1. Providing payment services under the Payment Services and Payment Systems Act;
2. Issuing and administering other means of payment (travellers checks and letters of credit) as far as this activity is not covered by item 1;
3. Financial leasing;
4. Guarantee transactions;
5. Trading on your own account or for account of customers in foreign currencies and precious metals with the exception of derivative financial instruments on foreign currency and precious metals;
6. Currency brokerage;
7. Acquisition of credit claims and other forms of financing (factoring, forfeiting, etc.);
8. Issuing electronic money;
9. Acquisition of shareholdings;
10. Lending funds, that are not raised through public deposits or other repayable funds.

Financial institutions are subject to registration with BNB (Bulgarian National Bank) public register. A very important detail in this regard is that if there is a specific activity under a special law – the arrangements for licensing a Bulgarian financial institution are different. For example, a financial institution that issues electronic money should be registered and licensed under the Payment Services and Payment Systems Act.

The Credit Institutions Act sets out the following common requirements for the applicants:

1. To have a commercial registration in the Republic of Bulgaria as a limited liability company, joint stock company or a limited partnership with shares;
2. The scope of activity of the company shall not include services / activities different from those listed above;
3. Company’s own capital shall be in structure and in the amounts determined by Ordinance No 26 of 23.04.2009 for financial institutions, whereas only registered shares are allowed;
4. Main business activity shall be conducted on the territory of Republic of Bulgaria;
5. Managers and representatives of the company shall have the necessary qualification, experience and reputation, and the people who directly or indirectly hold the majority of the shares shall match certain criteria for reliability, financial stability and good reputation.

There are certain requirements to the person managing or representing a financial institution licensed in Bulgaria as well as natural persons who directly or indirectly hold a qualifying shareholding in the capital of a financial institution, beneficial owners, and persons who by law represent legal persons holding directly or indirectly a qualifying shareholding in the capital of a financial institution. Any such person shall:

1. Have a higher education;
2. Have at least 3 years of experience in economics, law, finance, IT;
3. Have not been convicted of a crime of general nature, unless rehabilitated;
4. For the last two years have not been a member of a management or supervisory body or a general partner in a company terminated due to bankruptcy in case unsatisfied creditors are left;
5. Have not been deprived from the right to hold responsible positions;
6. Have not been included in the list under art. 5 para. 1 of the Law on Measures Against Financing of Terrorism.

For registration and enlistment of a financial institution in the National Bank Register the capital of the company should be paid (in the form of cash contributions) in amount of BGN 1 000 000 (one million). The contributions to the minimum required capital must be paid in cash and should have been effected with own funds. A registered financial institution shall at all times maintain equity capital of not less than BGN 1 000 000. Equity shall be the sum of the registered and paid-up capital, the company’s reserves formed in accordance with Article 246 of the Commercial Law, retained earnings for previous years and current earnings as at the relevant reporting period, reduced by the loss for previous years and the current loss as at the relevant reporting period. In the case of repurchased shares, the company’s equity is reduced by the amount of the repurchased shares.

The administrative fee for processing the application and registration of financial institution and its entry in the register of the National Bank is BGN 3000 (three thousand). Additional fees are also payable for issuing certificates and making changes in the registered circumstances.

Buy Bulgarian citizenship by investing in Bulgarian companies or mutual funds

Fast track Bulgarian citizenship

Following the 2021 amendments to the Foreigners in the Republic of Bulgaria Act and the Bulgarian Citizenship Act, adopted by the National Assembly, Bulgaria offers new options for obtaining citizenship by investment. These amendments allow non-EU citizens to practically buy Bulgarian citizenship by investing in the economy of the country. Current legislation offers four different types of investment:

1. Investment in shares of Bulgarian commercial companies traded on a regulated market or a multilateral trading system in the Republic of Bulgaria, at a market value of not less than BGN 2,000,000.
2. Purchase of shares or stocks in collective investment schemes (mutual funds) originating in the Republic of Bulgaria, with a value of not less than BGN 1,000,000.
3. Shares in alternative investment funds established in the Republic of Bulgaria with a value of not less than BGN 1,000,000.
4. Contribution to the capital of a Bulgarian commercial company in the amount of not less than BGN 2,000,000 for a priority investment project in Bulgaria implemented by the company.

