Doing business in Bulgaria

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ADVANTAGES OF DOING BUSINESS IN BULGARIA

  • A Bulgarian limited liability company can be incorporated within two weeks, with a minimum of one shareholder and one director, who can be of any nationality and place of residence. Conveniently, the minimum paid up share capital is only €1 (clients will not need to travel to complete Bulgaria business setup).
  • Registering a business in Bulgaria Bulgaria`s corporate tax rate is a flat 10% on global profits, the second lowest in the EU.
  • Full corporate tax exemption is available to business setups in high unemployment regions.
  • Clients will not pay withholding tax on dividends remitted to corporate and individual shareholders residing within the European Economic Area and 68 other countries including India, Singapore, UK, USA, Luxemburg, Netherlands and Ireland, which have signed sta treaties with Bulgaria.
  • Withholding tax on interest payments is low at 5% within the European Area and 10% to all other countries unless reduced by a double-tax treaty.
  • Bulgaria boasts VAT refund agreements with 10 countries outside of EU.
  • Tax losses can be carried forward up to 5 years.
  • Licensed real estate investment trusts are fully tax-exempt.
  • Companies incorporated in municipalities with higher level of unemployment can receive up to 100 tax retention.
  • VAT registration is not mandatory under 25 000€ annual turnover of taxable goods.
  • Consequently total tax paid by Bulgaria´s companies only represent 27% of their earnings, to be compared with 41% in OECD countries.
  • Additional government incentives for investment projects in Bulgaria include:
    • R&D-oriented companies registered in Bulgaria industrial zones benefit from a 2-years tax holiday.
    • Foreign investments in Bulgaria have preferential access to EU structural funds, available in Bulgaria and Romania.
    • Under the Renewable and Alternative Energy Sources Act, foreign investment in renewable energy are connected with priority to the electricity grid, otherwise a time-consuming process.
    • Foreigner investing more than 10 million € in Bulgaria will quality to become Class A investors and consequently obtain full 100% reimbursements of labour costs.

Disadvantages of doing business in Bulgaria

  • Domestic market is relatively small, with a declining population of 7,03 million people, according to the world bank.
  • Purchasing power in Bulgaria continues to be the lowest in the EU since the country became a member in 2007.
  • The country suffers from high unemployment levels, recorded at an average 10% in 2015.
  • Bulgaria experienced a bank run in 2014 when the fourth largest bank became insolvent.
  • Clients will face red tape and unpredictable bureaucratic practices in Bulgaria because:
    • Bulgaria is ranked as the second most corrupt country in European Union.
    • Governments have changed two times in the past two years, thus resulting into unpredictable changes to the law and political instability.
    • Bulgaria is highly criticized by the European Union for high corruption and a lack of judicial reforms.
    • Obtaining construction permits is difficult as the country is ranked 21st among 189 by the world Bank’s 2015 doing business report
    • Getting electricity for your business is a bureaucratic nightmare that can delay business operations, as the process can take up to 130 days to complete.
  • A mafia-related, murder spree of entrepreneurs in 2015 further lowers the confidence in the court system and the country’s safety as an investment destination.
  • Organized crime imposes high costs on business. As a result, Bulgaria is ranked 117th out of 144 countries by the world economic Forums Global competitiveness rankings for 2014-2015.
  • Insurance business suffers insurance premium tax calculated on 2% of contract value.
  • Bulgaria’s infrastructure and energy sector are not up to par with EU standards because:
    • Roads in Bulgaria are generally in moderate to poor condition, causing additional operational costs for logistics companies.
    • Railway infrastructure quality in Bulgaria is lower than other European States, according to the World Economic Forum.
    • Power outages, while quickly fixed, are not uncommon in suburban areas. The country has a middling rank on the Infrastructure ND-Gain index for 2013.
    • Ukraine`s crisis is increasing the risks of a second gas crisis in Bulgaria. The 930 km gas pipeline infrastructure project South Stream was suspended indefinitely by the Bulgarian Government in 2014.
    • The period 2013-2015 was marked by deadly flood, due to inadequate maintenance of water reservoirs.

 

  • CORPORATE TAX IN BULGARIA
  • INCORPORATION PROCESS IN BULGARIA

COUNTRIESBULGARIA – DOING BUSINESS IN BULGARIA

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