Here is an interesting story that I would like to share with you. The godfather of my daughter is a French guy. He recently decided to invest and reside in Bulgaria, much to my surprise. He is about the fifth person in the last two years around me that has decided to move over there. The other four are a British guy who decided to start up a tech company there, couple of Russian friends of mine as well as Swiss business man. I have been living as an expat for 15 years + now. Naturally, it was really curious for me to find out why did they decide to move and invest in Bulgaria. Although, some of them decided to move their business to Bulgaria to better their fiscal position there were some unexpected WHYs’s that I collected while I spoke to them. So here is the list.
Corporate Tax
Financial freedom is a destination for many. It is also a journey worth taking. One of the steps to take in the journey in order to make it more pleasant is to be efficient with your taxes. Corporate tax rates in Bulgaria are the lowest in the EU. The tax rate is fixed at 10%. By relocating the corporate office their EU company in Bulgaria one of my friends has already freed significant amount of capital. This move has allowed him to start and fund an additional business venture. What are you waiting for you could be next to seize that opportunity?
Personal Income Tax
Now that you know how to make your corporate tax more efficient let’s look at how the personal situation can be also improved with lower level of taxation. The income tax in Bulgaria is also among the lowest in Europe. It is just 10 %. For a country within the EU this is as low as you can get. What’s better is that the dividend taxes are even lower – 5%. Being an investor with a Bulgarian fiscal residence does have many advantages as a friend of mine managing his family investments would say.
Wages
A partner of ours recently moved to Bulgaria as a business owner. Their company works in the field of mechanical engineering. Their corporate culture pushes them to always pay a fair price for the services of their employees. According to numerous sources, Bulgaria is quickly becoming the place in Europe where your employees can have the best lifestyle at the most reasonable possible cost. Something worth having in your mind if you were to start a company, like this guy who is absolutely loving it there.
Business Costs
The cost of doing business in Bulgaria is once again very reasonable. As previously mentioned taxes in Bulgaria are low. Setting up a company, as well as hiring an accountant and filing the necessary papers on annual basis is also something really affordable. According to the World Bank ease of doing business survey starting up a business in Bulgaria is one of the easiest in Europe, while maintaining the most reasonable costs. The country has scored 85.38/100 in the latest doingbusiness WorldBank report. The full publication is available here , it is 65 pages long and contains all the costs that you can expect to pay once you have a business in Bulgaria.
Labor Force
The education system in Bulgaria is very qualitative. Illiteracy levels are virtually zero. There are 41 universities in the country that teach pretty much any subject that you can think off. Foreign languages are widely spoken. There is particularly strong expertise in quantitative sciences such as physics, mathematics, statistics and infomratics. Bulgarian teams regularly scores within in the top 10% of international Olympiads.
From outsourcing to innovation
Since Bulgaria, joined the EU in 2007 both the BPO and the Shared Services industry have flourished. Cushman & Wakefield ranked Bulgaria the 3rd most attractive country in the world for the outsourcing industry. It is the first European country to make it in the top ten. Bulgaria has also climbed to the top ranks very quickly. The industry has grown five fold since 2013 and has topped a billion euros in 2018. Naturally, a lot of talent has grown within the industry. Some of it has span out and has started to create a reasonably dynamic start up and innovation community. VentureBeat recently wrote an article about how a new born ecosystem fostering innovation is rapidly expanding. By the way, number of early stage indigenous seeding funds are already present. 2018 brought significant number of M&As in the high value add sector. 2019 is expected to be better, according to Neveq.
Insignificant Financial Risk
Bulgaria’s currency is pegged to the euro, which makes it immune to major FX fluctuations. The country is running a budget surplus for the last four years. GDP is growing at an average of 2.7% over the last five years and it is set to continue doing so. The banking system is stable. Foreign exchange reserves excluding gold stand at 24 bln EUR, an all time high. The recent survey form the ECB reaffirmed the strong liquidity position of the local banks. By the way most of the e-banking services are also available in English. From macro economic point of view the country is stable immune to many risks. It is a great safe and sound place to do business.
Easy Company Incorporation
It takes only 24h to open a company in Bulgaria. The cost of doing so is insignificant. The minimum required share capital is the equivalent of 1 EUR. The most common forms of company are Limited Liability Companies as well as Joint Stock Companies. LLCs in Bulgaria have two forms EOOD or OOD, depending on whether there is one or multiple shareholders. The LLC companies should have at least one director and one shareholder. There is no restrictions in terms of nationality of the shareholders or directors. Joint Stock Companies are called AD or EAD, depending on whether they are owned by one or multiple shareholders. A joint stock company should have at least one sharehoder, a chairman and three board members. There are no restrictions in terms of the nationality of the directors or the shareholders. Minimum required capital for a joint stock company is 25 000 EUR. Bearer shares are possible and yes, for a joint stock company in Bulgaria there is a compulsory annual audit.
EU Funds
As new EU member state, there is a lot of EU funding available for businesses in Bulgaria. For the 2014-2020 program period 9.88 BLN EUR have been allocated to Bulgaria trough 10 national programs. There is a national budget contribution of 1.88 BLN EUR that is directed toward creating an innovation friendly business environment for the same period. Should you want to get some of this funding for your business idea, you do not need to wait but just act.
Nature
The nature of Bulgaria is well preserved. In a rather small amount of territory there mountains peaking around 3000 m in altitude as well as countless sandy beaches. You can go for a hike in one of the 9 national parks relatively easy from any location in the country. Sofia, is one of the few European capitals to have a sky slope. Although a bit crowded on weekends it is worth a try.
Weather
The climate in Bulgaria has got four seasons. It allows you to join the summer on the sea cost and the winter in the mountains without having to hop on a plane. Although there are four distinct seasons, there is a lot of sunshine. For example the average sunshine hours in London are 1481, in Paris 1779, and in Sofia 2177. By the way, the capital is far from having the most of sunshine hours in the country. Due to the various geography of the country there are quite a few micro climates in Bulgaria that make it a really nice pleasant place to live.
Organic Food
Food, yes food. We all need it to survive. Fact of live. Due to the climate and the specific characteristics of the black soil the agricultural produce is tasty. There plenty of independent organic agricultural producers in Bulgaria. The quality of the food is impressive, many of my expat friends say. Additionally, there are numerous scientific studies that have proven the benefits of local probiotics.
Value
Yep, value this is the word that I heard the most while talking to people that have chosen to make Bulgaria the home of their business and investment. They seem to be finding a lot of value in the low tax environment, the flexible labor laws and the friendly business environment. This added to the the great climate, fantastic local food, beautiful landscape makes is a fabulous place to base your business. Should you want to know more or get the details of my foreign friends who have thrived in Bulgaria, drop me a message I can perhaps put you in touch. Also, here is a podcast in which I discuss this post in more details.
About the author
Boris Grozev is a seasoned fintech executive. Entrepreneur by heart Boris has helped number of businesses to create and implement business development and product enhancement 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 and shares his experiences from the journey to financial independence. Boris is a fast learner, whose leadership abilities, ambition, stamina, passion to succeed and attitude naturally spread to others helping to achieve common goals.
