Starting a business in Bulgaria has been a popular choice for many EU and third-country nationals in the last decade. The country’s good economic conditions like low corporate taxes, low VAT (value-added tax) rate (20%), and uncomplicated administrative process for company formation attract investors from all around the world.
If you are a foreign citizen considering launching a business venture in Bulgaria, you might be wondering what company type would be the most suitable choice for you. Several options exist but the two most often selected forms for Bulgarian companies are OOD (limited liability company) and EOOD (single-member LLC).
Understanding EOOD
EOOD (ednolichno druzhestvo s ogranichena otgovornost) is, in a way, a subtype of OOD. The main difference between the two is the number of shareholders. An OOD requires a minimum of two, while the essence of an EOOD is the sole capital owner.
A big plus of EOODs is the limited liability of the business owner. In case the company registered in Bulgaria gets in financial trouble, the financial liability is restricted to the size of the firm’s capital. In comparison, the owner of an ET company (sole proprietor) keeps the full profit. However, he is fully financially responsible, even with his private property, in case the company goes bankrupt.
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Advantages of EOOD over OOD
The main advantage of choosing an EOOD as your company type is the flexibility this structure offers. As the sole shareholder, you have the freedom to structure your company the way you want to and to make decisions without depending on other people.
OOD shareholders are obliged to hold a general assembly at least once per year. A single capital owner can make any company related decisions at any time. The only requirement is that they are put on the official record.
What’s more, the minimum value of a share for an EOOD is just 1 BGN (around 0.50 EUR). In comparison, an OOD needs a minimum of 2 BGN per share. The single-member LLCs are also a subject of lower tax rates, especially when it comes to small businesses.
In any case, converting an EOOD to an OOD and vice versa is a simple administrative process. You can keep your flexibility and adapt based on the situation.
Basic requirements for registering a company in Bulgaria
Like with the registration of an OOD in Bulgaria, setting up an EOOD company requires a few main steps:
- Registration of a physical address. This will serve as the company’s headquarters for administrative reasons. It does not need to be an office building.
- Opening a company bank account. You will deposit your initial capital in it.
- Choosing a name for the company. It has to be written in Bulgarian with the Cyrillic alphabet in the official company documents, even if it is in another language.
- Preparation of all necessary documents:
- forms from the Registry Agency and the Commercial Register;
- bank documentation for the capital deposit;
- article of incorporation;
- decision for appointing the sole shareholder as the company’s representative;
- declarations and confirmations for paid registration fees.
- Payment of all fees:
- new bank account fee - about 10 BGN;
- start capital - minimum 2 BGN;
- notary fees for document execution - about 6 BGN per 1 document;
- registration fee for a private limited company - 110 BGN or 55 BGN if done online;
- reservation of company name (not obligatory) - 40 BGN or 20 BGN if done online.
Expert legal help for setting up an EOOD
Luckily, Bulgarian law does not impose any nationality or residence restrictions for company owners. Thus, any foreign citizen can launch a business venture without worrying about additional documents. However, a minimal knowledge of Bulgarian language and administration is necessary to navigate through the sometimes unnecessarily intricate bureaucracy of the Balkan country.
Hiring an experienced lawyer to be your consultant can save you a lot of time and potential stress. The legal experts at “Danailova, Todorov and Partners” can advise you on how to approach your business formation, assist you with the preparation of all documents, and even take care of the registration process on your behalf. Feel free to contact us, we will answer all your questions and provide you with the most appropriate solutions for your business!
