As of 2021, more and more European and world virtual currency traders choose Bulgaria for their headquarters of cryptocurrency business. There is still no law on virtual currencies based on blockchain technology, neither in Bulgaria, nor in the EU, nor in any other developed country, although cryptocurrency trading (Bitcoin, Ethereum, etc.) has been flourishing for years. Supervisory authorities in various EU countries issue sporadic guidelines, recommendations and warnings, but this has nothing to do with creating a legally regulated framework for crypto trading to adhere to, let alone uniform legal requirements.
The very first thing to mention in this relation is that from legal point of view there is no such legal term as ‘business address’. The official legal term, according to Bulgarian Commerce Law, is ‘seat and registered address’ but practically registered, business, fiscal, postal, etc. address in practice means one and the same thing.
The above mentioned local postal address is actually the company’s official business address. But what is the purpose of this official address one may ask? The main and maybe most important role is that this is the local address in Bulgaria where all official company correspondence is delivered. This is of utmost importance due to the fact that it may lead to monetary losses or even business closure. And here is one simple example in this relation – if someone, actually this could be anyone, is suing the company – all court summons are delivered to the official postal address of the Bulgarian company. And if there is no such company found at the address, then, according to Bulgarian laws, all papers are considered delivered and accepted and the company is not sought for the civil or commercial proceedings anymore. Which of course means that this company would bot for example be able to appoint a lawyer to defend its rights and best interest – and this in most cases leads to a lost case. And if it’s a big case then the company would suffer enormous losses and could even go bankrupt.
Having in mind the above, a common question of foreign businessmen who are living abroad is: Can I use the address of someone else in Bulgaria? And the answer is positive. There are companies in Bulgaria that offer registered address or even virtual office services. The first thing means that you are officially registering your company at the address in Bulgaria of a trusted person (e.g. lawyers, etc.) and then all correspondence is duly accepted by the authorized persons and then forwarded to the company owner/s or shareholder/s – usually scanned copies of the documents via e-mail over the Internet. The fee for this service varies but is usually in a very low amount, typically around 100 Euros per annum. The virtual office service is more expensive.
Obtaining Forex license in Bulgaria
Bulgarian Forex broker MiFID EU passporting
Bulgarian Forex license gives right to the broker to operate within the entire EU either by free providing of services or through opening a branch.
Companies that want to operate Forex business platforms in Bulgaria should be registered as investment intermediaries and licensed by Bulgarian Financial Supervision Commission. They work under the European MiFID which has been implemented in Bulgarian legislation and financial institutions are regulated by the directive with some national specifics.
There are two types of Forex licenses in Bulgaria which are applicable to brokers, depending on the type of activity:
- Brokerage license – BGN 250 000 (approx. EUR 125 000) minimum required investment capital – that type of license gives the investment intermediary the opportunity to hold clients’ money and securities and to provide any of the following services:
- Reception and transmission of orders in relation to one or more financial instruments, including intermediating for conclusion of transactions in relation to financial instruments
- Provision of investment advice to clients
- Execution of orders on behalf of clients
- Portfolio management
Full (Market Maker) license – BGN 1 500 000 (approx. EUR 750 000) foundation capital – that type of Forex license gives Bulgarian investment intermediaries the right to deal on their own account.
In both cases 25 % of the minimum required capital must be deposited with a bank before filing the application for licensing in Bulgaria and the remaining amount within 14 days from receiving the approval by the Financial Supervision Commission.
Apart from the capital requirement, there are other requirements that can be summarised in several categories:
- Requirement towards the directors (managers) – they must be professionals of good reputation, with proper higher education and experience in the field
- Requirements towards the shareholders and the origin of funds of the share capital – as above shareholders can be persons/companies of good reputation, showing clear criminal record and clear origin of investment capital
- Capital adequacy requirements
- Requirements towards staff, organizational structure
- Requirements towards internal control, audit
- Technical requirements
The first major requirement is a minimum amount of the investment. There are two applicable components – BGN 600 000 (a little more than EUR 300 000) is the amount which must be invested in hardware, software, etc. plus BGN 1 000 000 free capital for the purpose of paying clients, i.e. real money available ‘at hand’. The documents proving that the company has the required funds (BGN 1 600 000 BGN) are shown together with the application for the licence. The origin of all funds must be proved as the Commission explicitly checks for this.
