Investment projects- Highly-skilled, multilingual workforce at Europe's most competitive wages;
- Stable and predictable business and political environment;
- EU membership on January 1, 2007;
- The lowest operational costs and tax rates in Europe;
- Industrial goods traded duty free between Bulgaria and the EU, EFTA, CEFTA and Turkey;
- 15 % corporate income tax rate (expected rate in 2007: 12 %);
- VAT exemption on equipment imports for investment projects over Euro 5 million ;
- Annual depreciation rate of 30% for machinery & equipment, 50% for new equipment used in entirely new investment or expansion and 50% for software and hardware;
- Acquisition of land and property through a Bulgarian registered company with 100% foreign ownership;
- Fast administrative services through TEMIS CONSULTING;
- 58 treaties for avoidance of double taxation;
- 56 agreements on mutual protection and promotion of foreign investment;
- Excellent climate, natural scenery, food and hospitality.
- Due diligence and advice;
- Registration of foreign investments;
- Minimizing expenses and taxation advice;
- Venture capital.
- Incorporation of representative offices of foreign companies;
Bulgaria is a parliamentary republic. The supreme legislative body is the National Assembly, seated in the City of Sofia. It enacts legislation and ratifies international treaties. Municipal councils perform legislative functions at the local level and in full compliance with the acts adopted by the National Assembly. The 240 members of the National Assembly are elected for a four-year term of office directly by the electorate. The elections are based on a system of proportional representation. The Council of Ministers heads the executive power on a national level. District Governors and Mayors represent the executive power, and implement the Government's policy within their respective jurisdictions at the local level. The President is elected directly for a five-year term of office. As a Head of State he has certain representative functions and symbolizes the unity of the nation.
Bulgaria is governed by statutory law. The legal system is based on legal models found elsewhere in Europe, especially on the civil law systems of France, Germany, Italy and Belgium. After the Second World War and the Soviet troop invasion in the country, Soviet influenced laws were introduced. However, most of the principles of the civil law system were not abolished. After the democratization of the country in 1989, most of the laws based on the Soviet Union system were repealed and replaced with acts influenced by the EU legislation. The harmonization of the Bulgarian legal system with the EU one still continues. A major effort toward democratization was the Constitution of 1991, which set forth the principle of new social order: supremacy of international treaties ratified by the National Assembly over the domestic regulations; separation of powers and independent judiciary; respect for the human rights, including private property rights; free economic entrepreneurship and equal treatment of state and private property; protection of foreign investments, among others. The Bulgarian judicial system complies of three instances. Regional courts, District courts, Courts of appeal, Supreme Court of Cassation and Supreme Administrative Court operate within its structure. The Regional court operates only as a court of first instance. All cases are under its competence, except those, which, according to the provisions of the law, are jurisdictional to another court. The District Court operates either as a court of first or of second instance. Some categories of civil and criminal cases are under the jurisdiction of the District court as a court of first instance. As a court of second instance it functions on cases initiated upon claims and protests against resolutions of the Regional Court. The District court comprises Civil, Commercial, Penal and Administrative departments. Courts of Appeal operate only as second instance courts on cases upon appeals and protests against decisions of the District Courts operating as courts of first instance. The Courts of Appeal comprise Civil, Commercial and Penal departments. The Supreme Court of Cassation is the highest instance for penal and civil cases. It exercises supreme judicial supervision for precise and equal application of the law by all Courts. Its jurisdiction spreads upon the whole territory of the Republic of Bulgaria. The Supreme Administrative Court is the highest instance for administrative justice. It is an instance of cassation for the judicial acts of all Courts concerning the legality of the administrative acts including the administrative acts of the Council of Ministers.
Establishing a Business
All persons wishing to undertake economic activities in Bulgaria have to apply before the Bulgarian District Court for registration at the special Commercial Register kept by the Court. Foreign entities may operate through joint ventures, wholly owned subsidiaries and branches in Bulgaria. Foreigners may own buildings and limited rights over real estate. Nevertheless, direct ownership of land by foreign persons is restricted.
