Types of Companies in Bulgaria | 9 Entity Structures Covered

Introduction to Entity Types in BulgariaCopy link to section

Bulgaria sits in southeastern Europe, bordered by Romania, Serbia, North Macedonia, Greece, and Turkey, with a Black Sea coastline to the east. It is an independent republic and a member of the European Union, which means company formation and ongoing compliance are governed within an EU regulatory framework.

Registration of legal entities falls under the jurisdiction of the Bulgarian Commercial Register and Register of Non-Profit Legal Entities, maintained by the Registration Agency under the Ministry of Justice. All commercial entities are required to register here before conducting business.

From a tax perspective, Bulgaria operates one of the lowest flat corporate tax rates in the EU, making it a notable low-tax jurisdiction within the bloc.

The types of business entities in Bulgaria available to both domestic and foreign investors include: the Joint Stock Company (AD), the Limited Liability Company (OOD), the Single-Member Limited Liability Company (EOOD), the General Partnership (SD), the Limited Partnership (KD), the Limited Partnership with Shares (KDA), the Branch Office, the Representative Office, and the Sole Trader (ET).

Each structure carries distinct liability rules, capital requirements, and governance obligations. This article examines each one in detail to help you determine which fits your operational and ownership requirements.

An Overview of Business Structures in BulgariaCopy link to section

Bulgarian company law recognises several distinct entity types, each governed primarily by the Commerce Act (Targovski Zakon), first enacted in 1991 and amended numerous times since. The Registration Agency (Agentsiya po Vpisvaniyata), operating under the Ministry of Justice, maintains the Commercial Register through which all commercial entities are registered. Each structure carries different rules on liability, governance, and permitted activity.

Business Structures at a GlanceCopy link to section

Each of these structures is examined in full in the sections below.

Joint Stock Company (Aktsionerno Druzhestvo – AD)Copy link to section

Governed by the Commerce Act of 1991 (Targovski Zakon), the joint stock company Bulgaria AD registration process establishes a capital-based entity with full legal personality, separate from its shareholders. Liability is limited to each shareholder's subscribed capital contribution.

Structured for larger commercial operations or entities intending to raise public or private capital, the Aktsionerno Druzhestvo issues transferable shares and may, under certain conditions, list on the Bulgarian Stock Exchange (BSE).

Key CharacteristicsCopy link to section

Focus PointsCopy link to section

• Taxation: Corporate income tax at 10% flat rate; standard VAT rate of 20% with registration threshold of BGN 100,000; dividend withholding tax at 5% (reduced rates available under applicable double tax treaties); no stamp duty on share transfers.
• Annual Compliance: Mandatory annual financial statements audited by a registered auditor; filing with the Registry Agency; general meeting of shareholders required annually.
• Economic Substance: No formal substance test under Bulgarian law, though commercial reality and tax residency rules apply for treaty access purposes.
• Treaty Access: Bulgaria has over 60 active double tax treaties; AD entities qualify as residents for treaty purposes when management and control is exercised locally.
• Conversion: An AD may be converted into an OOD or other commercial entity through a statutory transformation procedure under the Commerce Act.

Sub-TypesCopy link to section

Publicly Traded AD (Public AD)

A Public AD has made a public offering of shares or has more than 10,000 shareholders, bringing it under the supervision of the Financial Supervision Commission (FSC) and the requirements of the Public Offering of Securities Act. Ongoing disclosure, prospectus, and reporting obligations apply that do not affect a standard private AD.

Suited to institutional investors, joint ventures, and businesses anticipating equity financing, the AD offers structural flexibility through its dual-board option. The primary drawback is the relatively high minimum capital requirement and mandatory audit obligation, which increases administrative overhead compared to simpler Bulgarian entity forms.

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Limited Liability Company (Druzhestvo s Ogranichena Otgovornost – OOD)Copy link to section

The limited liability company Bulgaria OOD is governed by the Commerce Act of 1991 (Targovski Zakon), which establishes it as a distinct legal entity separate from its members. Liability is confined to each member's capital contribution, meaning personal assets remain protected from business obligations.

Structurally, the OOD sits between a sole trader and a joint stock company — it carries corporate legal personality while permitting a relatively simple internal governance framework. Druzhestvo s Ogranichena Otgovornost registration is handled through the Bulgarian Commercial Register (Targovski Registar), maintained by the Registry Agency.

