Financial license Bulgaria – regulation of financial institutions

Posted on 17/10/2024 by TLO

Financial license in Bulgaria can be obtained quickly and at quite reasonable costs. Bulgarian financial institutions are governed by the Credit Institutions Act and in accordance with its Art. 3, a financial institution is a legal entity different from an institution or an industrial holding. Main activity of licensed financial institutions in Bulgaria is performing one or more of the following:

Providing payment services under the Payment Services and Payment Systems Act;
Issuing and administering other means of payment (travellers checks and letters of credit) as far as this activity is not covered by item 1;
Financial leasing;
Guarantee transactions;
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;
Currency brokerage;
Acquisition of credit claims and other forms of financing (factoring, forfeiting, etc.);
Issuing electronic money;
Acquisition of shareholdings;
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. read more

EU Laws & Cryptocurrencies – Trading Rules & Legislation

Posted on 11/10/2021 by TLO

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. read more

Private security company incorporation in Bulgaria

Posted on 10/06/2020 by TLO

If you are considering opening a private security company in Bulgaria, you should know that this activity can be conducted only after obtaining a private security licence.

The definition of “private security activity”, the procedure for obtaining the licence and the necessary documents are specified in the Private Security Activity Act and the respective sub-legislation. Private security companies can provide any of the following services: physical security, security of individuals, protection of property, protection of events, protection of real estate, etc. It is important to note that if the company wants to provide more than one type of security services, it must have an explicit permit for each type of security activity separately. Security activities can be armed or unarmed. The company can be licenced to operate on the whole territory of Bulgaria or only within a specific area. Depending on the above listed options, the licensing fee is different. read more

Bulgarian Forex license – fast obtaining and EU passporting

Posted on 07/04/2017 by TLO

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:
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
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

Registration of non-profit organizations and foundations in Bulgaria

Posted on 28/11/2016 by TLO

The procedure of registration and re-registration of non-profit organizations and foundations in Bulgaria has been significantly changed with the new amendments of the Non-profit Legal Entities Act. The changes were published in Bulgarian SG in 2016.

From 2018 on all Bulgarian non-profit organizations shall be entered into a special Non-profit Legal Entities Public Register of Bulgarian Registry Agency. Presently registration is made at the District Court by the seat and registered address of the entity and there is not one unified register where the status of the non-profit entities can be checked.

The new register shall include and make public a number of important data such as:

Name, main objectives and means to achieve them;
Headquarters and official address of the non-profit organization or foundation;
Names and personal details of all members of the managing board;
Foundation act; statute;
All decisions regarding changes in circumstances;

Announcement of any of the above listed circumstances should be made no later than one month from the day of occurrence of the relevant circumstance.

Re-registration of non-profit organizations and foundations in Bulgaria is a totally new legal phenomenon. It concerns those foundations and organizations registered with the district courts before the amendments. All existing Bulgarian foundations and non-profit organizations shall undergo a re-registration procedure under the new rules. By the end of 2020 all those entities are obliged to file an application for re-registration accompanied by a certificate of good standing issued by District Court by their seat and a BULSTAT registration certificate.

The same requirements apply to branches of Bulgarian non-profit organizations and foundations.

There is an option changes of circumstances to be filed together with the re-registration application, regardless of the nature of the new circumstance, including dissolution of Bulgarian non-profit organizations or foundations.

After their re-registration with new register, Bulgarian non-profit organizations and foundations and their foreign branches will be excluded from the BULSTAT register and the BULSTAT code will be changed with an Unified Identification Code of a non-profit legal entity. After the re-registration the legal entity will keep its current name.

The good news is that the re-registration will be free of charge, including for branches. The same re-registration process was carried out a few years ago for the commercial companies when the public commercial register was created.

Relocating to Bulgaria or move business after Brexit

Posted on 05/07/2016 by TLO

Relocating to Bulgaria after Brexit is an option considered by more and more Britons. Moving business to Bulgaria is another option which more and more European and worldwide businessmen are taking advantage of.

Bulgaria is an EU member since 2007. Continued financial stability, lowest corporate income tax in Europe (10%), lowest cost of labour force combined with highly educated work force are only a few of its credits. That is why it is not a surprise why UK and other EU companies already started to study the opportunities to use Bulgaria as a safe harbour for relocation of their business.

