Bulgaria Info
Joined: 20 Apr 2007
Posts: 16
Home Country: bulgaria
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 Posted: Wed May 16, 2007 6:55 am Post subject: DOING BUSINESS IN BULGARIA / BULGARIA BUSINESS GUIDE |
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DOING BUSINESS IN BULGARIA
STARTING A BUSINESS
STANDARDIZED COMPANY
Legal Form: Druzestvo s Ogranichena Otgovornost (DOO)
Minimum Capital Requirement: 5,000
City: Sofia
Registration Requirements:
Procedure 1. Check if chosen name is available at the IS /information services; get certificate for the registered name
Time to complete: 1 day (15 - 30 minutes)
Cost to complete: BGN 100 or BGN 102 (by phone)
Comment: This service is also available by phone. It cost 2 BGN more, but one has to get the certificate for the registered name and make the payment anyway.
Procedure 2. Obtain notary certified consent with a specimen of the signature of the company manager, certified Articles of Incorporation (2 copies, one to court, one to bank), and notarised Appendix to Articles of Incorporation.
Time to complete: 1 day (30 min.)
Cost to complete: BGN 48 (BGN 3 per page)
Comment: Notary's participation in certifying the specimen of the manager's signature is mandatory. All other documents require simple written form with the signatures of the founders.
Procedure 3. Deposit paid-up capital in a bank
Time to complete: 2 days
Cost to complete: BGN 20-30 (depending on the bank)
Comment: The capital accruing bank account must be opened either by the company manager or a person authorised by a notary certified power of attorney. The persons authorized to operate with the bank account must provide specimen of their signatures in person or notary certified. The amount of capital stays blocked in the bank account until presentation of the court decision for registration of the company.
The Commercial Act requires only 70% of the capital to be paid-in prior to incorporation and each of the partners shall pay at least 1/3 of her share but not less than BGN 10. The time frame for the payment of the remaining part of the capital may be fixed in the Articles of Incorporation of the company but shall not exceed two years from the court registration of the company. After opening of the escrow account and depositing the funds the partners are issued a certificate evidencing the deposit. The certificate shall be presented in court upon registration.
Procedure 4. Pay the court fee at the Treasury
Time to complete: 1 day
Cost to complete: BGN 121.50 - state fee for court registration
Comment: The court fee was recently increased up to 250 BGN but the Supreme Administrative Court repealed the increase.
Procedure 5. Register at the Commercial Register at the District Court
Time to complete: 12 days
Cost to complete: included in Procedure 4. BGN 1.50 for certified copy of the court's decision on the incorporation
Comment: The company manager must file an application for registration to the district court at the seat of the company within 7 days as of the constituent meeting.
The following documents need to be attached to the application: Minutes of the constituent meeting, Articles of Incorporation (or Company Agreement), notary certified consent and specimen of the signature of the manager, non-competition statement of the manager, contract for management assignment, bank certificate for paid in capital, certificate for reserved company trade name, documents evidencing the payment of the court fees for the registration and the state fee for publishing of a notice for the incorporation in the State Gazette. If a founding shareholder is a legal entity, there must be attached a certificate of good standing and a corporate decision for participation in founding the new company. If a founding shareholder is a foreign national there must be presented a copy of his/her passport.
Procedure 6. Publish in the State Gazette
Time to complete: 15 days, up to approximately 3 months
Cost to complete: BGN 30 - state fee
Comment: The publishing in the State Gazette is necessary for information purposes only. It does not prevent the company from operating legally. An expedited service is provided for publication within 15 days for BGN 60.
Procedure 7*. Make a company seal
Time to complete: 1 day
Cost to complete: BGN 40
Comment: The company shall present the court decision for registration. No requirements as to the text of the seal. The text of the seal may be provided for in the Articles of Incorporation of the company. It could be in English as well.
Procedure 8*. Register with BULSTAT within 3 days of court registration
Time to complete: 1 day (30 min.)
Cost to complete: BGN 60
Comment: establishing one information database, connected to the BULSTAT Register, one registration and declaration procedure and one collection regulation regarding all state revenues. The TSSPC and the Law on BULSTAT Register also introduced a single identification number for statistical, tax, social security and other registration purposes.
The Law on the BULSTAT Register (State Gazette, issue 39 dated 10.05.2005, effective as of 11.08.2005, amended, SG, issue 105 dated 29.12.2005, effective as of 01.01.2006) regulates the linking of the BULSTAT Register with other registers and information systems. The law also established the Registration Agency, administering the BULSTAT Register.
