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.

How to Set Up a Bulgarian Subsidiary?

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:

  • Obtaining the nine-digit Tax Identification Number (TIN) from the Registry Agency, which manages the BULSTAT Register (Commercial Register).
  • Receiving the Unified Identification Code (UIC) or BULSTAT Code. The BULSTAT UIC must be used on all business documents.
  • Verifying a unique name for the company and compiling incorporation documents for the Registry Agency.
  • Providing notarised IDs for all founders of the subsidiary.
  • Lodging Articles of Association of the foreign parent company and their resolution to open a subsidiary in Bulgaria with the Commercial Register.
  • Registering with the National Revenue Agency (NRA) and the NSSI to withhold and remit payroll taxes and social insurance contributions.
  • The NRA automatically registers the company for Value Added Tax once entered in the Commercial Register, and providing the VAT number, prefixed BG.
  • Opening a bank account for depositing initial share capital, which cannot be less than two Bulgarian leva (BGN), €1 or US$1. A business bank account subsequently replaces this.

Further procedures must be followed to then operate payroll for staff in the country, including:

  • Registering employees with the relevant NRA office in the appropriate district centre to obtain their Tax Identification Number (TIN).
  • Registering foreign employees with the NRA, whether they are long-term or permanent residents or in Bulgaria, solely for tax purposes.
  • Ensuring Bulgarian employees have their Unified Civil Number (UCN), which acts as their TIN. Bulgarian citizens receive this at birth, and it is assigned to other individuals when they receive Bulgarian ID documentation.
  • Registering with the relevant office of the NSSI – is mandatory to make social insurance contributions.
  • Remitting payroll taxes and deductions to the NRA and social security contributions to the NSSI.
  • Drawing up employee contracts according to the Bulgarian Labour Code and the Obligations and Contracts Act. Within three days of signing, the contract must be filed with the NRA no later than the day the employee is due to begin work.

Benefits of Setting Up a Bulgarian Subsidiary

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:

  • Easier to obtain potential benefits and incentives and enter into contracts with other Bulgarian or EU companies.
  • More impact with clients and suppliers, as subsidiaries imply more permanency than branches.
  • Employees feel there is more stability and job security than from being with a branch.

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.

Subsidiary Laws in Bulgaria

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:

  • The nine-digit Tax Identification Number (TIN) is obtained from the Registry Agency, which administers the BULSTAT Register (Commercial Register).
  • The Unified Identification Code (UIC), or BULSTAT Code, identifies all business entities in Bulgaria.
  • The BULSTAT UIC is quoted in all business documents.
  • Notarized incorporation documents for the Registry Agency – power of attorney, Articles and Memorandum of Association.
  • Notarized IDs for all founders of the subsidiary and verified passport details for foreign members.

Accounts and Taxation:

  • Registration with the National Revenue Agency (NRA) to withhold and remit payroll taxes.
  • Registration for Value Added Tax as per the Tax Procedure Code and Value Added Tax Law to receive the VAT number prefixed BG. Once entered in the Commercial Register, the NRA automatically registers the company for VAT.
  • Bank account for depositing minimum share capital, two Bulgarian leva (€1, US$1), subsequently replaced by a business bank account.
  • Bank certificate for proof of deposit
  • Corporate Tax is paid at 10% on worldwide profits.
  • The company’s assets are separate from the shareholders’ contribution, whose liability is limited to their contribution.
  • The subsidiary complies with taxation and accounting laws applying to all Bulgarian companies.
  • The subsidiary does not need to provide audited accounts of the parent company and creates its reports, filed annually with the Trade Register and complying with the Accountancy Act (ZS).


  • The private limited liability subsidiary has a minimum of two shareholders.
  • There are no legal restrictions on the nationality of shareholders or managers.
  • Manager(s) and director(s) elected by the shareholders.
  • Shareholders must hold an annual meeting.


For more information, download our free guide or get in touch with our consultants here