The EU is the UK’s largest trade partner. Free movement of goods within the EU is one of its best achievements – no border control, no duties, no VAT payable on import. Brexit puts too much uncertainty about how UK export-import companies will be affected. Some are optimistic that new trading arrangements will be achieved allowing Britain to continue to benefit from free trade even after Brexit but largest European member states already implied that such scenario is unlikely to happen. That means that UK trading companies and manufacturers could face significant difficulties and it may happen that they will not be able to run their European businesses from the UK. Relocating to Bulgaria a working business is not an easy job, that is why most businessmen prefer to wait and monitor the consequence of events before making a decision. Waiting is not a wise option as any last minute relocation could result in negative due diligence reports and decline in reputation; some top corporate UK solicitors and consultants already advised that relocating to the EU should be considered in the wake of Brexit as moving will allow such companies to get round potential trade barriers.

Most uncertain is the statute of regulated companies, such as financial institutions, transport companies, investment brokers, etc. Now most global regulated companies do business in the EU through their UK based companies using the right to passport their service in other member states. For example, largest Forex brokers are UK based and London is the largest Forex trading hub in Europe. According to statistics over 40 % of foreign exchange trading volumes worldwide are generated in London. Large market makers will definitely relocate to other big financial centres such as Frankfurt, Dublin or Paris but for a medium Forex broker Bulgaria is the perfect relocation option. A number of new emerging brokers already chose Bulgaria for their licensing even before Brexit mainly due to the low cost of the initial investment for the licensing and low cost of the post-licence support. Bulgaria also offers perfect conditions for haulage companies licensing as well. Procedures are fast and insurance and guarantee are much cheaper as compared to the UK. Now UK transport companies use one licence of the Community which allows them to carry cargo across the EU. The negative impact of Brexit is expected to be most severe for trucking companies, not only because of the EU regulations but due to the fact that 80 % of the truck drivers in the UK are immigrants and shortage of workforce is forecasted as inevitable, if not now, surely in a few months or years.

Bulgaria is still not among the top relocation jurisdictions for big corporations but its advantages for small and medium sized businesses are unquestionable and perspicacious entrepreneurs have already noticed the chance to insure their business future by setting up a Bulgarian company. Having companies in both the UK and Bulgaria is a wise business decision for many reasons, the main of which is the fact that the initial company setup is very cheap and then running a dormant company costs a couple of hundred euros per annum. A Bulgarian dormant company can be quickly turned into an active commercial company at any time if its owner(s) decide to start doing business in Bulgaria – and this would then be a company with business history, although it has been dormant for that time. Some have already moved their whole businesses in Bulgaria while some have only cloned their businesses – moving only 10-20% of their business activities just to see how well they will perform while keeping their main business activities in the UK. In any case setting up a Bulgarian company is definitely beneficial to British businessmen, no matter what exactly the business consequences of Brexit will be.

Registration and licensing of recruitment / employment agency in Bulgaria

Posted on 17/06/2016 by TLO

The procedure of registration of recruitment / employment agencies in Bulgaria is regulated under Bulgarian Employment Promotion Act and Ordinance on the Terms and Conditions for Conducting Mediation in Employment.

Offering any of the intermediation employment and recruitment services listed below requires obtaining a registration certificate before starting the activities. These activities are:

Consulting job seekers and employers
Professional training
Referral to appropriate employment programs
Support to job seekers for starting work
Offering job positions on behalf of various employers

The certificate of mediation activity is issued by the Minister of Labour and Social Policy but the application is actually filed with Bulgarian Employment Agency. Along with the application form, the recruitment agency applicants should provide a list of documents proving that their company matches the requirements prescribed by Bulgarian and European legislation such as: education of manager and employees of the company, certificate of good standing, certificate of clean tax record of the company, certificate of registration with the Personal Data Protection Commission as well as drafts of the intermediation contracts the company will offer to employers and job seekers.

There is a state fee payable at the time of application. The fee is BGN 400 if the recruitment company will operate only on the territory of Bulgaria and BGN 900 if the employment company wants to operate in other countries as well.

The whole process of registration of an employment agency in Bulgaria takes minimum three months. Actually the application is reviewed by the competent authority within 14 days so this stage is relatively fast. However, the preparation of required legal documentation which should be filed together with the application form takes at least two months.

