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Setting up a business in Bulgaria
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The thought of setting up a business in Bulgaria often puts people off making the move to this wonderful Balkan state, yet the process is quite straightforward providing you follow the correct channels and get good legal representation. You need a Bulgarian company if you are a foreigner who wishes to purchase Bulgarian land and property or if you intend to operate an active business. Foreigners are not required to set up a company if they are buying an apartment.

Commercial law in Bulgaria recognises two distinct types of business: Partnerships and Corporations. The legal difference between them concerns share allocations. Foreign investors may establish a company under either of these two models and must use the title Limited Liability Company or Joint Stock Company as part of their title to denote the type of organisation they represent. As most foreigners set up limited liability companies to purchase land and property here, we focus on the key requirements and procedures for achieving this goal.

Limited Liability Company

A Limited Liability Company denoted by the letters OOD in Bulgaria is the most common form of company organisation. This is the type of business, which foreigners need to set up to buy and sell land and property on a small scale or to operate a guest house, bar, shop, restaurant or other small business. The business must have at least one partner and the overall share capital must be a minimum of 5,000 leva and the minimum nominal value of each share must be no less than 10 leva. 70% of the capital must be paid into the company bank account before applying for registration. The partners of the company are only liable for the debts of their company up to the amount of their contribution and partners are not liable for each other. Shares within the company are not negotiable and may only be transferred with the approval of the other partners the transfers must be approved by at least 75% of the partners who must all be present at the vote. One person must be appointed director of the company.

Setting up a limited liability company

It is advisable to use a reputable lawyer who speaks your language to organise all of the paperwork for you. Many of the large estate agencies will also be able to arrange your company formation for you, but double check, where your company will be registered, it is better to apply to the court in the municipality where you intend to live, own property or do business. Some of the larger agents will use their head offices to set up your company and this can mean that whilst you reside in Varna, your company is based in Sofia. Whilst this is perfectly legal, any changes to your business must be reported in person to the court where your company was registered, which can involve quite a lot of unnecessary travel.

The next step is to decide on a name. Most people use their surname as the name for their company but it is possible to apply any name providing that another company is not using the name already. Your lawyer will check that your company name is unique by checking the company register. At the moment Bulgaria is in the process of creating a central database of company names. Prior to January 2008, names were registered at a municipality level, which meant that there could be two companies in different parts of the country with exactly the same name. It is now possible to reserve names in advance of completing your documents to inaugurate your company.

Your lawyer will then prepare your articles of association, which details what your company will do in terms of trading as well as details of the share holders, the main company director and how the company will be run. If you are not setting up an active business, it is wise to make your articles of association as general as possible in case you decide to run your own business in the future. You will need to provide proof of ID in the form of a passport. The statutes will then be notarised by a public notary in your presence or that of your lawyer if you have given them power of attorney.

At this stage you need to open a company bank account and deposit the share capital, minimum of 5,000 leva into the account. Surprisingly once your company is officially registered and you have all of the necessary paperwork, you can withdraw your money from the company account.

The documents are then submitted to the district court in your chosen area and you will be required to pay a court fee to the treasury. The formation of your company will be published in the State Gazette. The court will then send you officially stamped copies of all of your documents including permissions from the court to set up your company.

Registering with the relevant authorities

Once you receive official registration, you should take your documents to the National Statistical Institute, where after more form filling, you will be able to receive your BULSTAT number and card. These are the details you need to make your company stamp and to obtain official receipts that you can offset against tax. You can buy a company stamp from the national stationary chain known as Office 1. The cost is around 13 leva.

If your company is intending to trade you must register with the National Social Security Institution (NOI) the tax office and VAT authorities in your region within fourteen days of your business starting. You will be subject to fines if you fail to do this.

The company formation process should take around 20 to 30 working days and should cost around 1,200 leva. If you need to set up your company in a faster time frame then be prepared to pay fees of around 2,500 leva for the privilege. Each year you will need to employ an accountant to make your annual tax declaration, even if your company has not been trading. Expect to pay around 50 leva for a nil declaration return.

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