When talking about company formation in Bulgaria, the most common kinds of companies that attract entrepreneurs are the EOOD and OOD. Both these companies have limited liability, meaning the shareholders are not personally liable for company debt and financial responsibilities.
We will further go into detail about what each type of company is, what is the difference between an EOOD and an OOD Bulgaria, and some important information on company registration.
It is worth mentioning that engaging the services of an accounting firm, like Accountancy Bulgaria, is a wise move in order to delegate the bookkeeping responsibilities, and the yearly tax reports to the experts, and focus on growing your business.
Accountancy Bulgaria, with headquarters in Sofia, counts with experts that have years of experience and deep knowledge of the Bulgaria financial system, rules, and regulations and can even advise on company formation. Opt for a free consultation and find out how they can best serve your company.
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What is an EOOD?
An EOOD is a sole-owned limited liability company.
As a sole-owned company, only one proprietor is necessary. The person opening this kind of company can be a Bulgarian or a foreign citizen.
Bulgaria has no restrictions in place regarding the citizenship or residency of directors of a company registered in Bulgaria, making this country an attractive destination for companies looking to relocate to maximize their earnings and reduce costs.
However, members of EOODs or OODs Bulgaria that are going to be settled in the country to run said company must have a residency, as well as a registered address in Bulgaria, and company owners will also need to consider opening a corporate bank account in a local bank.
Limited responsibility means that the proprietor doesn’t have to compromise his own assets and he is not liable in the case of company debt.
READ ALSO: Establishing a Company in Bulgaria: Complete and Updated Guide
What is an OOD?
Similarly to the EOOD, an OOD is a limited liability company. However in this case more than one member is possible.
In the case of an OOD, there are 2 or more shareholders.
This is the main difference between an EOOD and an OOD Bulgaria.
Complete comparison table
Here is a complete comparison table between EOOD and OOD
| SEO Keyword / Criterion | EOOD (Single-Member LLC) | OOD (Multi-Member LLC) |
|---|---|---|
| Number of Shareholders | 1 (Individual or Corporate Entity) | 2 or more shareholders |
| Minimum Share Capital | 2 BGN (approx. €1) | 2 BGN (divided among shareholders) |
| Decision-Making Process | Sole Director / Immediate decisions | General Meeting of Shareholders (Majority/Unanimity) |
| Corporate Income Tax (Flat Tax) | 10% Flat Tax | 10% Flat Tax |
| Dividend Tax Rate | 5% | 5% |
| Best Suited For | Freelancers, e-commerce, solo consultants, single investors | Co-founders, tech startups, joint ventures, shared projects |
Company registration Bulgaria
Company formation Bulgaria is actually a very straightforward process that may only take a few days to complete if all documents are drawn correctly.
The attractive business environment in Bulgaria and the advantageous tax scheme are some of the main reasons for companies to relocate or open branches in this country.
Requirements to open an OOD Bulgaria
To open an OOD in Bulgaria the following documents are necessary:
- a copy of an ID,
- 3 options for company names,
- The name of the company’s manager,
- The name of the company’s capital sole proprietor,
- The amount of the foundation capital,
- A brief scope of the company’s activities.
Open an OOD Bulgaria: step by step
The steps to open a OOD in Bulgaria are the following:
- Prepare the incorporation documents,
- Open a bank account in Bulgaria,
- Present the paperwork at the Bulgaria Company Register.
It usually takes about 2 business days to complete the process.
Keep in mind that foreign citizens may also need to work on obtaining a visa or residency for Bulgaria if they are planning to stay over 183 days in the country (in a period of one year) to run the business.
READ ALSO: All you need to know about Bulgaria Ltd
Conclusion about EOOD in BUlgaria
An OOD Bulgaria is one of the most common company types for company formation Bulgaria.
The process of creating and registering a company in Bulgaria is simple and fast.
Counting on the accounting services of a reputable accounting firm like Accountancy Bulgaria is a definite must for any business looking into registering a company in Bulgaria. Accountancy Bulgaria has over 30 years of experience that can be an asset for an OOD Bulgaria.
Looking for Accountancy Service in Bulgaria?
Request a free consultation
Book your free 30 minutes meeting with us here to receive all the support you need
FAQ ABOUT SETTING AN EOOD or OOD COMPANY
Do I need to move to or reside in Bulgaria to manage an EOOD?
No. Bulgaria does not impose any citizenship or residency restrictions on company directors or shareholders. You can manage the company entirely from abroad. However, please note that if the strategic and administrative management of the business is conducted entirely from your home country, local tax authorities there might cross-examine the business for tax corporate inversion (esterovestizione). It is highly recommended to seek professional guidance to structure your substance and operations correctly.
How can I withdraw funds and profits from my Bulgarian EOOD?
The most transparent and tax-efficient method is through the distribution of dividends, which are subject to a low $5\%$ withholding tax in Bulgaria. Alternatively, the director can receive a formal management salary/remuneration. This salary is subject to the standard $10\%$ personal income tax and local social security contributions.
Can an EOOD operate smoothly across the Italian and European markets?
Yes. Once your company is registered in the VIES system (the European Intra-Community VAT registry), your EOOD can issue invoices to clients in Italy, the EU, and non-EU countries. For B2B transactions within Europe, you will be able to apply the reverse charge mechanism, meaning you will invoice without charging local VAT.
What is the minimum capital required to set up an EOOD?
The legal minimum share capital required by Bulgarian law to incorporate an EOOD or OOD is just 2 BGN (which is approximately $1\text{ €}$). This capital must be deposited into a temporary corporate bank account in Bulgaria before submitting the final incorporation documents to the Trade Register.