Another mandatory requirement concerns the online communication equipment and respectively the central computer system. The rule is that they must be physically located on the territory of Bulgaria. However, they can be managed or maintained from a distance, i.e. even though in Bulgaria, servers and other equipment can be run from abroad. The central computer system of the online casino must be connected to the Bulgarian National Revenue Agency for real time transfer of information directly to the National Revenue Agency. Every transaction is online registered in the Agency’s system. And finally the gaming software should be approved by the Bulgarian State Commission on Gambling
When it comes to payment applicants should bear in mind that licensed companies organizing online gambling must open a special bank account for depositing stakes and paying out winnings with an EU or a Swiss licensed bank operating in Bulgaria.
The time frame for obtaining an online gambling licence is 2 months from the date on which all required documents have been filed with the Commission. If there are any discrepancies or if the Commission requires more documents, then the applicant has another month. The fees for reviewing the applicant’s documents are BGN 40 000 for sporting events and horse/dog racing or BGN 70 000 for online poker and casino. A licence can be issued for 5 or 100 years and in order to be maintained the company organizing the online gambling should annually pay BGN 100 000 plus 20% on the net profit.
If you are a foreign national, permanently living abroad, and you have already appreciated the big benefits of doing business by running a Bulgarian company, then maybe you have already asked yourself the question whether it is possible to incorporate a company in Bulgaria and then run it from abroad or you still have to come to Bulgaria personally.
If you have the option for coming to Bulgaria, no matter the reason why, the best option would be to act personally while setting up your business in Bulgaria. This of course does not mean to prepare all required paperwork and other required documents personally. It means that you will have to sign all related documents that someone, usually a trustworthy Bulgarian business lawyer, has already drafted on your behalf. If all documents have already been exchanged by post or e-mail and certainly approved by the owner/s or respectively shareholder/s, then the latter will only have to sign the documents, some of which before a notary public. All this takes from a couple of minutes to an hour.
If however you are not planning an initial business trip to Bulgaria, then you should bear in mind that there is an option for your new Bulgarian company to be incorporated without your physical presence in the country. In this case you can have the documents posted or e-mailed to you – which, upon receipt, you will sign and post back to your Bulgarian company representative (e.g. a corporate attorney etc.).
The only problem in the above described scenario is the necessity of witnessing some of the documents. As explained earlier, there is an option for these papers to be witnessed by a notary, even a notary abroad. A common problem for many investors who want to do business in Bulgaria is that Bulgarian commercial laws do not allow solicitors to witness signatures on documents as it is in many countries around the world – and only notaries are allowed to carry out this job. Notarizing documents abroad is a little but more difficult because once notarized, the papers then have to be legalized. Which means a little more time and expenses. An exception to this rule are countries Bulgaria has singed legal assistance treaties with – in which case documents get automatically recognized without being legalized. The last option in this regard, which is preferred by foreign citizens, is the company documents to be witnessed in any Bulgarian embassy around the world. Even if you live in Russia, you can still go to the Bulgarian embassy in London, UK, and do this job successfully.
Following the Bulgarian company registration process successful end, owners or shareholders start actively doing business in Bulgaria (as this what they have established the company for after all).
The first question in this regard is related to the scope of business activities of commercial companies in Bulgaria. They can do virtually any kind of business they wish. Or do no business at all – something that is not prohibited but even allowed. In the latter case the company pays no taxes, nor any other sort of contributions to the state. The only expenses on account of the LLC or other type of corporate body are the accounting and / or legal charges which are due annually for filing nil returns.
Upon registration Bulgarian companies declare their business activities with the Trade Register. But are they restricted with the exact activities that they have stated at the time of initial incorporation? No, they are definitely not. Even if a company, at the time of the business start-up, declares production of some sort of goods, later on it can start doing other type of business in Bulgaria, EU or around the world, e.g. dealing with distribution of goods even if this is not explicitly mentioned in the official companies register. But aren’t there any limitations after all? Yes, there are limitations for doing business in Bulgaria of course but they are related to some sectors which are monopolized by the state – e.g. military production, etc. Some other specific commercial activities could be subject to initial licensing – for example production of drugs, etc.
To summarize things up – almost all of the things described above can be done either personally by foreign businessmen who are doing business in Bulgaria or from abroad via proxies – trustworthy lawyers, managers, etc. Many things can also be done over the internet – e-banking, real time business monitoring, etc. Having in mind this, may foreign investors have already developed a successful business in Bulgaria without their physical presence in the country.
But first one should know that Bulgaria is not a typical offshore zone. It is more of a tax haven. In simple words – you get the best from an offshore and a ‘normal’ company registered in EU. From legal point of view Bulgarian offshore companies are ‘normal’ companies, publicly registered and legally operating all across Europe and the world. They are registered under EU jurisdiction which means that they benefit from all EU financial and tax regimes. And from purely psychological point of view they are much more prestigious – because everyone would prefer to deal with an EU based company, which is publicly registered and strictly regulated under EU legal framework – rather than deal with a typical offshore company, which by default hides many details about its business activities, real owners, etc.