Any of the above investments grants directly Bulgarian residence permit to the investor and to their families (spouses and children under 18). A second investment at the same value during the second year from obtaining the residence permit grants citizenship. Thus, a non-EU citizen can get an EU permanent ID card for less than 6 months and an EU passport for two-three years.

The investors are free to purchase shares from different issuers and to make an investment portfolio at their own discretion. Using the service and advise of a Bulgarian Broker who is well-acquainted with the specifics of the Bulgarian stock market is highly recommendable.

A further advantage of this fast-track Bulgarian citizenship option is that the applicant is involved with bureaucracy procedures at a minimum. Almost everything can be arranged from a distance via a power of attorney given to a Bulgarian immigration lawyer. The whole process from making the investment to obtaining Bulgarian citizenship requires no more than two-three trips to Bulgaria and a visit to a Bulgarian embassy depending on the applicant’s current residency. The fact that the procedure is consuming a little time and efforts on behalf of the applicant makes it a preferred option by well-to-do businessmen who don’t have time to spend in sluggish administrative procedures.

Applicants are required to have address in Bulgaria though, but this requirement is common for all countries which offer EU citizenship for sale. Bulgaria’s advantage is that rental prices of real properties are very low as compared to other European countries. Anyone can rent a decent apartment for approximately 200-300 Euro per month which definitely costs less than a night stay in a good hotel in Europe.

Positive features of the citizenship by investment program are that foreigners and their family members who apply under this program are not required to learn Bulgarian language or to stay physically in Bulgaria.

The procedure described above is simple and 100 % perfectly legal and secure but obviously there are only a few who can afford it. No doubt this is an expensive option but this was exactly the idea of Bulgarian authorities when they launched the program. The fast-track Bulgarian citizenship option is deliberately intended to wealthy investors, people from high societies from non-European countries who wish to have a second citizenship in the European Union for themselves or their families. Furthermore, we are bound to mention that this option is for people who can prove the origin of their funds and can show a clean criminal record and good reputation.

Last but not least, anyone who wishes to apply should be ready to keep the investment for a total period of 5 years.

If you match the above criteria, please do not hesitate to contact our immigration legal team.

Bulgarian debt collection proceedings are not completely codified which unfortunately leaves many loopholes and opportunities for various legal interpretations. Debt recovery proceedings in Bulgaria are officially conducted by bailiffs (public or private enforcement agents). Debt collection agencies in Bulgaria could also help but in the end the role of a debt recovery lawyer is frequently most important. The regulations in force, especially of the registration of real estates, has many imperfections which can be used to sabotage the entire debt collection process. An experienced Bulgarian debt collection lawyer can undertake an investigation and carry out a number of researches in many different institutions with the aim of discovering all assets of the debtor. If the assets are not enough, sold or burdened, the solicitor can undertake specific legal actions for the return of sold or donated property back to the ownership of the debtor and thus they can be used to cover all amounts on the creditor’s writ of execution.

On the other hand, sometimes Bulgarian debt collection lawyers represent debtors in civil or commercial execution proceedings because even if a debtor is completely conscientious and intends to pay all amounts due – he can still become victim of unfair legal techniques which can double his duties.

Bulgarian Civil Procedure Code provides that subject to enforcement are:

• Decisions and rulings of Bulgarian courts in force, suing decisions of Bulgarian courts of appeal, writs of enforcement which are subject to or on which a preliminary and immediate execution is admitted, as well as decisions of Bulgarian arbitrary courts or arbitrary agreements.
• Decisions, acts and court agreements of foreign courts, which are subject to execution in Bulgaria without any special procedure.
• Decisions, acts and court agreements of foreign courts on which execution in Bulgaria is admitted.