Once the company has been registered as an recruitment agency it has the obligation to display the registration certificate prominently in all its offices as well as to quote its registration number in all its job ads and publications. The mediator can publish ads or announce job vacancies only if he has a contract with an employer.

Bulgarian Law explicitly stipulates that recruitment services shall be provided for free to job seekers. Any agency fees shall be paid by the employers. Agency fees cannot be deducted from the salary of the employees.

EU Online Gambling Licence from Bulgaria

Posted on 11/12/2015 by TLO

Gambling licence in Bulgaria is the best and most cost effective solution in the whole EU. Especially when it comes to online gambling which could in fact be managed from abroad and not necessarily from Bulgaria where the licence has been obtained. Bulgarian Gambling Law requires that the owner of the company that will provide online gambling to be either a Bulgarian or an EU national. The same requirement is if the shareholder is a legal entity. If a non-EU company plans to obtain such licence, it should incorporate another EU company first and then the new entity can be the shareholder of the Bulgarian company that will organize the online gambling.

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.

Options for fuel oil trade in Bulgaria

Posted on 02/11/2015 by TLO

There are four available options for fuel oil trade in Bulgaria, either by foreign or Bulgarian companies.

The first option includes receiving of excise goods (like fuel) on the territory of Republic of Bulgaria, which have been released for consumption on the territory of an EU member state. This means that the excise needs to be paid to the member state from which the excise goods are bought. After the goods arrive in Bulgaria and the excise is paid again to the Bulgarian authorities (it is obligatory and in order to be avoided the double payment of the excise) the seller could return back the paid excise. Then the seller could return this amount to the buyer – the actual payer of the excise. In this case:

It is not required the Bulgarian commercial company to possess special registration (for diesel and gasoline trade);
It is not required to be concluded an agreement with excise storehouse;
It is not required a special license for importing of excise goods from member states;
It is required a payment of the excise to be done to the member state from which the goods are bought;
It is required a payment to be done to the Bulgarian authorities.

In the second option it is possible the excise goods to be delivered directly from the storehouse of the seller to a licensed storehouse on the territory of Republic of Bulgaria. In this case the goods will be received after paying the excise fee (in Bulgaria). An agreement with the Bulgarian storehouse shall be concluded.

The third option includes receiving of excise goods as a registered receiver. In this case it is not necessary a preliminary payment of the excise fee to be done and contrary to the first option the excise goods could be bought from the foreign trader without paying the excise fee in the foreign member state. In this case:

It is required a special procedure and special requirements to be met in order the registration to be fulfilled;

It is required an agreement with licensed excise storehouse to be concluded;

It is required a permanent security to be provided;

It is not required a special license in order goods to be imported from EU;

The registered receiver may not pay the excise fee, it provides as an evidence not the paid excise fee but a document for the provided security;

EU insurance agency – registration of insurance broker or agent in Bulgaria

Posted on 04/05/2015 by TLO

EU insurance agency can be set up via one of the following two formations in Bulgaria – an insurance broker or an insurance agent. These two types of insurance intermediaries are legally defined in Bulgarian Insurance Code in accordance with current EU legislation.

The figure of EU insurance broker registered in Bulgaria includes more options for independent work with many insurance companies and for that reason the requirements for its registration are stricter. They differ from the requirements imposed to the insurance agents. The most specific requirements imposed to Bulgarian insurance brokers are connected to the financial security and financial stability of the broker. First of all the broker must permanently provide the obligatory Professional Liability insurance valid on the territory of the entire European Union. The minimum insured amount shall be at least BGN 2.2 million for each insured event or BGN 3.3 million for all the insured events for one year. The second requirement relates to the financial stability of the broker. According to Bulgarian Insurance Code the performance of the obligations of the broker shall be secured by one of the following means:

By maintaining personal financial funds in amount of 4 % of the total value of the insurance premiums under insurance agreements concluded throughout the previous year but not less than BGN 33 606 or
By opening a special clients bank account where all the insurance premiums or insurance compensations shall be transferred to.

Except for the above listed requirements there are some other important conditions that shall be met. Special professional requirements are imposed to insurance broker’s representatives and to the management bodies of insurance brokerage companies. They are as follows:

Certificate of higher education

Professional experience or successfully passed professional exam

Clean criminal record

Entitlement to occupy materially responsible positions

Not to have been declared insolvent

Bulgarian Company Formation ✅

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