Key CharacteristicsCopy link to section

Focus PointsCopy link to section

• Taxation: Subject to 10% corporate income tax; standard VAT rate of 20% applies once registration threshold is met; withholding tax of 5% applies to dividends distributed to non-residents; no stamp duty on share transfers.
• Annual Compliance: Annual financial statements must be filed with the Commercial Register; audit obligation applies when statutory thresholds on revenue, assets, or headcount are exceeded.
• Economic Substance: No formal substance requirements under Bulgarian law, but tax residency determinations follow effective management and control principles.
• Treaty Access: Bulgaria's tax treaty network covers 70+ jurisdictions, making the OOD eligible for reduced withholding rates where applicable.
• Conversion: An OOD may be converted into an AD through a statutory transformation procedure under the Commerce Act.

ClosingCopy link to section

The OOD suits trading operations, holding structures, and service-based businesses where controlled ownership and administrative simplicity are priorities. Its low capital threshold supports entry-level incorporation, though share transfer restrictions can limit investor flexibility compared to a share-based structure.

Single-Member Limited Liability Company (Edinolichno OOD – EOOD)Copy link to section

The single member LLC Bulgaria EOOD structure is governed by the Commerce Act of 1991 (Targovski Zakon), the same legislation that regulates the standard OOD. Structurally, the EOOD is a variant of the OOD in which a single individual or legal entity holds 100% of the capital.

As a separate legal person, it shields its sole owner from personal liability beyond the amount of their registered capital contribution. This hybrid character — combining the operational simplicity of a sole proprietorship with the liability protection of a limited liability entity — makes it a widely used form among small businesses and wholly-owned subsidiaries.

Key CharacteristicsCopy link to section

Focus PointsCopy link to section

• Taxation: Subject to 10% corporate income tax; VAT registration is mandatory once annual turnover exceeds BGN 100,000; dividends distributed to non-resident owners are subject to 5% withholding tax under domestic law, reducible under applicable tax treaties.
• Annual Compliance: Annual financial statements must be filed with the Bulgarian Commercial Register; dormant companies still carry reporting obligations.
• Conversion: An EOOD can be converted to a standard OOD upon admitting additional shareholders, without dissolving the entity.
• Treaty Access: As a Bulgarian-resident legal entity, the EOOD can access Bulgaria's network of double taxation treaties, provided substance requirements are met.
• Restrictions: A single owner cannot simultaneously be the sole owner of another EOOD, under Article 156(2) of the Commerce Act.

ClosingCopy link to section

The EOOD is suited to trading operations, holding structures, and wholly-owned subsidiaries where a single shareholder requires liability separation without the administrative overhead of a joint-stock entity. Its principal limitation is the restriction on sole ownership across multiple EOODs simultaneously, which can constrain certain multi-entity structuring approaches.

Partnerships in Bulgaria [General Partnership (Sabiratelno Druzhestvo – SD), Limited Partnership (Komanditno Druzhestvo – KD), Limited Partnership with Shares (Komanditno Druzhestvo s Aktsii – KDA)]Copy link to section

The three partnership types in Bulgaria — SD, KD, and KDA — are governed by the Commerce Act (Targovski Zakon) of 1991. All three possess separate legal personality upon registration with the Commercial Register at the Registry Agency, which distinguishes them from simple civil partnerships under the Obligations and Contracts Act.

Liability structures differ across these forms. In an SD, all partners bear unlimited joint and several liability for the firm's obligations. The KD introduces a two-tier membership model, separating unlimited general partners from limited partners whose exposure is capped at their capital contribution. The KDA extends this further by issuing shares to limited participants, combining partnership governance with share capital mechanics.

Key CharacteristicsCopy link to section

Focus PointsCopy link to section

• Taxation: Partnerships are subject to 10% corporate income tax on profits; VAT registration is mandatory above the BGN 166,000 threshold; distributions may attract 5% withholding tax on dividends paid to non-resident partners.
• Annual compliance: All three forms must file annual financial statements with the Commercial Register; SD and KD have simplified accounting requirements relative to capital companies.
• Treaty access: Access to Bulgaria's double tax treaty network depends on the entity being treated as a tax resident; partnership classification can vary under foreign jurisdictions' domestic rules.
• Conversion: A KD may be converted into a KDA or an OOD under the Commerce Act transformation procedures, subject to creditor notification requirements.
• Restrictions: Limited partners in a KD who participate in management lose their limited liability protection under the Commerce Act.

