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A Bulgarian dormant company is an inactive company that does not trade and hence does not have any accounting transactions recorded at all. Then why should anyone need such a company?
Well, the reasons for keeping such a company registered in Bulgaria may be different. A good reason to use a dormant Bulgarian company is if you have a trademark or a brand name that you wish to protect. In other cases, if you have an active Bulgarian company, but business is not doing well and you need a break, you can make your company dormant so as to reduce expenses to minimum and until waiting for a suitable moment to start trading again.
In Bulgaria, dormant companies have been broadly used by foreign investors to buy real properties into the name of a company as Bulgarian law prohibited land purchase by foreigners. This law has been changed recently and now all EU citizens do not need a Bulgarian company to own land, so normally all this company owners now wonder what to do with their Bulgarian companies since they no longer need them. In such cases it is reasonable to file for liquidation and to stop the existence of their company. Although liquidation process is relatively slow (typically 6-12 months) and connected to expenses, in long-term aspect, it is more cost-effective to liquidate the company, because administration of a dormant company in Bulgaria is also connected to expenses.
Even a dormant company must have a seat and registered address for receiving official notifications by authorities and any third parties. Any change in the address of registration or in the company management or any other change in the articles of associations must be duly registered with Bulgarian Trade Register (Commercial or Company Register) of the Registry Agency.
Under Bulgarian tax laws, all limited companies in Bulgaria are liable to submit annual tax returns with the National Revenue Agency (NRA), and even if your company may be dormant, you are obliged to file a zero tax return. Dormant companies are also subject of control by Tax Authorities (NRA) and not submitting a tax declaration within the deadlines under Bulgarian tax laws may incur significant fines to the company shareholders.
In addition all dormant companies must prepare annual balance sheets and financial statements and file them with Bulgarian Trade Register. Preparation of annual accounts, tax returns and balance sheets can be made only by chartered accountants who usually offer full scale accounting services for dormant companies for fees ranging from 100 to 300 euro per year. Therefore, one should consider all pros and cons before deciding whether to form a Bulgarian dormant company.