since in this case entrepreneurs face fewer tax difficulties.
Companies in Bulgaria (OOD, EOOD, AD, EAD) need to pay the following taxes:
  • Corporate income tax (10%)
    Tax base: gross profit minus costs. Costs refer to all costs of running a business.
  • Value added tax (VAT) – 20%
    Export of goods and services, as well as trade of goods and services with the countries of the European Union are not subject to VAT (0% tax, reverse). Legal entities with an annual turnover of 50,000 leva and more are required to pay VAT. This tax must be paid before the 10th month following the reporting year. Entrepreneurs can get VAT refund in case they export goods. In addition, some companies may count on reduced tax rates. For example, hotel businesses apply 9% VAT.
  • Taxes on payroll 40%
    The tax depends on the amount of wages paid, which cannot be less than the minimum determined by law for each group.
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