The new Tax and Social Security Procedure Code (promulgated State Gazette, issue 105 dated 29.12.2005, effective as of 01.01.2006) (TSSPC) introduced a new procedure for the collection of state revenues by the National Revenue Agency (NRA), a united state authority undertaking the powers and competences of the former tax and social security authorities.
Two sets of copies of the following documents must be presented personally by the company manager or a person authorised through a notary certified power of attorney: court decision for registration, Articles of Incorporation (or Company Agreement). A copy of the passport of the manager may also be requested. A certificate for registration valid for 1 month is issued. Within 1 month a plastic card evidencing the registration is issued. The registration agency provides one set of copies of the above documents to the National Revenue Agency, responsible for public revenue, including tax collection.
Procedure 9*. Register for VAT
Time to complete: 1 day (30 min.)
Cost to complete: BGN 0.5
Comment: The company may register for VAT purposes, if its taxable turnover for the last consecutive 12 months exceeds BGN 25,000 (as of 1 April 2006). The company is obliged to register for VAT purposes if its turnover for the consecutive 12 months exceeds BGN 50,000. The company may irrespective of its taxable turnover register for VAT purposes if the registered capital is at least BGN 500,000 and is effectively paid in. Such registration of the company on this ground is possible only once and may be kept for a period of 3 years.
Note: Procedures sometimes take place simultaneously. Instances of this are marked with an asterisk (*).
FORMS OF BUSINESS ORGANISATION
1. Limited liability company
2. Joint stock company,
3. Joint enterprise
The most common type of organisation for foreign investors is a limited liability company. Other forms are companies limited by shares (joint stock companies), joint enterprises, business associations, general partnerships, limited partnerships and sole proprietorships.
TAXATION
Corporate tax
Standard rate: 10%
Resident companies are taxed on their worldwide income; non-resident companies pay tax only on Bulgarian-source income. Companies are generally treated as resident if they are registered under Bulgarian law. A flat rate of 10% applies. Profits distributed by resident companies to resident corporate shareholders are excluded from taxable income of the recipient company.
Individual tax
Progressive rates up to 24%
Resident individuals are taxable on worldwide income; non-residents pay tax only on Bulgarian-source income. An individual is deemed to be resident if the individual’s centre of vital interests is in Bulgaria (which is strongly indicated by a permanent address in the country) or if the individual stays in Bulgaria for more than 183 days in any 365-day period.
Income tax rates rise progressively to a top rate of 24%. Dividends distributed to individual shareholders of Bulgarian companies are taxed at source at a flat rate of 7%.
Capital gains
Generally taxed as income
Capital gains are taxed as income. Gains on shares listed on the Bulgarian stock exchange are exempt, subject to meeting certain requirements.
Indirect tax
Standard rate: 20%
Value-added tax (VAT) applies to most transactions. Exports and intra-community supplies are zero-rated. Exemptions include financial and insurance services, education and health services, land sales (that do not qualify as regulated land plots) and old buildings (with or without adjoining land).
Registration is compulsory for businesses with a taxable turnover of over BGN 50,000 in any previous period not exceeding 12 months. Registration is also compulsory for intra-community acquisitions exceeding BGN 20,000 for the year if the company/individual is not registered on other grounds. Registration may occur on a voluntary basis regardless of the turnover.
A non-resident company making supplies in Bulgaria must register for VAT through an accredited representative.
Tax administration and compliance
Tax year: Calendar year
Companies make monthly advance payments of tax, based generally on the adjusted taxable profits of the previous year. Where a loss was incurred in the previous year, quarterly advance payments are due based on pre-tax earnings in the relevant quarter of the current year (except for the last quarter). A final payment of tax is due on March 31st following the tax year. Where advance tax paid exceeds the final liability, it may be offset against the following year’s corporate tax liability.
Employment income of individuals is taxed by withholding.
Additional tax information
Withholding taxes: Dividends 7% (0% on dividends paid to companies resident in the EU subject to certain requirements); Interest and Royalties 10%. Withholding rates may be reduced by provisions in an applicable tax treaty.
Tax treaties: Bulgaria has concluded more than 50 tax treaties.
Dividends: Dividends paid between resident companies are exempt.
Revenue protection: There are transfer-pricing and thin-capitalisation rules.
Groups: There is no group taxation.
Incentives: Agricultural production and investment in certain regions with a high level of unemployment.
Other taxes: Inheritance and gift tax, Real estate tax, Customs duties. |
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