Property interdictions and other injunctions in Bulgaria are one of the most important aspects in the debt collection proceedings. In many cases Bulgarian debtors make attempts, some quite successful, to sell, donate, etc. most or all of their assets thus making the monetary satisfaction of the creditor(s) practically impossible or very hard to achieve. An experienced Bulgarian debt collection lawyer knows when and how exactly to secure assets of the debtor – which is of vital importance for the purpose of effective debt collection.

At any stage of the execution proceedings, before the distribution of the collected amounts is done, any other creditors of the same debtor may join the procedure. All joint creditors have the same rights in the execution procedure as the initial creditor. If the collected amounts are not enough to satisfy all creditors, the bailiff shall make a distribution, as first he shall separate amounts for payment of receivables that have the right of priority satisfaction. The remainder shall be distributed for the rest receivables proportionally.

Most popular methods for debt collection are execution over movable properties (chattel) or immovable properties (real estates). For these cases there are strict procedures for public auctions which are typically handled or closely monitored by Bulgarian debt recovery attorneys.

With the above in mind, small and individual players in the crypto market usually do not take any measures to comply with legislation, and this is somewhat justified because it requires additional costs. However, for slightly larger and medium-sized players in the virtual currency market, it is advisable to take preventive measures that can save them a lot of hassles with all sorts of government institutions in the future. Even if cryptocurrencies are not comprehensively and precisely regulated in the current Bulgarian and European legislation, this does not mean that e.g. Bulgarian National Revenue Agency (NRA) will not carry out a tax audit, within which it will establish by an audit act considerable income and therefore unpaid taxes on the part of the obliged person – crypto trader. Or the Financial Intelligence Unit will not knock on the door in connection with measures against money laundering, not taken even on paper. Or the Commission for Personal Data Protection (CPDP) for requesting from the obliged person documentation of compliance and fulfilment of legal requirements.

It is perhaps unnecessary to mention at all that the first mandatory step in this respect is the registration of a limited liability company (LTD) or a joint stock company (JSC), because according to Bulgarian Commercial Act (CA), persons who carry out commercial activities on a sole proprietorship basis, even if they have registered absolutely nothing, are presumed to be sole traders (sole proprietorship). And in the case of a sole trader, firstly, taxation is less favourable and, in addition, the trader is liable with all his personal assets for his obligations.

The next step is to map out the business model according to which the cryptocurrency trading activity will be carried out in practice. It is highly advisable to consult a lawyer and an accountant. The least advisable option is to try something out to see if it works and, once it is found to work flawlessly (only on the technical side, however), no further legal or accounting measures are taken, at least until the competent authorities come to visit and serve a prescription, administrative infringement, penalty notice or other act. A good compromise option is to test how something works from an individual account that is not subsequently used in the company business activity of crypto trading.

Bulgarian Measures Against Money Laundering Act (MAMLA) is the first piece of legislation to be complied with by cryptocurrency traders in their activities. It also contains the first attempt at a legal definition in Bulgarian legislation of the concept of virtual currencies – “a digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily linked to a legal currency and does not have the legal status of currency or money, but is accepted by natural or legal persons as a medium of exchange and can be transferred, stored and traded electronically”. Under the most recent paragraphs of Article 5 of the MAMLA, persons who provide exchange services between virtual currencies and recognized currencies without gold backing on a professional basis, as well as wallet providers who offer custodial services (a natural or legal person or other legal entity that provides private cryptographic key custodial services on behalf of its clients for the holding, storage and transfer of virtual currencies) are obliged and therefore subject to sanctions under the law. Depending on the volume and complexity of the transactions carried out by the crypto trader, appropriate documentation should be prepared and made available upon request by the competent authorities.

The next act that should be complied with when trading in cryptocurrencies is the GDPR. It does not explicitly set out requirements for cryptocurrency traders, but they do arise from the activity carried out. Considering that even just email addresses without other accompanying data fall under the category of “personal data”, there is simply no way around the GDPR, even when it comes to trading with an accompanying high level of anonymization such as crypto trading.

