Under Bulgarian law it is possible to incorporate the following companies: Partnership (general, limited and limited by shares

Companies under Bulgarian Law. Incorporation and Taxation - General Legal Frame

Under Bulgarian law business activities may be carried out through the following companies: Partnership (general, limited and limited by shares), Limited Liability Company and Joint Stock Company.

Partnership

A general partnership is an association of two or more legal or natural persons, who are personally, jointly and unlimitedly liable towards the creditors for the partnership’s obligations. In a limited partnership there are one or more general partners bearing unlimited liability and one or more limited partners, whose liability is limited to the extent of their agreed capital contribution. A limited partnership by shares has general partners who bear unlimited liability and at least three limited partners whose liability is limited to the extent of their shareholding. A foreign national must be resident in Bulgaria in order to participate as a general partner in a partnership.

Necessary documents for the incorporation:

1. Application to the registration court;

2. Minutes of the incorporation meeting of the company;

3. Articles of association of the company;

4. Notary certified specimen/s of the unlimitedly liable person/s;

5. Certificate that the proposed name of the company is unique;

6. Evidence/bills that all registration fees are paid.

Limited Liability Company

The Limited Liability Company may have one or more shareholders, who are liable to the extent of their contribution in the capital. The minimum capital required by law is BGN 5 000 (five thousand). The decision-making bodies of the company are the General meeting and one or more Managers. There is no limitation regarding the number of shares, but each share cannot be less than BGN 10 (ten) and shall be dividable to 10. The shares can differ in their size.

Necessary documents for the incorporation:

1. Application to the registration court;

2. Minutes of the incorporation meeting of the company;

3. Articles of association of the company;

4. Declarations of the persons, who shall manage and represent the company that they are not conducting on their own or on behalf of somebody else a commercial activity; that they are not participating in partnerships or any other limited liability companies; they do not hold a seat in management bodies of another companies and they are not declared insolvent;

5. Notary certified specimen/s and consent to manage the company of the Manager/s;

6. Bank certificate that at least 70% of the capital is paid up;

7. Certificate that the proposed name of the company is unique;

8. Evidence/bills that all registration fees and fees for promulgation in the State Gazette are paid.

Joint Stock Company

The Joint Stock Company may have one or more shareholders, who are liable to the extent of their shareholding. The minimum capital required by law is BGN 50 000 (fifty thousand). The company may issue registered, bearer or preference shares. The contributions in the capital may be paid in cash or in kind. The decision-making bodies are the General meeting and one-tier (Board of directors) or two-tier (Supervisory and Management board) managing bodies. The minimum value of one share shall be at least BGN 1 (one). Each share shall have the same par value.

Necessary documents for the incorporation:

1. Application to the registration court;

2. Minutes of the incorporation meeting of the company;

3. Articles of association of the company;

4. Shareholders’ list of the shareholders who took part in the incorporation meeting and subscribed for shares;

5. Declarations of the incorporators that they are not declared insolvent;

6. Declarations of the members of the Board of directors, respectively of the Supervisory and Management boards that they have not been members of management or supervisory body of a company, terminated due to insolvency in the last two years before the date, when the insolvency has been declared, if there are any creditors, whose claims has not been satisfied, and they comply with the requirements of the Articles of association;

7. Minutes of the meeting of the Board of directors, respectively the Supervisory board regarding the appointment of the persons who shall manage and represent the company;

8. Notary certified specimen/s of the persons, who shall manage and represent the company;

9. Bank certificate that at least 25% of the capital is paid up;

10. Certificate that the proposed name of the company is unique;

11. Evidence/bills that all registration fees and fees for promulgation in the State Gazette are paid.

Sole Proprietorship

Each capable individual resident in Bulgaria may register a sole proprietorship. Each person may register only one company as a sole proprietorship. This person is unlimitedly liable for the obligations of the company.

Each company and the sole proprietorship after having been registered with the court shall be registered with the Tax authorities, the National Insurance Institute and the National Statistical Institute. No fees are due for the registration.

Taxes and duties

All companies incorporated under Bulgarian law become local legal persons for taxation purposes. The sole proprietorship shall be subject to Personal income tax. The other companies are subject to 15 % Corporate income tax and 10 % municipal tax. Certain types of incomes payable to foreign companies and individuals are subject to a 15 % withholding tax. The applicable VAT rate is 20 %, a zero tax rate is applicable to exports. There are many supplies exempted from VAT taxation. Excise duties are due on importation of spirit drinks, tobacco products, coffee and tea, fuels, some types of automobiles, gambling machines. Bulgaria is a member of WTO, has signed a Memorandum of Understanding with the EC for participation of the EC program “Customs 2002” and a customs tariff is applicable on exported or imported goods.