Doing Business in Bulgaria
Either incorporating a company or by acquiring an existing Bulgarian company, a business or an enterprise as a going concern, or assets. Certain commercial activities like banking, insurance and investment intermediary services can be performed only after obtaining a license. Acquiring an existing Bulgarian entity, business or assets may be subject to mandatory merger notification and / or (depending on the industry specific legislation) regulatory approvals.
In a nutshell, if you are acquiring a Bulgarian business which has generated a turnover of more than BGN 25 million (approx. EUR 12.7 million) for the previous financial year, merger filing shall be mandatory. The same applies if the following criteria are simultaneously met: (i) the target company’s turnover in Bulgaria for the previous financial year exceeds BGN 3 million and (ii) the combined turnover of the acquirer and the target (including their respective groups) on the Bulgarian market for the previous financial year exceeds BGN 25 million.
In Bulgaria, you may establish a general partnership, a limited partnership, a limited liability company, a joint stock company, a limited partnership with shares and European Company (also known as Societas Europaea or SE). The most common company forms are a limited liability company (LLC) and a joint stock company (JSC). You can own 100% of the share capital in a LLC and a JSC.
An LLC is preferred for its simplified management system. The advantages of an LLC include:
- it may have a single managing director (no board of directors is required);
- the required statutory minimal capital is low (BGN 2, about EUR 1);
- financial assistance is not prohibited.
The main disadvantage of an LLC is that its shares are not freely transferable (unless between shareholders) and shareholders’ consent is required for a share transfer to a third person and for admittance of new shareholders.
A JSC is more appropriate for large businesses with multiple shareholders. You would use a JSC, if this is required by law for a regulated activity (banking, insurance, etc.) or if you intend to list the company shares or corporate bonds on a stock exchange. The advantages of a JSC include:
- shares typically are freely transferable;
- a JSC can issue corporate bonds.
A JSC’s management system, however, is more complex (one-tier with a Board of Directors or two-tier with a Management Board and a Supervisory Board) and its minimum registered capital is BGN 50,000 (approx. EUR 25,500).
An employment contract cannot be less beneficial for the employee than the provisions of the Labour Code and other generally binding regulations, as well as the (industry- or company-wide) collective bargaining agreement (if relevant).
The common type of employment is an indefinite term employment contract. Fixed-term employment contracts are permitted by law only in exceptional cases.
Employment contracts may be terminated only on grounds that are explicitly stated in the Labour Code and which may or may not require a prior termination notice. An employee is entitled to terminate her contract by one to three months’ notice (as agreed in the individual employment contract), without a reason.
Employment agreements with a probation period (for a maximum of 6 months) are permitted. During the probation period, the benefiting party or parties can terminate the employment without notice and a reason.
The entry into, amendment and termination of employment contracts are subject to prior notification to the National Revenue Agency.
Yes. However, as a Bulgarian employer, the number of your non-EU employees may not exceed ten per cent of the average total number of your Bulgarian, EU and EEA employees in the preceding twelve months.
All non-EU foreign nationals, who do not hold a long-term or permanent residency card, are generally required to obtain a work permit in order to be able to work in Bulgaria. They may need a visa or residence permit to legally stay in Bulgaria. Foreign employees may benefit from the EU Blue Card (a temporary residence and work permit) for working in a highly skilled profession.
Yes, non-EU management or supervisory board members of a Bulgarian company can reside and work in Bulgaria (based on management contracts) on grounds of an extended residence permit, where the Bulgarian company has employed at least 10 Bulgarian nationals (subject to exceptions set out in international treaties concluded by Bulgaria).
Foreign citizens and foreign companies can directly acquire ownership rights over buildings, premises within buildings and limited property rights over immovable property (e.g. construction right, right of use, etc.). Citizens or commercial entities of European Union Member States and the European Economic Area (EEA) can directly acquire land ownership title.
Foreign citizens and entities outside the EU and EEA can acquire land ownership rights, subject to an international treaty to which Bulgaria is a party. When restrictions for direct acquisitions of property rights apply, the acquisition can be made by means of a company established in Bulgaria or other EU/EEA country.
Limitations apply to the acquisition of agricultural and forest land.
The information contained here is not intended to and does not constitute a legal advice under Bulgarian law or under the laws of any other jurisdiction. It is provided for informational purposes only, based on the legislation currently in effect and may not be up to date at the time of reading. No actions should be taken or not taken based on any contents of this post.