Insolvency in Bulgaria – bankruptcy laws & proceedings

Bulgarian bankruptcy / insolvency proceedings are regulated by Bulgarian Commercial Act. The first thing one should bear in mind is that bankruptcy and insolvency in Bulgaria are synonyms and mean absolutely one and the same thing from legal point of view.

There are two legal grounds for opening bankruptcy proceedings in Bulgaria – insolvency or over-indebtedness (the second rule applies only to limited liability companies, stock corporations or companies limited by shares). According to Bulgarian Commercial Act insolvent shall be deemed merchants who are unable to meet outstanding capital obligation under a commercial transaction or public duty to the state and the municipalities related to the merchant’s commercial activities, or private state obligation. The insolvency shall be assumed when the debtor has stopped his payments. Insolvency may be present also when the debtor has paid or is in position to pay partially or in full only the claims of individual creditors. An interesting detail is that bankruptcy proceedings shall be deemed automatically opened as well as for any unlimited partner in an insolvent company in Bulgaria. Bankruptcy proceedings can also be opened for deceased or even deregistered merchant – physical person if before his death or deregistration from Bulgarian Commercial Register he has been insolvent. read more

Payday loans license for short term loans direct lenders in Bulgaria

Contrary to the common European practice, Bulgarian Law of Consumer Credit Protection is not applicable for loans under BGN 400 (a little more than EUR 200) and in case the loan is for up to three months. Currently these loans are outside the scope of this protection law and there are no limits. Although the government has been considering changing the law, this has not happened up to date so any companies that work in the field of micro loans can take advantage of the delay in regulating these micro loans. Currently most companies offer such micro loans with around 35% monthly interest that makes more than 400% per annum, which is much more as compared to other European countries. read more

Companies subject to annual financial audit by registered auditors in Bulgaria

Although EU countries have made large steps in unifying their legislation, there are still major differences especially in the field of business and accounting regulations. One of the most frequent questions asked by foreign investors who step onto Bulgarian market is whether all companies registered in Bulgaria are subject to annual financial audit.

According to Bulgarian Accounting Act enterprises which over the current or the previous year do not exceed the indicators under two of the following criteria:
1. Balance sheet assets as of 31 December: BGN 1.5 million
2. Net income from sales for the year: BGN 2.5 million
3. Average number of personnel for the year: 50
are referred to as Enterprises applying a simplified form of financial reporting. Such companies are not subject to independent financial audit by registered auditors unless these companies are:
1. Joint stock companies and partnerships limited by shares
2. Enterprises which are issuers in the meaning of the Public Offering of Securities Act
3. Credit institutions, insurance and investment undertakings, companies for additional
social security and the funds managed by them read more

0 % Corporate Income Tax in Bulgaria?

Yes, the zero corporate tax is a fact in areas with high unemployment in Bulgaria. As per Bulgarian Corporate Income Tax Law companies that carry out manufacturing activities in municipalities where the rate of unemployment for the year preceding the current year is by 35 % or more higher than the national average for the same period can benefit from the so called ‘tax retention’ of up to 100 %.

‘Corporate tax retention’ means that the company is entitled not to remit the amounts of corporate tax due to Bulgarian state budget and has the right to keep the amounts in its company capital and to use them for purposes prescribed by law. Broadly speaking, the retained tax must be invested in fixed assets within four years from the beginning of the year for which the tax is retained.This tax relief can be granted for companies that have made their initial investment after 2006 but not later than 2014. read more

Costs for opening a cheap company in Bulgaria

How much does it cost to open a cheap Bulgarian company? – is maybe one of the first questions many foreign investors ask. And the answer is that the company formation procedure in Bulgaria involves different types of costs.

The first group of expenses represents the administrative ones. In other words all state fees fall into this category. The main expense here is the company registration tax which is in all cases due to the Bulgarian Commercial Register. One should also know and bear in mind that if this tax is paid electronically over the internet, then it is in lower amount. The other condition is that all paperwork is also submitted to the aforementioned register electronically. This task is very hard to achieve for foreign investors who are not in good command of Bulgarian language since the Trade Register’s interface in only in Bulgarian language. read more