” You miss 100% of the shots you don’t take ” Unknown
The story of this article is similar to ” Investing in Bulgaria” with a slightly different nuance – many friends asked me what is like to have a business in Bulgaria. I felt, I had to do an article for multiple reasons. First, I have grown up in an entrepreneurs’ family as both my parents operate a small business in that country. Furthermore, my brother left the United Kingdom and has a software and e-commerce company over there. Finally, I recently opened a limited liability investment company in Bulgaria. Given all the experiences I have collected there are a few insights I could potentially share with you.
Setting up a company in Bulgaria is easier than many people think. The process is quick, easy and relatively cheap. State taxes and fees amount for up to 100 EUR depending on the structure you would like to have. Common structure to start up with are multiple shareholders limited liability partnership (OOD) or a single shareholder limited liability partnership (EOOD). Most of the required documents can be submitted online, trough the online platform of the Trade registry. Documents need to be submitted in Bulgarian, so knowing the language is essential or appointing someone to act on your behalf who speaks the language is a must. Share capital for such a structure is relatively low – the legal requirement is as little as 1 EUR. Processing time of the paperwork is around 10 working days. Memorandum of association needs to be drafted by a local solicitor, which also costs about 50 EUR. There is a legal requirement to have a registered address. For that purpose you can use your own address ( if you have any) or rent an office space. Depending on the city where you would like to be based there prices vary and multiple options are available. Renting an office in the capital, Sofia, costs from 7 eur/sq m. virtual offices price 50 EUR per moth. In other cities, the costs are significantly lower, sometimes even divided by half.
Once your company is incorporated, a bank account needs to be opened. There are about twenty commercial banks in Bulgaria. Business bank accounts usually come with a nominal monthly charge. The charge average on a monthly basis is 2 EUR. The process of opening a bank account is straightforward, it requires you to submit a copy of your ID and certificate of incorporation. It takes a day or two. Debit and credit cards are issued within a week. Depending on your location of incorporation and monthly turnover, accountant tariffs vary. It is usually a subscription based service and you can expect to pay anything between 40 and 120 EUR per month. it is common practice in Bulgaria that accountants take care of tax returns. Corporate tax in Bulgaria is 10% on profits. You need to register for VAT once your turnover exceeds 25 000 EUR. If you decide to opt of legal advice on a subscription basis, you can expect to pay about 100 EUR a month. Alternatively, you can hire a lawyer when you need something particular. Depending on the service you need, fees vary. Useful information on the topic can be found here. Should you require any finance, these days cost of credit in Bulgaria is low as the country’s currency is pegged to the EUR and interest rates are relatively low.
Hiring staff in Bulgaria is still relatively affordable. As the average salary is 350-400 EUR you can expect to have a reasonable labor cost. Social contributions, including medical, social and retirement insurance equal to about 30% of the employee salary. People are usually well trained and educated. It is common that people speak at least one foreign language to a native level. Usually, this language is English. Unless, carefully looked after employees tend to move away quickly. Due to the current economic uptrend and the demographics of the country, specific skills are not easy to find, however there is still an abundant amount of people willing to take challenges and help new companies grow.
Bulgaria’s legal system is not based on Common Law. It is a continental, rule based system. Before opening a business in Bulgaria, it is worth knowing that corruption exists and on some instances this can affect the well functioning of the national Justice. Business culture in Bulgaria can be compared with continental European business culture. People usually work from 09h00 to 17h00. Salaries are paid at the working day of the month. Lunch breaks are common practice so are coffee and cigarette pauses. When negotiating deal terms it is advisable to prioritize the signature of binding agreements so that you have a reference point should misunderstanding occur.
On paper the business environment in Bulgaria is friendly. However, it is worth noting that to the justice system as well as administrative deadlocks and widespread corruption running a business can become a challenge. Therefore it is important to be constantly vigilant and make sure that your interest is looked after by both the service consultants you hire as well as the staff you employ. Finally, incorporating a business in Bulgaria has got numerous fiscal, cross border and investment advantages that should be carefully considered. Really, keen to hear what your entrepreneurship endeavors abroad as well as doing business in Bulgaria are. Feel free to share your comments, questions and feedback.
Boris Grozev is a seasoned fintech executive. Entrepreneur by heart Boris has helped number of businesses to create and implement business development and product strategies. His advisory work in Emerging and Frontier markets has promoted culture and technology change, fostered innovation and lead to tangible results. He invests in variety of asset classes. Boris is a fast learner, whose leadership abilities, ambition, stamina, passion to succeed and attitude naturally spread to others helping to achieve common goals.