How to set up an LLC in Bulgaria

The process of establishing a Limited Liability Company (LLC) in Bulgaria has become an increasingly popular route for foreign entrepreneurs seeking to enter the Bulgarian market and open a company in Bulgaria. 

Known locally as OOD (for multiple owners) or EOOD (for single ownership), this business structure provides a combination of limited liability protection, flexibility in management, and ease of setup that is attractive to many business people from abroad.

An LLC in Bulgaria shields owners’ personal assets from business-related debts and obligations, ensuring that their personal finances are protected. This business format is versatile, allowing for both single and multiple owner scenarios, making it suitable for a variety of business ventures. The simplicity of the company formation process in Bulgaria, coupled with the country’s stable economic environment, makes it an ideal choice for non-residents looking to establish a business presence in Europe.

Steps to Set Up an LLC in Bulgaria

Steps to register an LLC in Bulgaria include company preparation and registration, post-registration setup and VAT registration. 

Preparation and Registration an LLC in Bulgaria

The first step in registering an LLC in Bulgaria involves comprehensive preparation. Prospective company owners must decide on a unique company name that adheres to Bulgarian naming conventions and is distinguishable from existing entities. The information required for all prospective owners includes full name, date of birth, contact details, and copies of an ID or passport. The same details are needed for the appointed director(s), who will manage the company.

The primary business activity should be clearly defined for regulatory purposes and to inform the scope of the business operations. The minimum capital requirement for an LLC in Bulgaria is symbolically set at 2 BGN (approximately 1 EUR), but a higher initial capital of 500 to 1000 BGN is often recommended to enhance the credibility of the business.

The process of document preparation is crucial and typically handled by a lawyer who specializes in Bulgarian company law. These documents, which must be prepared in Bulgarian, include the company’s articles of association among other incorporation papers.

Accompanied by a lawyer or a legal representative, the next step involves visiting a notary to sign the incorporation documents and a power of attorney if necessary. Following this, an escrow account is required to be opened in a Bulgarian bank where the initial capital will be deposited. This step is crucial and currently presents challenges for foreigners, which can be mitigated by registering as a tax resident or obtaining a Bulgarian residency permit.

The final step in the registration phase involves filing the prepared documents with the Bulgarian Trade Register. This process typically takes between 2 to 5 business days, depending on the efficiency of local administrative processes.

Read also: Accounting for Small Businesses in Bulgaria: What to Know

Post-Registration Setup an LLC in Bulgaria

After the company is officially registered, selecting a local accountant is essential. This accountant will handle ongoing bookkeeping, tax, and financial advisory services. The escrow account opened during the initial setup phase will then be converted into a regular business current account, and arrangements for online banking should be set up to facilitate business transactions.

It’s often advisable to prepare a power of attorney enabling a local company representative to manage administrative and operational tasks on behalf of the foreign owners.

VAT Registration 

Depending on the business activity, VAT registration may be necessary. This is determined in consultation with the appointed accountant, and if needed, the VAT registration application is filed post-company registration. Obtaining a VAT number typically takes about two weeks.

The entire process of setting up an LLC in Bulgaria can be completed within approximately three weeks. Although not mandatory, the presence of the company’s owners in Bulgaria during the notary and bank processes can significantly expedite the proceedings.

Given the complexities associated with foreign company registration, consulting with both a lawyer and an accountant who are versed in Bulgarian business law and finance is strongly recommended. This professional guidance ensures compliance with all local regulations, smooths out the incorporation process, and sets up proper accounting practices from the start.

Read also: How to Open a Fundraising Account and a Bank Account in Bulgaria?

Conclusions

Setting up an LLC in Bulgaria offers a strategic gateway for foreign entrepreneurs into the European market through a business structure that provides significant protections and flexibility. By following the outlined steps and considerations, and with the aid of professional advice, like that offer Accountancy Bulgaria,a company advisor in Bulgaria expert in the construction of different corporate forms and associated regulations, foreign investors can efficiently establish a robust business presence in Bulgaria, poised for success in a dynamic economic environment.