Open a Holding in Bulgaria: A Complete Guide

Opening a company in Bulgaria is a strategic choice for many international entrepreneurs, especially when structuring a corporate group through a holding company. In economic terms, a holding company is a legal entity created to own shares in other companies, both domestic and foreign, and to exercise strategic control over them. This structure allows centralized management, optimized financial flows, and the ability to benefit from a favorable tax environment—particularly in Bulgaria, where corporate taxation is among the most competitive in Europe.

Holding companies can be established by both local and foreign investors, provided they meet the requirements set by the Bulgarian Commercial Code. In general, the law stipulates that the company should hold a significant share—often around 80%—of the subsidiary’s capital. This ensures that the holding company has dominant influence and coordinates the operational and strategic decisions of its subsidiaries.

Legal Forms Available for a Holding Company in Bulgaria

Those wishing to establish a holding company in Bulgaria can choose from three main legal structures, each with different features and requirements.

1. Joint-Stock Company (EAD) This is the ideal structure for businesses that need to raise capital from investors. It requires a minimum share capital of €25,000 and offers greater flexibility in managing complex operations, especially at the international level.
2. Limited Partnership (LP) or Partnership Limited by Shares This form requires at least two partners and a minimum share capital of €2. It is particularly suited to professional services companies or projects with a limited number of partners.
3. Limited Liability Company (OOD) This option requires only one shareholder and a minimum capital of €1. It is the most widely used structure for starting a business in Bulgaria due to its ease of management and the possibility of operating in multiple sectors.

Regardless of the chosen form, a holding company in Bulgaria can purchase and manage shares of foreign companies, provide financing to its subsidiaries, and benefit from a streamlined administrative framework.

Read also: Tax Incentives in Bulgaria: A Comprehensive Overview of Allowances and Deductions

Steps to Register a Holding in Bulgaria

Establishing a holding company in Bulgaria follows a well-defined process, requiring careful attention to both legal and administrative aspects.

1. Drafting the articles of association and company statute These documents, which define the operating rules of the company, can be prepared by professionals specialized in company formation in Bulgaria. In many cases, the process can be handled through a power of attorney.
   
2. Filing with the Commercial Register Once the documentation is complete, it is submitted to the Bulgarian Commercial Register for official registration.
   
3. Signing the notarized specimen signature The directors of the holding must sign a specimen signature at a notary in the city of registration. This document must be translated and legalized.
   
4. Opening a corporate bank account The holding company must have an account in a Bulgarian bank where the share capital is deposited.
   
5. VAT registration Obtaining a VAT number is mandatory and can be done with the assistance of local consultants.

Key Legal Considerations

Bulgarian law sets out specific conditions for the operation of holding companies. Key provisions include:

• At least 25% of the capital must be paid to the company holding the shares.
  
• Holdings can manage investments, bonds, and participations but cannot acquire licenses unless they are intended for their subsidiaries.
  
• They cannot participate in activities without legal personality.
  

Foreign investors can choose from the three corporate forms mentioned earlier, enjoying the same legal protections as local companies.

Read also: EEIG in Bulgaria: Legal Nature, Taxation and Registration

Tax Regime for Holding in Bulgaria

One of the main reasons investors choose to establish a holding in Bulgaria is its favorable tax regime. The corporate income tax rate is set at 10%, one of the lowest in the European Union. Distributed dividends are subject to a 5% withholding tax, which can be reduced or eliminated thanks to international double taxation treaties.

Interest payments are generally taxed at 10%, but reductions may apply depending on bilateral tax agreements.

Tax and Financial Advantages

Setting up a holding in Bulgaria offers several important advantages:

• Access to more than 60 international double taxation treaties.
  
• Potential full corporate tax exemption for companies located in high-unemployment regions.
  
• Favorable dividend taxation.
  
• Ability to hold and manage shares in international companies.
  
• Access to EU funding through a Bulgarian holding company.
  

Operational Functions of a Bulgarian Holding

Beyond shareholding management, a holding company in Bulgaria can play an active role in coordinating group strategies, financing subsidiaries, and streamlining costs. It is common for holdings to centralize administrative, accounting, and HR services for group companies, optimizing time and resources.

Why Choose Bulgaria

Foreign entrepreneurs select Bulgaria not only for its attractive tax regime but also for its economic stability, strategic geographic location, and access to the EU single market. Simple administrative procedures, combined with low operational costs, make Bulgaria particularly appealing for structuring international investments.

Establishing a holding company in Bulgaria is a concrete opportunity for entrepreneurs who want to optimize the management of their shareholdings, reduce tax burdens, and operate in a stable economic environment. Choosing the most suitable legal form, managing the registration process correctly, and complying with the applicable laws are all essential to the success of the operation.

Accountancy Bulgaria, accountant in Bulgaria, offers the expertise and experience to assist companies and investors at every stage of the process: from assessing the most advantageous corporate structure to registration with the Commercial Register, and providing ongoing tax and accounting management. Relying on a team of experts means not only complying with all legal requirements but also benefiting from tailored solutions to maximize your holding’s efficiency. Contact us today to learn how we can help turn your business project in Bulgaria into a reality.