Last but not least among the authorities controlling the trade with virtual currencies are the revenue administration authorities in the face of the NRA. In this regard, some would be surprised to know that there is a Regulation of the Minister of Finance, according to which there is a public register at the NRA, in which crypto traders should be registered. However, it should be borne in mind that it is not so important to be formally entered in this register as it is to “spell out” the business model and activities so that the tax administration has nothing to “catch” when exercising control over crypto traders. It is important to note that the registration in question should be carried out prior to the commencement of business.

The draft Withdrawal Agreement between the UK government and the EU envisages that British citizens will keep the right to live and work in the country where they reside at the time of the withdrawal. Both parties confirm that this has been surely agreed and further amendments in this section of the Withdrawal Agreement are not expected. Moreover, the negotiators agreed that there shall be a transitional period of 21 months (from 29 March 2019 until the end of 2020) before UK leaves the EU completely. So, according to the last draft of the Withdrawal Agreement, UK citizens residing on the basis of EU law before the end of the transitional period will maintain the residence rights they currently enjoy, under the currently applicable conditions and limitations. This protection includes also rights which are in the process of being obtained: citizens will be able to acquire the right to permanent residence after five years of lawful residence, even if the five-year period is completed after the end of the transition period. So, if you are a British citizen trading with EU partners, travelling around Europe or you are self -employed, providing services to EU clients, or you simply need to lower your taxes, and you wish to become a Bulgarian (tax) resident benefiting from current EU laws and the rights they give, you have a little time to do it.

What does it mean to be a Bulgarian resident for tax purposes?

That means that all your world income will be taxed in Bulgaria. For example, if you receive income in a country where income tax is 40 % but you are considered as Bulgarian residence for tax purposes, you are entitled to declare this income in Bulgaria and pay as per Bulgarian tax system. Please note that this rule does not refer to property taxes – property taxes are paid in the country where the property is located.

How one can be sure that there will be no double taxation?

Bulgarian National Revenue Agency issues a tax residency certificate which you show to tax authorities in other countries where you generate the income and they will no longer chase you to pay taxes in these countries and all your income will be taxable only here.

What is necessary to obtain such certificate?

EU laws give an opportunity a person to be considered tax resident of the country where his centre of economic interest is. To show that Bulgaria is your centre of economic interest you need to do the following:

1. First step is to obtain a Bulgarian long term residence as an EU citizen and a Bulgarian ID card with a Bulgarian personal ID number. The procedure is relatively easy and the only one significant requirement is to have a registered address. There are three possible options – to rent an apartment and use it for real, to rent an apartment just for the address registration without the possibility to actually stay there, to buy your own property in Bulgaria. If you buy a property, but do not plan to stay in Bulgaria physically most of the time, you can even rent it for income.
2. Register a Bulgarian company or register as a self-employed service provider and invoice your clients for the work provided to them. Incorporation of a Bulgarian company is the best option, because as a company you can deduct expenses, pay only 10 % on profit and 5 % on dividends.
3. Pay social and health contributions here in Bulgaria.

A few months from starting your Bulgarian company and paying social and health contributions here, you can apply for a tax residence certificate. On filing the application, the applicant needs to declare how many days within the year he/she has spent in Bulgaria. The general rule is that a person must stay in Bulgaria more than 183 days in a year in order to be considered tax resident. But as long as the person can show that Bulgaria is the centre of his/her economic interest as described above, obtaining such a certificate is possible without the necessity of matching this particular requirement.

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:

1. 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:
   1. Reception and transmission of orders in relation to one or more financial  instruments, including intermediating for conclusion of transactions in relation to  financial instruments
   2. Provision of investment advice to clients
   3. Execution of orders on behalf of clients
   4. Portfolio management
2. 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 Forex licensing procedure in Bulgaria is relatively fast and takes approximately 6 months. The applicant needs a couple of months prearrangements and legal work for preparing the application documents before filing the application with FSC. The Commission charges a fee for reviewing the application and issuing the investment intermediary license (different depending on the type of license) and comes up with a decision within 3 months from the date of application.