Forms of Doing Business
Organizational Forms of Doing Business The organizational forms of doing business are stipulated in the Bulgarian Commercial Code. It was enacted in 1991 and draws on the principles and practice of the German law. A “merchant" is such an individual or an entity that executes business transactions on a regular basis and for a profit. Farmers and self-employed professionals (artisans, doctors, lawyers, etc.) are excluded from the scope of the law.
The types of merchants are:
- Sole Proprietorship;
- Unlimited Partnership;
- Limited Partnership;
- Limited Liability Company (LTD);
- Stock Corporation (CO);
- Public Limited Partnership:
- Cooperative (regulated by the Cooperatives Act).
Merchants are registered with the District court on the basis of information provided by the partners or the manager. This information concerns the owners, the management, the capital, the scope of activity and other circumstances. The Commercial Register kept by the District Court is public. Sole Proprietorship
An individual who conducts business activities on a regular basis must be registered with the Commercial register of the respective District Court. Sole proprietors:
Are not obliged to deposit initial capital in order to obtain the court registration; Bear unlimited liability for their debts; Are subject to personal income tax; Must keep books, usually using the single entry accounting method. Double entry accounting method is also permitted.
Two or more persons may join efforts to do business together by having an equal vote in the management and being liable for the debts of the company. An unlimited partnership: Is established by means of an agreement between the would-be partners;
- Is registered with the Commercial register of the District Court;
- Is not a subject to minimum capital requirements;
- Is a legal entity separate from the partners. Nevertheless, all partners bear unlimited liability for the debts of the partnership; Is taxed at the corporate level and later the partners pay personal income tax on their shares of the profit.
The difference from the unlimited partnership described above is that some of the partners bear limited liability for debts of the partnership and, correspondingly, have limited management powers.
Limited Liability Company
The Limited Liability Company is the favourite structure of foreign investors in Bulgaria. It combines several advantages:
- Very low initial capital requirement –BGN 5,000 (Approx. EUR 2,500);
- The participants own ,,shares” in the company which are transferable under certain conditions;
- The shareholders bear limited liability up to the value of their shares.
- The same registration procedure, as for partnerships, is applied.
The company is governed by the General Meeting of Shareholders and represented by a Manager. The Bulgarian Law recognizes also the Sole Limited Liability Company (EOOD). Usually, the foreign investors structure their direct investments in the country through this form of Limited Liability Company. The sole owner resolves any issues connected with the company's policy. Therefore, the multinationals find this form of doing business the best vehicle for their centralized policy of taking decisions.
The Stock Corporation may be established by one or more persons. The minimum capital required is BGN 50,000 (Approx. EUR 25,000). Banks must meet more stringent capitalization requirements imposed by the Bulgarian National Bank. The stock may be common or privileged, bearer's or registered. The Stock Corporation may also issue bonds in order to raise funds. A Stock Corporation chooses a one-tier and two-tier system of management. Under the one-tier system the Board of Directors manages the day-to-day operations and reports directly to the General Meeting of Shareholders. Under the two-tier system the Managing Board runs the business in a way overseen and guided by the Supervisory Board. The annual balance sheet and Profit and Loss account of the stock corporation must be certified by a chartered accountant.
Public Limited Partnership -12
In fact, this is a limited partnership, where the limited partners own stock equivalent to their participation in the company. This form is rarely used in practice.
A foreign company can register a branch in Bulgaria. The latter is not a legal entity, but:
- Is considered as such for tax purposes;
- May conduct business activities;
- Must keep its own books in accordance with the respective Bulgarian law and the national accounting standards.
Foreign entities are allowed to operate in Bulgaria through a representative office whose activities are limited to marketing and providing support to the foreign entity. The representative office itself cannot undertake economic activity. A representative office is registered with the Bulgarian Chamber of Commerce and Industry. A representative office:
- Is not a legal entity;
- Does not have to keep books except for payroll purposes;
- May not conduct business activities;
- Does not pay corporate taxes since no income is generated;
- May not recover VAT credit.
Foreign Exchange Controls
The Bulgarian currency is Bulgarian Lev (BGN). Payments between a local person and a foreigner may be effected in foreign currency. The commercial banks and the Bulgarian National Bank may perform transfers and payments towards foreign countries after declaring the reasons for the transfer. The Bulgarian National Bank may also demand information, which is important with respect to the status of the balance of payment.
