When Bulgaria is the target for Global Expansion, foreign companies planning to operate payroll for their staff must establish a legal entity as a subsidiary to deal with the National Revenue Agency (NRA) for taxation and the National Social Security Institute (NSSI) for insurance and other compulsory contributions. The most popular choice is to set up the Bulgarian equivalent of a private limited liability company (or LLC), known in Bulgaria as a drujestvo s ogranichena otgovornost (OOD), which has two or more shareholders. The subsidiary incorporates under the Bulgarian Commerce Act, which regulates legal business entities in Bulgaria.
However, establishing a company in a foreign country can be costly, both in time and money, and there is no guarantee that the effort and financial outlay will bring any success. If the move fails, companies face the extra expenditure and stress of closing the business, selling property, and paying off employees. It is easy to stumble while chasing two objectives – advancing your company at home while crossing the world into new territory, maybe thousands of miles overseas. The sensible alternative is to use a Professional Employment Organisation (PEO) and Employer of Record (EOR) such as Bradford Jacobs to locate the finest local talent and administer your payroll in Bulgaria – speedily and risk-free. Your company will be up-and-running in days rather than weeks or even months.
The Bulgarian private limited liability company is the drujestvo s ogranichena otgovornost (OOD), which has two or more shareholders. Like local companies, the subsidiary incorporates under the Bulgarian Commerce Act, which regulates the types of business entities allowed in Bulgaria. Registration requirements for limited liability companies include the following:
Further procedures must be followed to then operate payroll for staff in the country, including:
International companies opening a private limited liability company in Bulgaria operate under the Commerce Act. They can benefit from among the lowest personal and corporate tax rates in the European Union. The subsidiary has a separate legal identity from the parent company and is treated the same as a local company. Generally, the parent company’s liability is restricted to the share capital invested in the subsidiary; neither is it responsible for any subsidiary debts.
The subsidiary provides the parent company with the potential for further expansion throughout the ‘free market’ of the European Union and a stepping stone into other central and eastern European economies. Additionally, the subsidiary can ‘test the market’ by following its business ideas and entering into different areas of operation with the parent company. The subsidiary can also draw up its contracts and agreements with clients. Other benefits for a subsidiary include the following:
In the broader commercial sense, opening a subsidiary makes a statement of a company’s commitment to expanding into foreign markets, in this case, the opportunities offered by European economies. However, there is a more straightforward option to the risks and costs of setting up a subsidiary in Bulgaria by working with Bradford Jacobs. Using a global PEO such as Bradford Jacobs means staff can be sourced, placed in their roles and be up and running within days rather than months. All the payroll, taxation and compliance difficulties are under control thanks to our EOR services.
Foreign business entities in Bulgaria operate under the Commerce Act, the same as local companies, and register for incorporation by following the requirements of the Registry Agency. Although opening a branch in Bulgaria is permitted, the usual choice for foreign and local investors is establishing a private limited liability company. Required documentation and procedures include:
Registration and Documentation:
Accounts and Taxation: