Who is liable for corporation tax?

• Bulgarian legal entities and commercial entities.
• Bulgarian legal persons who are not traders pay tax on any profits they make on transactions subject to Article 1 of the Commercial Law or on the rental of movable or immovable property.
• Bulgarian unincorporated companies.
• Foreign entities trading in Bulgaria through a commercial location.
• Foreign unincorporated entities trading in Bulgaria through a commercial location

The following pay tax which substitutes corporation tax:

• Budget-funded enterprises (departments, local authorities, etc). The tax rate is 3 % (2% for local authorities).
• Gaming and betting organisers pay a gaming tax on the basis of the bets made or the number of gaming machines operated. The rate of taxation is 15 %. The tax for the use of gaming machines is based on the number of machines.
• Persons carrying on merchant shipping pay 10% tax on their vessel operations based on the net vessel tonnage per day of operation.
• Certain revenue of foreign legal entities and unincorporated companies generated in Bulgaria is taxes at source. The rate is 10 %. 

A 5% tax is levied on dividends and shares in liquidation distributed by local legal entities to:

• foreign legal entities, with a few exceptions
• local non-trading legal entities, including local authorities. 

Tax is not deducted at source where the dividends and liquidation shares are distributed to:

• a local legal entity participating in the company as a representative of the state;
• a mutual fund;
• a foreign legal entity which for tax purposes is a local entity from the EU or the EEA, except for hidden profit distributions.

 The following are subject to tax at 10 %:

• social benefits in kind provided to employees and contract workers;
• costs of presentation for the company's activities;
• costs of operating vehicles for management purposes. 

Local taxes are taxes and charges levied by local authorities, such as taxes on vehicles, buildings and patents. These differ from one region to another and are collected by the local authorities.

If you are subject to corporation tax under the Corporate Income Tax Law, you or your representatives have to submit an annual tax return declaration to the local office of the National Revenue Agency corresponding to the company's place of registration. You can send it via the Internet or by post, and it has to include an annual statistical report.
 
Deadlines for submitting returns and paying tax:

• Submitting the return: 31 March of the following year

 
Payment of corporation tax after offsetting advance corporation tax:

• 31 March of the following calendar year.

The primary legal act governing the types, corporate structure and governance as well as the requirements for the establishment of commercial companies in Bulgaria is the Commerce Act 1991. The Commercial Register Act 2008 regulates the requirements and procedure for registration in the commercial register of commercial legal entities operating under Bulgarian law and of changes in the corporate status of such entities.  The Public Offering of Securities Act 1999 sets forth the general legal framework of public companies.

Bulgarian law recognizes the following types of commercial companies exhaustively listed in the Commerce Act:
(i)    general partnership;
(ii)    limited partnership;
(iii)    limited liability company (“LLC”) or one-person-owned limited liability company;
(iv)    joint stock company (“JSC”) or one person owned joint stock company;
(v)    company limited by shares.

A joint stock company can be publicly listed or private. Under Bulgarian law, joint stock companies are the only type of companies that may become listed, provided that they have conducted an initial public offering or have a registered share issue for the purposes of trading on a regulated securities market.

The minimum share capital required by the Commerce Act for incorporation of an LLC is BGN 2.
The minimum share capital required by the Commerce Act for incorporation of a JSC is BGN 50,000 (fifty thousand). However, special legislation may require higher minimum share capital for carrying out certain types of activities, for example banking or insurance activity.

In addition to the five types of commercial companies mentioned above, business may also be conducted in one of the following organisational forms:
(i)    sole trader;
(ii)    holding;
(iii)    branch;
(iv)    trade representative office (“TRO”);
(v)    cooperative.

Under Bulgarian law, sole traders, partners in general partnerships and unlimited partners in limited partnerships and in companies limited by shares have unlimited personal liability to the company’s creditors. The shareholders’ exposure in limited liability companies and joint stock companies as well as the liability of limited partners in a limited partnership and in a company limited by shares is capped at the amount of their shareholding in the company’s capital.

Establishment of a Company.

Under Bulgarian law there are no restrictions as to the size of the foreign participation in the capital of a Bulgarian company and, therefore, up to 100% of the registered capital of a local company can be held by foreign persons.

All types of commercial companies and all branches of foreign commercial companies are incorporated by way of registration in the commercial register administered by the Registry Agency functioning under the authority of the Ministry of Justice. This is a one-stop shop registration and it serves for all commercial, tax, social security, statistics and other public purposes. Upon its registration in the commercial register a newly incorporated company or branch receives a unique unified identification number, which serves to identify the company throughout its entire existence.

The requirements for the registration of each particular type of commercial company or branch are set forth in the Commerce Act, while the registration procedure and applications and documents relevant to each particular type of commercial company or to branch, in the Commerce Register Act.

The registration procedure currently takes one to five business days. The amount of the state fees due is bound to the legal type of company and it varies form BGN 80 to BGN 1700.

The incorporated company or branch becomes a capable legal entity as of the date of its entry in the commercial register.

Unlike commercial companies and branches of foreign commercial companies, a TRO of a foreign company is established by means of registration in the commercial register held by the Bulgarian Chamber of Commerce and Industry (the “BCCI”) and is subject to secondary registration in BUSLTAT Regsiter, a united national administrative register also held by the
Registry Agency under the BULSTAT Register Act 2005.

Where a license or permit is required by virtue of special laws for the performance of a specific activity, such activity may be performed after obtaining the respective license or permit. By way of example, activities subject to licensing/ permit regime include banking, insurance, gambling, trade in medicines, trade in tobacco, etc.
 

Bulgarian National Bank 
Bulgarian National Audit Office
Bulgarian Stock Exchange 
Custom Agency                                                                      
Council of Ministers of the Republic of Bulgaria                     
Financial Supervision Commission                                  
Ministry of Finance                                                                  
National Assembly of the Republic of Bulgaria             
National Social Security Institute                                              
National Statistical Institute                                                      
National Revenue Agency