Multiplier Logo
Loading Animation Image
Starting a Business in Bulgaria

Establishing a Subsidiary Company in Bulgaria: Step-by-Step Guide

Bulgaria is one of the premium locations for foreign companies to start a company due to its expert and multilingual workforce, high economic stability, and strategic geographic location. The World Bank ranked the country 61st out of 190 economies globally in the Ease of Doing Business report 2020. Moreover, the country’s tax system is one of the lowest in Europe, making it favorable for investors from a tax perspective.

Companies can establish their presence in Bulgaria and exploit its growing economy. Opening a subsidiary in Bulgaria is one of the simplest ways to enter the Bulgarian market. It requires comparatively less paper and compliance. 

Let’s review all the vital information you must know before setting up a subsidiary in Bulgaria.

What are the Types of Subsidiaries in Bulgaria?

You must be acquainted with various subsidiaries before setting up a subsidiary system in Bulgaria. They are explained below.

1. Limited Liability Company (LLC):

  • In Bulgaria, the most famous form of conducting business is a limited liability company (LLC).
  • It is suitable for small and medium-sized businesses.
  • It involves a small amount of the registered capital.
  • To establish an LLC, one or more individuals are required. They are responsible for the company’s liabilities and make their contribution to the company’s capital.
  • The minimum registered capital required to form an LLC is BGN 2.
  • The capital contains the partners’ shares, and all shares must be greater than BGN 1.
  • The involved company bodies are (i) the sole owner of the capital or the General Meeting and (ii) the managing director.
  • When multiple managing directors are available in LLC, they may act independently or jointly. The director’s license can be withdrawn at any time.

The sole owner of the capital represents and administers the company, either individually or through a managing director. Moreover, the sole owner resolves the issues within the authorities of the General Meeting.

2. General Partnership:

  • Recognized as the most fundamental type of subsidiary, it considers ownership and equal partnership.
  • The entire liability and managerial task are equally divided among the partners.
  • To establish a general partnership, two or more individuals must perform commercial transactions under a joint business name. The partners are unlimitedly and jointly liable.
  • The partnership’s business can be administered by one or multiple partners or a third party.
  • Any partner added to a prevailing general partnership is responsible for all company liabilities.

3. Limited Partnership:

  • One or multiple general partners manage the business in this subsidiary business in Bulgaria.
  • The remaining partners are liable for the amount of the joint contribution.
  • A limited partner’s name can’t be incorporated into the company’s business name.
  • The general partners administer and represent the company.
  • A limited partner owns no right to administer the company. They can’t disregard the decisions of the general partners.

How to Set Up a Subsidiary in Bulgaria?

Setting up a subsidiary in Bulgaria can vary based on the company’s proposed business activities. The steps described below will streamline setting up a subsidiary company in Bulgaria.

  • Step 1: The Bulgarian company should deposit the minimum share capital (BGN 2) in a preferred bank account (specifically opened for future financial operations) before registering a subsidiary. A business bank account will successively replace it.
  • Step 2: The foreign company should apply to the Commercial Registry. The application contains the registered office’s address and information about the subsidiary’s representative.
  • Step 3: The foreign company should also provide the contract between the parent and subsidiary.
  • Step 4: Prepare the consent with a sample of the signature of the notarized subsidiary manager and the decision to establish a subsidiary taken by it.
  • Step 5: Obtain the nine-digit Tax Identification Number (TIN) from the Registry Agency. It governs the BULSTAT Register (Commercial Register). The BULSTAT UIC is cited in all business documents.
  • Step 6: Register for VAT only if the annual turnover is expected to surpass BGN 50,000. The VAT registration should follow the Tax Procedure Code and Value Added Tax Law to get the VAT number (prefixed with BG). After being entered into the Commercial Register, the NRA automatically completes the VAT registration for the company.

Benefits of Setting Up a Bulgarian Subsidiary

Setting up a subsidiary in Bulgaria is easy as it involves less paperwork and no capital requirement. Some additional advantages of setting up a subsidiary company in Bulgaria are as below:

  • A subsidiary is a business body either partly or wholly owned by another body.
  • The subsidiary registration process involves filing the documents in the Commercial Register, provided all the documents are submitted and signed by the managers and partners.
  • Fulfilling the necessary paper requirements and conforming to local rules and regulations help a foreign company set up a subsidiary in the country.
  • International companies that set up a business in Bulgaria benefit from the lowest corporate and personal tax rates in the European Union.
  • The subsidiary allows the parent company to expand its business through the ‘free market’ of the European Union. It also serves as a medium to enter other central and eastern European economies.
  • The subsidiary can investigate the market by employing its business ideas and exploring various areas of operation with the parent company.
  • The subsidiary can also set down its agreements and contracts with clients before starting a business to avoid confusion in future.
  • It simplifies obtaining tax incentives to encourage a specific economic activity by decreasing tax payments.
  • It simplifies entering into contracts with other Bulgarian or EU companies.
  • Compared to branches, it benefits employees with better job security and stability.

Documents to Prepare When Opening a Subsidiary in Bulgaria

Companies should prepare the following documents while applying for subsidiary incorporation:

  • Articles of Association
  • Certificate of incorporation
  • Registration Certificate from the Board of Trade
  • Bank certificate for proof of deposit
  • A formal request for Business License registration
  • A real estate clearance certificate
  • Proof of residence for the company partners/administrator
  • Notarized IDs for the Company Administrator
  • Notarized copy of incorporation documents for the Registry Agency. It includes Articles, and Memorandum of Association, and power of attorney.
  • Notarized IDs for each founder of the subsidiary and certified passport details for foreign members
  • Notarized copy of either the property lease or property deed verifying the entitlement of use of the property where the company is located
  • The company name’s consultation certificate
  • Statement specifying that the partners are not banned by law or by conviction to set up a company 

Note: The authorities may request further documents if needed.

What Business Forms Can Bulgaria Subsidiaries Take?

Subsidiaries can assume one of these standard subsidiary forms:

  • Public Limited Company (PLC)
  • LLC (Limited Liability Company)
  • Joint Stock Company (AD)

The company can decide the most appropriate subsidiary form based on the business plan and its needs.

Bulgarian Subsidiary Laws

The companies willing to set up a subsidiary in Bulgaria should consider the following laws:

  • The Bulgarian Commerce Act incorporates the subsidiary and controls legal business bodies in Bulgaria.
  • No legal restrictions are imposed on the nationality of managers/shareholders.
  • The minimum capital required for registering is 1.00 EUR for an OOD (limited liability company) and 25.000 EUR for an AD (joint stock company).
  • The least number of shareholders is 1 for an EOOD (limited liability commercial entity), 1 for an EAD (unipersonal joint stock company), 2 for an AD (joint stock company), and 2 for an OOD (limited liability company).
  • The Bulgarian Investment Agency (BIA) performs a background check to guarantee that your investment abides by Bulgaria’s anti-money laundering laws.

Post-Incorporation Compliance

The compliance checklist for incorporation of foreign subsidiaries in Bulgaria also covers the following:

  • Once you set up the Bulgarian subsidiary, you are responsible for handling local tax laws, payroll withholdings, employment requirements, and banking regulations.
  • Appoint an auditor for the company.
  • Obtain the unique company number.
  • Obtain the incorporation certificate as released by the Registrar of companies.
  • Provide the share certificates to all the shareholders (if it is a public company) after obtaining the subscription amount from the subscribers.
  • Convey all the necessary details of the shareholders to the Registrar.
  • Mandatory compliances include the first board meeting, subsequent board meetings, filing of disclosure of interest by directors, and filing of Financial Statements (Form AOC-4).
  • All private limited companies should file their Annual Return within 60 days from the start date of conducting the Annual General meeting.
  • The BOD shall appoint the first auditor of the company within 30 days of the subsidiary’s incorporation. The first auditor will own the office till the conclusion of the first AGM.
  • Tracking event-based compliances like change in directors, change in authorized share capital, change of registered office, etc.

Taxes on Subsidiaries in Bulgaria

A subsidiary in Bulgaria is subject to the following taxes:



Corporate income tax


Personal income tax


Withholding tax


Social Contribution

12.9% payable by employees

17.9% payable by the employer

Capital Gains Taxation

10% (Capital gains obtained from the sale of publicly listed shares are exempt)

Main Allowable Deductions and Tax Credits

4% to 50%


20% (for taxable transactions of the main category)

0% (for exports/other kinds of transactions stated in international agreements)

Tax Incentives for Businesses Setting Up a Subsidiary in Bulgaria

Tax incentives are significant components for the incorporation of a foreign subsidiary in Bulgaria. Regardless of the sector, your subsidiary business in Bulgaria can benefit from the following tax incentives:

  • The intangible assets are allowed a 100%-expense deduction from R&D activity.
  • Maximum 100% corporate income tax relief is provided to manufacturers in underdeveloped areas.
  • Quick depreciation for new investments
  • The preliminary investment tangible production properties and manufacturing facilities/ plants are subjected to tax relief
  • Experienced investors can evaluate VAT (up to a certain amount) on imports rather than paying it.
  • Experienced exporters and investors benefit from a short refund period of 30 days.
  • The VAT refund duration is the shortest, i.e. three months.

Other Important Considerations

Apart from the compliance checklist for incorporation of foreign subsidiaries in Bulgaria, there are a few other important factors to consider, as discussed below.

  • If you aim to set up a subsidiary system in Bulgaria, you must focus on residence permits, insurance, registration with the federal tax administration, and applying for any licenses (if needed).
  • Ensure you are acquainted with your business activity and the objective of registering before starting the process of subsidiary company formation in Bulgaria.
  • You must pay application fees at every step of the subsidiary establishment process. Based on the conditions of the specific sector, the government may demand high investment capital set up your subsidiary.
  • The subsidiary incorporation process can last weeks or months. It is recommended to dedicate the money and time you would require. For instance, you may need to manage your schedule to frequently travel to and from Bulgaria for 1-2 months. If you can’t spare the time for the same, you must appoint a company executive or member to manage the process.
  • You must consider the hiring costs and travel costs.

How Can Multiplier’s Employer of Record Help You Hire & Expand in Bulgaria?

You must devote considerable time and investment to expand your business in a foreign country. Moreover, it demands effort and time to comply with a country’s labor rules and industry standards. You can use the services from a third-party service company like Multiplier to set up a subsidiary system in Bulgaria.

Multiplier manages all the regulations, including hiring skilled employees, payroll processing, etc., while expanding the business in a foreign country. It removes the need for establishing a subsidiary and streamlines onboarding global and local talent while guaranteeing compliance with Bulgaria’s regulations and labor laws.

Frequently Asked Questions

It takes about 2 months to open a subsidiary in Bulgaria. It can be done in a few days if the authorities approve the submitted documents and if all the conditions are fulfilled.

Bulgaria is renowned for its favorable tax system. It claims one of Europe’s lowest corporate tax rates (10% flat rate). The favorable tax system simplifies calculations and further reduces your administrative costs.

The choice between a subsidiary and a branch office for business expansion depends on the control the parent company aims to implement to set up the Bulgarian-based enterprise. The branch office guarantees complete foreign entity control, whereas the subsidiary enables the company to work as a domestic vehicle. The subsidiary pays corporate tax on its entire income, whereas the branch only pays on the profits received in Bulgaria.

Need help hiring in Bulgaria?

Table of Contents

World’s Preferred EOR/PEO Platform for a Global Workforce