As a member of the European Union and the World Trading Organization Bulgaria may boast as a great investment and start-up business destination with low taxation, highly stable currency – the Bulgarian lev, whilst having very little government debt.
Bulgaria has lower than the average taxation, which is one of the best in Europe, not to mention the zero taxation and tariffs on product imports from the European Union market. Moreover, there is 0 % withholding tax on dividends and liquidation quotas if you are a legal entity in a country part of the European Union or EEA area.
What’s more, Bulgaria may offer special privileges to the entities regardless of each sector they supply under certain conditions. The Bulgarian Ministry of Economy has categorized two types of investors, which are defined by reaching a certain minimal threshold.
However, it differs from sector to sector. For example, to obtain the status of category A investor and benefit from privileges for that classification one must implement between 3 million BGN for services sector and 10 million BGN for the processing industry sector. There is also category B classified investors who are given lesser threshold but also receive fewer privileges. You can see more information regarding the investments in the Republic of Bulgaria at the Invest Bulgaria Agency (http://www.investbg.government.bg/en)
As it stands, the process of liberalization of the Bulgarian energy marked has been almost completed. Before the liberalization, the marked was heavily regulated by the Energy and Water Regulatory Commission (EWRC) by creating and supervising territorial monopolies on supply and network distribution, which were controlling both the marked and the network. Nowadays, any physical person can choose his electricity provider. Business entities, on the other hand, are free to enter the market, but in order to provide their services they are supposed to pay a certain fee for the usage of the territorial networks, which are held by private companies.
EWRC (http://www.dker.bg/indexen.php) is the regulatory institution which holds all the control function of the marked.
Bulgarian civil law and legislation is highly advanced in the section of the legal entities. There are many different types, which serve various interests.
As per the Bulgarian Commercial Act business entities are formed as – Unlimited partnerships, Limited partnerships, limited liability companies, joint– stock companies, limited partnerships with shares and sole traders. There are certain sectors that require government authorization for the established legal entities, in order to carry on their activities.
Every person can easily check if a business entity is legally registered in the Bulgarian business register (https://public.brra.bg/CheckUps/Default.ra?0).
By the virtue of Corporate Income Taxation Act there are three categories taxation of legal entities – Corporate Income Tax, Withholding Tax and Lump Sum Tax. Upon creation, these entities are considered tax residents and as such are subjected to taxation on their total worldwide income. Corporate taxation in Bulgaria is 10% and withholding tax rate is 10%. Dividend distributions and liquidation quotas are 0% when the shareholder is a legal entity, established in a country of the European Union or European Economic Area and 5% for entities, which are not established in the Union. There is no withholding tax for financial instruments.
There is established stock exchange market (http://www.sce-bg.com/?pid=1&l=en), which operates on daily basis with its own indexes - BGBX40, BG TR30 and BG REIT and the primary used one is SOFIX. Bulgarian capital market is supervised by the Financial Supervision Commission (http://www.fsc.bg/en/ ), which ensures investors protection and controls the conformity with the law of the activities on the market.