There are some new moments which any company applying for Bulgarian Forex license should take into consideration. They are related to the newest 2017 requirements and recommendations by the European Securities and Markets Authority and include the following issues: EU passporting of services and cross-border operation, poor practices in this relation, involving third parties in acquiring retail clients, operating in different jurisdictions without branches, etc.

In the common practice the balance profit is distributed among the shareholders in proportion to their shares. In other words, if in a limited liability partnership there are two partners each holding 50 %, that means that they will receive equal share from the profit, unless otherwise agreed. “Unless otherwise agreed” is a key phrase here, as it gives opportunity to shareholders to stipulate different shares of profit. These stipulations shall be made in writing on the company’s Articles or Operating Agreement. So, practically there are no legal limitations to disproportional distribution of profits in a Limited Liability Company, in case all shareholders agree on that. In all cases, in order to be effective and legally binding, the decision for distribution of profits in the form of dividends should be taken by the General Meeting of Shareholders and duly recorded in writing in the company’s documentation.

Furthermore, payment of dividends should not confront the Limitation of Cash Payments Act which prohibits cash payments for amounts over BGN 10 000 (approx. EUR 5000). In such cases, payment of dividends must be by bank transfer.

The distribution of the votes in the general meeting of a Limited Liability Company (LLC) can be agreed in a similar way. Unless otherwise agreed, the voting right is proportionate to the share of the respective shareholder. Nevertheless, shareholders are free to determine different voting powers, regardless of their shares, in case all partners agree to such condition.

The distribution of profits in Bulgarian Joint Stock Companies (JSC) depends on the type of stocks the respective company issues. A Joint Stock Company is a company the capital of which is divided into stocks with a nominal value. A stock entitles its holder to a single vote in the General Meeting of Shareholders, to a dividend and to a liquidation share in proportion to the nominal value of the stock. Bulgarian Commercial Act, however, provides that JSCs can issue stocks with special rights, the so called privileged shares. They can grant to their owner guaranteed or additional rights to a dividend and/or a liquidation quota. It is possible the privileged shares to guarantee additional dividend but at the same time to deprive their holder from voting rights. Any special rights must be explicitly provided in the by-laws (statute) of the company.

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.

• Bulgarian Law on Payment Services and Payment Systems,
• Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market (amending Directives 97/7/EC, 2002/65/EC, 2005/60/EC),
• Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009 on the taking up, pursuit and prudential supervision of the business of electronic money institutions (amending Directives 2005/60/EC and 2006/48/EC and repealing Directive 2000/46/EC) and
• Latest PSD2 Directive 2015/2366/EU of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC.

The above documents regulate the requirements to the payment service providers which, apart from banks, inclusive European Central Bank and the national central banks of the member states, can be two types:

• Payment institutions
• Electronic money institutions

From 13 January 2018 all EU member states are obliged to apply the rules of PSD2. In October 2017 Bulgarian government proposed amendments to payment service legislation which are expected to be adopted by Parliament by the end of the year. Since new procedure and requirements have not been announced yet, the article below gives only basic guidelines on the matter based on current laws.

Payment Institutions in turn are divided into three types and they are allowed to offer any or all of the services specified below:

1. Services related to placement of cash on a payment account, as well as the related operations of servicing of a payment account;

2. Services related to cash withdrawals from a payment account, as well as the operations of servicing of a payment account;

3. Execution of payment transactions, including transfers of funds on a payment account with the user’s payment service provider or with another payment service provider:

a) execution of direct debits, including one-off direct debits;

b) execution of payment transactions through a payment card or other similar instruments;

c) execution of credit transfers, including standing orders;

4. Execution of payment transactions where the funds are covered by a credit line for a payment service user:

a) execution of direct debits, including one-off direct debits;

b) execution of payment transactions through a payment card or a similar device;

c) execution of credit transfers, including standing orders.

5. Issuing and/or acquiring of payment instruments;

6. Money remittance;

7. Execution of payment transactions where the consent of the payer to execute a payment transaction is given by means of any telecommunication, digital or IT device and the payment is made to the telecommunication, IT system or network operator, acting only as an intermediary between the payment service user and the supplier of the goods or services.

Obtaining an EU payment service provider licence in Bulgaria is cheapest and easiest for payment institutions providing only the services under item 6 above – the minimum required initial capital in such case is only BGN 40 000; while in case the EU payment institution will provide only the payment services under item 7 – the minimum required capital is BGN 100 000. Providing any of the payment services under item 1-5 requires BGN 250 000 initial capital (approx. EUR 125 000). Apart from the minimum initial capital, there is a further requirement for the service providers to hold own funds at all times in amount that is proportional to the volume of the payment transactions and is calculated by a special formula.

Payment institutions in EU are subject to licensing but once a licence is obtained in any member state (e.g. in Bulgaria) – then the payment institution can provide services on the territory of the entire EU without further licensing. Informing the relevant Central Bank of the respective member state is the only obligation in this relation. In Bulgaria this is the Bulgarian National Bank (BNB).

If a payment service provider (PSP) has a Bulgarian licence granted for only one of the services but decides to offer additional services afterwards, there is an opportunity to apply for supplementing the licence with other payment services.

Payment institutions registered in Bulgaria are also entitled to offer some ancillary services that are related to payment services, such as foreign exchange services, activity of payment service operator and other business activities. However, in case the Bulgarian payment institution engages in other business activities, BNB can interfere in its activities at any time and restrict its activities if BNB rates that these ancillary activities jeopardize the stability of the payment institution. BNB is also entitled to request, at its own discretion, extraordinary audit at the expense of the payment institution, in case BNB doubts its reliability. Payment institutions in Bulgaria can operate not only directly but also through a branch, a representation or agent but in any case they must be registered with the official Public Register of BNB of licensed payment institutions.

Electronic money institutions are the second type of PSP that are also subject of registration in Bulgaria. They are entitled to issue and buy back electronic money. Requirements towards these institutions are higher as compared to those referring to payment institutions. There are same common requirements, but minimum initial capital here is BGN 700 000 and BNB charges BGN 10 000 fee for the issuance of the licence (as compared to BGN 4 000 for a Bulgarian payment institution licence). That is probably the reason why by 2014 there are only two electronic money institutions licensed in Bulgaria against a couple of dozens payment institutions.

The Bulgarian e-money institutions are not allowed to accept deposits and to accrue interest, but similarly to payment institutions they can provide ancillary services, such as granting credits and operation of payment systems. The issuance of e-money in Bulgaria cannot happen through an agent but after the issuance the electronic money can be spread and redeemed through business agents. This method has been chosen by one of the two electronic money institutions licensed in Bulgaria.

That is probably the reason why many entrepreneurs that have set up companies in Bulgaria make the mistake not to publish their annual financial statements wrongly assuming that they do not fall among the entities that have this obligation. According to Art. 40 of Bulgarian Accounting Act enterprises are obliged to publish their annual financial statements and their annual management reports as adopted by the General Meeting of partners / shareholders.

All merchants in the meaning of the Bulgarian Commercial Act, namely: limited liability companies (single member limited liability companies and limited liability partnerships), joint stock companies, general partnerships or sole traders, are obliged  to file and submit their annual reports in Bulgarian Commercial Register by 30 June every year. This obligation is applicable even for companies which have had no activity throughout the fiscal year and for dormant companies.

Fines ranging from EUR 250 to EUR 1500 are imposed to all who fail to fulfill their obligation of submitting the information with the Commercial Register in Bulgaria within the specified deadline. In the event of a second violation of this rule fines are double.

The announcement of the reports shall follow a strict procedure rules set in the Bulgarian Commercial Register Act. Announcement is made by filing an application form (available only in Bulgarian language) together with the financial reports, minutes of the General Meeting of shareholders or the relevant body confirming the adoption the annual financial statements and a few mandatory declarations. Applicant can be either the Bulgarian company manager or a lawyer with an explicit Power of Attorney or the company accountant again with an explicit Power of Attorney. Application can be made either on line with an electronic signature or at the local offices of the Registry Agency. Sending your application by post is not acceptable.