Bank employees as well as any other persons working for the bank cannot, unless authorized, disclose or use for their personal benefit facts and circumstances, which have become known to them during the performance of their official and professional duties.
Supervision over Banking Operations
Each bank establishes a specialized office for internal control. The Central Bank supervises the operations of the banks and the branches of the foreign banks, operating in the country. It may demand accounting and other necessary documents, as well as information on their activities; it may also conduct audits. The annual accounts of each bank have to be audited and certified by a certified auditing company with a registered office in the country.
Insurance in Bulgaria is regulated by the 1996 Insurance Act. The Insurance Act governs the legal status of insurers, state control on insurance and mandatory insurance. An insurer may be a Stock Corporation, insurance cooperative or foreign insurer, operating through a branch within the country. The state insurance control is performed by the Financial Control Committee. A permission from the Financial Control Committee is required prior to the registration of the Insurer in the Commercial Register in order to perform insurance activity.
The Bulgarian legislation defines the concession as follows:
- Granting a special right to use a site, which is public state property;
- Granting a special right to use sites, over which the state exercises sovereign rights, given by the Constitution;
- Granting a permission to undertake activities, which are state monopoly under the Bulgarian Constitution.
The procedure for granting a concession has to go through the following steps:
- Resolution for granting a concession taken by the Council of Ministers;
- Competition or an auction for selecting the concessionaire;
- Conclusion of a concession contract with the concessionaire.
Concession is granted for a term of up to 35 years as of the date of signing the concession contract. The term may be prolonged, but the general term may not exceed 50 years.
Residence in the Republic Of Bulgaria
The normative order for residing foreigners on the territory of the Republic of Bulgaria is confirmed by the forthcoming acceptance of Bulgaria in the EU. On entering the country, any foreign person must submit before the customs authorities minimal financial means for daily allowance amounting to 50 BGN whereas the total amount of the means declared must be equal to the initially stated by that person duration of his/her stay. Any foreign person is obliged to register in the respective police office the address at which he/she will stay within 48 hours as per the time of his/her entry into the Republic of Bulgaria.
RESIDING IN BULGARIA - 12
According to our national legislation, residing in the Republic of Bulgaria can be of 2 major types:
- Short – term stay
- Long – term stay
Short – term stay has a maximum duration of 90 days within the period of 6 months. For this residence, it is necessary to obtain a visa for short – term stay from the appropriate consular office in the Republic of Bulgaria or at the border of the country. This requirement does not concern citizens of the EU.
Long – term stay is of two types:
- Extended stay – with a maximum duration up to one year with a possibility provided by the law for unlimited renewals of the term over and over again.
- Permanent stay - termless
REQUIREMENTS FOR OBTAINING PERMISSION FOR LONG – TERM RESIDENCE -12
A proof is required to certify that the foreigner is socially secured, that he has enough means of livelihood, that he has a home for the period of residence and he has made all necessary compulsory insurance for the time of residence in Bulgaria.
DOCUMENTS, NEEDED FOR GRANTING LICENCE FOR RESIDENCE -12
According to the kind of requested residence, the authorities of administrative control require from the foreigners a number of documents, verifying their reliability. Generally, they are directed toward specifying 2 groups of circumstances – that he has legally entered the territory of the Republic of Bulgaria, and that he has enough means of livelihood.
CONDITIONS AND PRINCIPLES OF FOREIGN INVESTORS -12
- Equality of Bulgarian and foreign subjects;
- Priority for action on international agreements in cases when they provide more favorable conditions for doing an economic activity for foreigners.
- Unlimited foreigner participation in the registration forms of an economic activity in Bulgaria.
Bulgaria is entering into a bipartite agreement for mutual protection of investments and it has an agreement for avoiding double taxation with many countries.
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Currency rates:1.00 USD = GBP
1.00 USD = EUR
1.00 GBP = EUR
1.00 BGN = GBP
1.00 BGN = EUR
1.00 BGN = USD
Currency data courtesy coinmill.com
Bulgarian Embassy in England