DOING BUSINESS IN BULGARIA - MAIN ADVANTAGES
Doing business in Bulgaria has many benefits. The advantages start with establishing a Bulgarian company. First of all, the minimum required capital is symbolical, at the rate of 1 euro. In the second place, the registration is very cheap in comparison with other countries and it`s fast – a company can be registered for a few days, although it usually takes 1-2 weeks. Of considerable importance is the fact that the company registration can be also done from another country, without the investor coming to Bulgaria physically, via a power of attorney.
The registration of а company doesn`t lead automatically to running costs! If a company has been registered but it doesn`t work, it doesn`t have any financial obligations. The only obligation in this case is submission of an annual tax return. Accounting services are usually used in this case which are not so expensive because the procedure is not complicated – the declaration can even be submitted by the manager of the company personally.
If the company operates, state taxes are the only thing which is paid. Corporate Tax in Bulgaria is the lowest in the whole Europe – it`s 10 percent on profit. And profit is something different from turnover – it doesn`t matter how much the profit of a company is; if the company has a lot of expenses, the profit will be minimum – and hence the taxes which it will pay will be minimum.
When we talk about taxes, Bulgaria has signed agreements for the avoidance of double taxation with many countries in the world (such as United Kingdom, Turkey, Russia, etc.). In the first place, it means taxes will be paid only in one of the countries. This country could be exactly Bulgaria, where sometimes taxes are several times lower than in other countries.
The profit of the companies can be easily used by the owner of the capital entirely at his discretion and for his personal use after paying the dividend tax of 5 percent. It means, if the owner is a foreigner and the company has a profit of one hundred thousand euro, first of all the company will pay ten thousand euro corporate tax, then 5 percent dividend tax and the rest of the profit amounting to approximately 85 thousand euro can be exported abroad by the owner of the capital absolutely legally and he can then spend it for personal use.
Apart from taxes, other most common costs made are for salaries and social insurances. There are many trained employees in Bulgaria, who speak different languages and at the same time are paid many times less than those abroad. It is a common practice a foreign owner of a Bulgarian company to hire employees in Bulgaria and then to come to Bulgaria only from time to time to inspect if they fulfill his requirements. The minimum salary in Bulgaria is a little over 120 euro per month– the lowest in the whole Europe. Social insurances paid for employees are also low. It is an usual practice for most popular positions the social insurances for one employee per month to be no more than 50-100 euro.
In developing the business, Bulgarian companies use current accounting, which is not so expensive but some companies prefer to use the services of an accountant only once per year – which is quite possible and permissible by the Bulgarian law.
Unlike the laws of some foreign countries, the law in Bulgaria doesn`t require a minimum number of people employed in one company. The company may have only one owner and the owner can be a foreigner. The owner himself may also be a manager and to sign for the company – in this case there is no need to appoint a manager. The manager can be appointed at the discretion of the owner and can be given only certain representative powers, which are controlled entirely by the owner so as to minimize the opportunities for abuses.
To operate a Bulgarian company, the law doesn`t set as a condition an obligatory membership in any organization (e.g. chambers of traders, industrials, etc.). The membership is entirely voluntary and the company can be a member of many organizations if it considers that useful – but the company may not belong to any organization and to operate completely legally.
Bulgarian law doesn`t make strong requirements regarding the subject of the company`s activity. With a few exceptions, when it refers to large businesses (banks, insurance companies, etc.) companies in Bulgaria can operate whatever activity they decide. For example, one company can be registered for the production of goods but to commence services – and this change in activity can be done immediately, without any formalities which is useful for business flexibility.
Fields in which one Bulgarian company can prosper are many and different. Agricultural land is at the root of all of them. Primarily, it is the cheapest one in the whole Europe, but also its status can be changed relatively easy in order to be used for non-agricultural purposes. Currently there is a prohibition for foreign citizens to buy land in Bulgaria but at the same time it is legal for a foreigner who owns a Bulgarian company to purchase land in the name of the company. The newest tendency is to buy relatively small plots of land, which are later merged into larger land parcels.
The regime of licenses is very liberal. Licenses are rarity especially in view of other countries and are only required for certain kinds of activities. In Bulgaria licenses are not required for many activities for which such will be required in other countries.
One of the most important advantages of Bulgarian membership in European Union is that duties are not paid within the Union. So a company may produce certain goods in Bulgaria and then export them completely duty free - to another European country.
Many foreign traders who have registered companies in Bulgaria use production equipment imported from other countries, which is completely legal. Many companies import also raw materials from abroad and only assemble the final product in Bulgaria, which they export to EU duty free.
There is a currency board in Bulgaria and the rate of Bulgarian currency (Lev) is fixed to the common European currency (Euro) and has remained unchanged for more than 10 years. Bulgaria is an island of stability in the region of Eastern Europe and hasn`t experienced any serious economic cataclysms during this period. All this, combined with a steady political environment and optimum economic and fiscal conditions in Bulgaria for the last several years has been attracting even investors from Bulgarian`s neighbor-countries. By crossing the border they get into a highly favourable environment for doing business in Bulgaria and in the entire European Union.