The benefits of a Bulgarian offshore company start with the lowest corporate tax rate in the whole EU – 10 %. Some typical offshore companies in Europe offer 0 % tax but as explained above this is the price for doing 100 % legal business in the entire EU. And all across the world.
Offshore companies in Bulgaria however have many things in common with typical offshore companies. To start with – nominee shareholders and nominee directors are not explicitly regulated under Bulgarian law but in practice are quite popular. Plus they are 100 % legal. So in other words any savvy businessman can run even a big business quite legitimately under the protection of and using all benefits of a European jurisdiction – while at the same time no one knows that he is the real owner of that business who remain hidden behind nominee shareholder/s and nominee directors.
Company in Bulgaria with account is something that every local company is entitled to. Anyone can set up a Bulgarian offshore company and then immediately open a bank account in Bulgarian Lev (BGN), Euro (EUR) or any other popular world currency. The fees that Bulgarian banks charge are very minimal, some even offer this service for free. Monthly fees for a Bulgarian company bank account are also very low – in most cases no more than 5 Euros. Another benefit in this relation is that many EU based large banks have branches in Bulgaria – and many corporate clients who use the services of such bank in their home countries prefer to use the services of the same bank, via its branch of course, in Bulgaria.
Another very important aspect of bank services in Bulgaria is that almost all banks offer e-banking – operating a bank account over the internet from all around the world. These bank products are highly appreciated by foreign investors who can register an offshore company in Bulgaria but conduct their business from abroad. Any businessman who has activated electronic banking with any Bulgarian bank can make and receive bank transfers like a charm, with only a few clicks on his computer.
Just like anywhere around the world, setting up an online web shop in Bulgaria does not require the availability of an offline store although you still have to register a Bulgarian company which will receive payments, issue electronic invoices, etc. The e-store is a computer software that provides the merchant (trader) with the opportunity to easily and quickly publish information for his goods on the Internet – and respectively sell goods / services and make profit. Although most legal requirements for traditional offline commercial activities apply for e-trade, some special rules need to be implemented. Applicable are mainly Bulgarian E-commerce Act and The Consumers Protection Act as well as other laws.
When making a decision to start or simply move an e-business in Bulgaria you should keep in mind the following:
Any Bulgaria based e-merchant / provider of services on the Internet shall be registered as a Bulgarian company. It could be a limited liability company with only 1 (one) Euro capital! Once duly formed, this company will be the operator of the online store.
According to Bulgarian law it is obliged to provide to the consumers and to the competent authorities direct and permanent access to the following information: the name of the merchant; the seat and the registered address; the address where the activity is performed; correspondence details – telephone numbers, e-mails, etc.; Unique Identification Code of the trader; information for the supervising authorities; information for VAT registration – if any; another information required by Bulgarian laws. The online trader is also obliged to inform whether all web shop advertised prices include taxes, fees and other expenses.
Another requirement demands the online trader to make a registration in accordance with Bulgarian Protection of the Private Data Act or to provide special options before the consumer.
As for advertisement – the advertisement messages have to be: easily recognized as such; to identify unanimously the addressee; to provide understanding about the characteristics and the conditions of the advertised product. Should you decide to send unsolicited messages you are obliged to clearly and unanimously provide the identification of these commercial messages as unwanted.
During the process of concluding of an online contract some EU requirements shall be met. They concern: the technical steps that shall be undertaken for the conclusion of the contract; the back up of the contract; the means of searching and correction of any mistakes; the languages that can be used for concluding the contract.
General terms and conditions to the e-contracts shall be also be presented and made publicly available.
According to Bulgarian and EU laws by concluding the e-contract, the buyer becomes legitimate owner of the purchased goods. One should bear in mind that according to the Bulgarian Protection of the Consumers Act, the client may cancel the contract, within a 14 day period, without stating any reason and having the right to a full refund. In this case the goods shall be returned back to the merchant and then the said trader shall refund the price that has been paid by the client.
To begin with, those who want to be listed as Bulgarian tour operators and / or travel agencies must be:
- Either merchants (Bulgarian companies) registered as per Bulgarian Commercial Act or
- Legal entities entitled to conduct business under any other law of an EU member state country or another country within the European Economic Area
Any of the above two categories have the opportunity to register as full-service providers or online providers of tour operator or travel agency / tour operator services. The second option is relatively easier. Tour operators and agents that offer only online services benefit from a simpler registration regime and fewer application documents for their listing.
Generally the requirements can be classified in 5 groups: