Company Formation in Bulgaria: A Path to the EU for US Entrepreneurs

With a 10% flat corporate tax rate, one of the lowest in the European Union, Bulgaria has become an attractive country for American entrepreneurs looking to expand their business footprint into Europe. If your goal is to streamline your supply chain, access EU markets or establish a cost-effective presence abroad, Bulgaria offers a compelling mix of affordability, ease of incorporation and regulatory stability.

Beyond its tax regime, Bulgaria boasts EU membership, access to trade treaties and relatively low labor and operational costs, making it an ideal launchpad for startups, holding companies or tech operations. And thanks to digital infrastructure and flexible company laws, forming a Bulgarian company is straightforward, even for foreigners who don’t reside in the country.

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Why U.S. Businesses Choose Company Formation in Bulgaria

For U.S. entrepreneurs, setting up a company in Bulgaria provides several strategic advantages:

• EU Market Access: A Bulgarian company gives you full access to the EU single market, with no customs barriers when trading with other member states.
• Low Corporate Tax: Bulgaria’s 10% corporate income tax is one of the lowest in Europe. Personal income tax is also a flat 10%.
• Cost Efficiency: Operating costs, including salaries, rent and utilities, are significantly lower than in Western Europe.
• Fast Incorporation: Most entities can be registered in one to three business days.
• No Local Director Requirement: Foreigners can own and manage a Bulgarian company without local partners or representatives.

Common Types of Bulgarian Companies

When considering company formation in Bulgaria, foreign founders typically choose between two main legal structures:

The OOD (Obsthestvo s Ogranichena Otgovornost) is the preferred route for most U.S. entrepreneurs. It’s similar to an American LLC in function and liability protection, making it ideal for small and medium-sized enterprises.

How to Register a Company in Bulgaria: Step-By-Step

Company registration in Bulgaria involves a few key steps, most of which can be handled remotely with the help of a local service provider or legal representative:

• Step 1: Choose a Company Name: Verify availability through the Commercial Register³
• Step 2: Draft Articles of Association: Must be notarized if registering an OOD with multiple shareholders
• Step 3: Open a Capital Bank Account: Deposit the minimum share capital
• Step 4: Register with the Commercial Register: Submit incorporation documents online or through a legal proxy
• Step 5: Obtain a VAT Number: Mandatory if turnover exceeds BGN 100,000 (~$55,000) annually or if engaging in cross-border trade
• Step 6: Register for Social Security and Payroll (if hiring staff): Required within seven days of hiring employees

Costs of Company Incorporation in Bulgaria

The average total cost for company incorporation in Bulgaria ranges between €800 and €1,500, depending on the complexity of the setup and the location of the founders.⁴

This price typically includes fees for government registration, notaries and lawyers, translation and document preparation, official registration and legal handling, and optional bank account setup.

These costs apply to a standard LTD (Limited Liability Company) and may increase if the founders are not physically present in Bulgaria or if additional legal structuring is required. The entire process usually takes three to five working days.

Taxation and Reporting Obligations

A Bulgarian company is subject to the following taxes:

• Corporate Income Tax: 10% flat rate
• Dividend Tax: 5% on distributed profits
• VAT: 20% standard rate; lower rates apply to specific goods/services

Annual financial statements and tax returns must be submitted to the National Revenue Agency. U.S. citizens must also report their foreign ownership or control of foreign companies under IRS regulations such as Form 5471 and FBAR if applicable.^5,6

Residency and Ownership Options for Foreigners

Foreigners can own 100% of a Bulgarian company without needing Bulgarian residency. Those planning to manage operations from within the country may consider applying for a business visa or long-term residence permit based on company ownership.

For Americans who want a permanent presence in the EU, Bulgaria also offers a residency by investment route through company ownership and long-term business activity.

Unique Features of Doing Business in Bulgaria

Here are some of the unique features to Bulgaria that may affect foreign business owners:

• Dual Language Contracts: Business contracts may need to be translated into Bulgarian for legal validity
• Digital Filing System: Bulgaria’s Commercial Register enables online incorporation and document submission
• Nominee Services: Available for owners who prefer privacy or are unfamiliar with local compliance processes

Bulgarian banks are known for thorough KYC (Know Your Customer) procedures, so expect to provide certified documents, business plans and U.S. tax compliance declarations when opening a bank account.

Final Thoughts

Company formation in Bulgaria offers U.S. entrepreneurs a low-cost, low-tax and EU-compliant route to international expansion. With minimal capital requirements, fast digital registration, and full ownership allowed for foreigners, forming a Bulgarian company is both practical and strategic.

However, as with any international incorporation, it’s important to stay on top of U.S. and Bulgarian compliance rules. Working with a local law firm or service provider can simplify the process and ensure your foreign company meets all legal and tax obligations.

Frequently Asked Questions

Is Bulgaria a Good Place to Start a Business for Americans?

Yes. With low taxes, EU access and no requirement for local partners, Bulgaria is highly attractive for U.S. entrepreneurs seeking cost-effective European expansion.

How Long Does It Take to Register a Company in Bulgaria?

Most companies can be incorporated within one to three business days once all documents are ready.

Can I Form a Company in Bulgaria Remotely?

Yes. You can authorize a local representative to handle the process via power of attorney. Many service providers offer end-to-end remote registration.

Do I Need to Be a Resident to Own a Bulgarian Company?

No. Foreigners can own and manage a Bulgarian company without Bulgarian residency.

What’s the Difference Between an OOD and an AD?

An OOD is similar to a U.S. LLC, suitable for small to mid-sized companies. An AD is a joint stock company, often used for larger or public enterprises.

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