Sub-TypesCopy link to section

General Partnership (Sabiratelno Druzhestvo – SD)

The SD is the structurally simplest partnership form, with no capital minimum and full unlimited liability for every partner. It is typically used by small professional firms or family businesses where all participants are actively involved in operations.

Limited Partnership (Komanditno Druzhestvo – KD)

The KD separates passive investors (limited partners) from active managers (general partners), making it suitable for arrangements where capital contributors prefer defined exposure without operational responsibility.

Limited Partnership with Shares (Komanditno Druzhestvo s Aktsii – KDA)

The KDA is the least common of the three. Its share capital component brings it structurally closer to an AD, and it is occasionally used for investment vehicles where transferability of limited participation interests is commercially important.

Partnership structures suit professional services, family-owned trading businesses, and investment arrangements requiring a clear separation between active managers and passive capital contributors. The unlimited liability exposure of general partners is a material constraint that limits these forms in higher-risk commercial contexts.

Foreign Business Presence in Bulgaria [Branch Office, Representative Office]Copy link to section

Establishing a foreign company branch office Bulgaria is governed primarily by the Commerce Act (Targovski Zakon), first enacted in 1991 and subsequently amended. Neither a branch office nor a representative office constitutes a separate legal entity — both are extensions of the parent company, which retains full liability for their activities. This distinction has direct consequences for contracting, taxation, and regulatory exposure.

Registration of both structures is handled through the Bulgarian Commercial Register (Targovski Registar), administered by the Registry Agency. A branch may conduct commercial activity directly, whereas a representative office is restricted to non-revenue-generating functions such as market research, promotional activities, and liaison work.

Key CharacteristicsCopy link to section

Focus PointsCopy link to section

• Taxation: Branch profits are subject to 10% corporate income tax on Bulgarian-sourced income; VAT registration is required if taxable turnover exceeds BGN 100,000; withholding tax may apply to profit remittances depending on the parent's home jurisdiction and applicable double tax treaties.
• Treaty Access: Access to Bulgaria's tax treaty network depends on the parent entity's tax residency; the branch itself does not qualify as a resident taxpayer.
• Annual Compliance: Branches must file annual financial statements with the Commercial Register; representative offices registered with the BCCI have separate annual re-registration requirements.
• Restrictions: A representative office cannot sign commercial contracts, invoice clients, or generate revenue — violations risk reclassification by the National Revenue Agency (NRA).
• Conversion: A branch can be converted into a locally incorporated entity, but this requires a new registration process rather than a statutory conversion procedure.

ClosingCopy link to section

A branch office suits foreign firms testing the Bulgarian market or executing specific contracts without committing to full local incorporation, though the absence of liability separation between the branch and the parent remains a structural exposure. The representative office is appropriate only for preparatory or auxiliary functions.

Sole Trader (Ednolichen Targovets – ET)Copy link to section

Sole trader registration Bulgaria ET is governed by the Commerce Act (Targovski Zakon) of 1991, specifically Part One, Chapter Two. Unlike the OOD or AD, the ET is not a separate legal entity — the individual and the business are legally the same person, meaning personal assets are fully exposed to business liabilities.

Registration is handled through the Commercial Register (Targovki registar) maintained by the Registry Agency. Any Bulgarian national or EU/EEA citizen with permanent residency may register as an ET; non-EEA nationals face restrictions under current rules.

Key CharacteristicsCopy link to section

Focus PointsCopy link to section

• Taxation: Subject to a flat 15% annual personal income tax on net profit (after a 60% standard expense deduction); VAT registration mandatory upon reaching the BGN 100,000 turnover threshold; no corporate tax applies.
• Social Security: Proprietors must make mandatory social and health insurance contributions regardless of profitability.
• Annual Compliance: Annual financial statements must be filed with the Registry Agency; dormant ETs with no activity may be eligible for simplified reporting.
• Conversion: An ET can be converted into an OOD or EOOD under the Commerce Act, but the process requires formal transformation proceedings and does not automatically transfer liabilities.
• Restrictions: Cannot be used for certain regulated activities (banking, insurance) that require a corporate structure with defined capital.

