Why do business in Bulgaria?
Contributed by Andiel Parker Randall
13 November, 2012
Favourable tax laws:
- 10% flat corporate tax rate. This is the lowest tax rate in EU.
- 10% flat personal income tax rate. This is the lowest tax rate in EU.
- 20% VAT. This is an average VAT rate in the EU.
- Social security payments of 12.1% from the employee and 16.9% from the employer some of the lowest rates in the EU.
- 5% withholding tax on dividends. The tax is due only if dividends are being distributed from the profit. The tax is 0% if the distribution of dividends is to an EU company.
- Bulgaria has Double Taxation Relief agreements with all the EU countries and with over 50 countries in total, including the US.
- Possibility to apply IFRS instead of local accounting standards, if preferred. It is very convenient for companies engaged in consolidation, cross-border reporting and standardized reporting procedures.
Free movement of goods:
- All goods manufactured in Bulgaria are with origin in the EU and are exported to other member states without duty. No export or import VAT is paid at the border, thus avoiding the need to block operating capital for such payments.
- If foreign producers establish their production in Bulgaria, all the goods produced will be with origin in the EU. In this way they can freely be traded in the EU countries avoiding any import restrictions on goods with origin outside the EU.
Easy company start-up:
- The required capital for the registration of a limited liability company in Bulgaria is 1 euro.
- There is a unified register of companies The Trade Register and the registration takes 3-7 days.
Free movement of people:
- Foreign citizens, who register a company in Bulgaria and give employment to at least 10 Bulgarian citizens, are entitled to receive temporary residence permits with which they can easily get visas for other countries from the EU from their Embassies in Bulgaria. After 5 years they can obtain a permanent residence permit which will enable them to travel in the EU without any visas.
- Foreign citizens who invest in Bulgaria over 500 000 euro in Bulgarian state treasury bills or make a deposit in a Bulgarian bank for at least three years, or register a company in Bulgaria with 3 000 000 euro capital can apply for a permanent residence permit immediately.
Low labour costs:
- Bulgaria is the country with the lowest labour costs in the EU, while its labour force is highly educated and qualified with many foreign degrees and training certificates.
Favourable conditions for the following business activities:
- All businesses in the service sector
- Companies operating as intermediaries or brokers that receive commission income
- Production and manufacturing (see Free movement of goods)
- Investors in green energy (The National Electric Company is required by statute to buy out from suppliers the energy generated from renewable sources. Green energy projects can be financed with EU funds.)
Strategic geographic position:
Bulgaria is situated in South-East Europe. The capital of the country is the city of Sofia. Bulgaria borders Turkey to the South-East, which makes it well-situated for business with the Middle East.
It is also close to Russia (the Black Sea is the border between the two countries) and, together with the traditionally good trading relations between the two countries, it makes Bulgaria the most suitable country in the EU from which to conduct business with Russia and the former Soviet Union countries.
The river Danube, which is a major transportation rout in Europe, runs through the country and is used for transporting lots of goods and materials to and from the EU. Bulgaria is also actively participating in the international sea trade with its two international ports Varna and Burgas on the Black Sea. Bulgaria has three international airports which make daily flights to London, Paris, Frankfurt, Vienna, Moscow, and others.
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