ClosingCopy link to section

The ET suits individual traders, freelancers, and small-scale operators who need a low-cost, quickly registered structure for domestic commercial activity. The absence of minimum capital and simplified setup are practical advantages, but unlimited personal liability makes it unsuitable for any business carrying significant financial or legal risk.

How to Choose the Right Entity Type in BulgariaCopy link to section

Knowing how to choose a company type in Bulgaria before you register prevents structural problems that are far more costly to correct after the fact.

Why Your Entity Choice MattersCopy link to section

The structure you select at registration has binding legal and financial consequences that persist for the life of the entity.

• Registering as a Branch Office when you intend to operate as an independent commercial entity means the parent company retains full liability for the branch's obligations under the Bulgarian Commerce Act — there is no liability shield.
• Choosing an OOD or EOOD when your activity falls under a licensed sector (banking, insurance, collective investment schemes) without meeting the minimum capital and regulatory requirements of the Financial Supervision Commission results in operating without a valid licence, exposing the entity to forced closure.
• Selecting a Representative Office, which cannot lawfully generate revenue, and then conducting commercial transactions through it constitutes a breach of its registered purpose and can trigger deregistration by the Registry Agency.
• Forming a Joint Stock Company (AD) for a single-owner consultancy imposes mandatory audited financial statements and a supervisory board structure, adding recurring compliance costs that a sole EOOD does not carry.

Key Factors to ConsiderCopy link to section

Before settling on a Bulgaria entity type, review each of the following against your specific situation:

• Business Activity: Active trading, passive asset holding, and regulated financial activity each point to structurally different entities under the Commerce Act.
• Ownership and Management: Single-person ownership suits an EOOD, while multi-party ventures with investor protections require an OOD or AD with a formal governance structure.
• Tax Objectives: If treaty access matters — for instance, to claim reduced withholding tax in counterpart states — you need a fully taxable resident entity, not a tax-exempt structure.
• Substance Capacity: If you cannot realistically maintain personnel, a registered address with operational activity, and management decisions inside the jurisdiction, the chosen structure must reflect that limitation.
• Privacy Requirements: The Commercial Register in Bulgaria is public; directors and shareholders of capital companies are disclosed, so nominee arrangements must be assessed separately for compliance with beneficial ownership reporting rules.
• Exit Strategy: Not all entity types in Bulgaria support redomiciliation or conversion; an OOD can be converted to an AD, but a Representative Office cannot be converted — it must be closed and a new entity formed.

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ConclusionCopy link to section

Selecting the right structure is the first substantive decision in any incorporating a business in Bulgaria guide, and that choice carries consequences for liability, governance, and long-term operational flexibility. The OOD remains the most registered entity type in the country, favored for its low capital threshold and straightforward management structure. The EOOD serves the same framework but suits single founders operating without partners. For larger ventures requiring share transferability and public capital access, the AD applies. Partnerships — the SD and KD — fit closely held arrangements where personal liability is acceptable. Branch offices and representative offices extend foreign entities into Bulgarian territory without creating a separate legal person, each serving distinct operational purposes. The ET remains specific to individual traders operating under personal liability. Registered under the Commercial Act and administered through the Commercial Register at the Registry Agency, each structure carries defined legal standing.

How Expanship Can Assist YouCopy link to section

Expanship's corporate services Bulgaria clients rely on cover the full formation cycle, from choosing between an OOD, EOOD, or AD to registering with the Bulgarian Commercial Register at the Registry Agency. Each entity type carries distinct filing requirements, capital thresholds, and ongoing compliance obligations — your setup should reflect your operational structure, not default to convention.

From initial document preparation through to post-incorporation obligations, here is what Expanship manages on your behalf:

• Document preparation and notarization for Registry Agency submission
• Registered address and local agent provision
• Government filing and liaison with the Bulgarian Commercial Register
• Post-incorporation compliance management, including annual reporting
• VAT registration support with the National Revenue Agency
• Banking introduction assistance for corporate account opening

To discuss your Bulgaria business incorporation, reach out to our team directly through Expanship Bulgaria.

Frequently Asked Questions (FAQ)Copy link to section