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Bulgarian National Revenue Agency announced that the number of fully Greek-owned companies registered in Bulgaria increased significantly in 2011. 3781 companies with 100 % Greek capital paid taxes in Bulgaria last year compared with 2199 in 2010. This is an increase by more than 70 %. At first glimpse, the movement of capital to Bulgaria can be put down to the crisis that Greece has been ridden by for the last couple of years. Indeed, some small Greek entrepreneurs moved their investments to Bulgaria because it is safer but crisis is not the only reason for choosing Bulgaria for their investments. This is proved by the fact that the number of Romanian companies also increased by more than 50 % during last year.
The real reason for the interest towards Bulgaria is the lower tax and social security burden in Bulgaria and the stability of the economy over the past years. Bulgaria has one of the lowest tax rates in the entire European Union: a flat 10 % tax on all corporate profits and incomes.Cost of labour is also much cheaper than in Greece and Romania.
In most of the cases the Greek and Romanian companies do not move their whole operations to Bulgaria but use their Bulgarian registered companies for an accounting trick for tax optimization.
The scheme is the following: a Greek (or respectively Romanian) registered company invoices its Bulgarian registered company for its production at cost prices and then the Bulgarian registered company sells to the customers of the Greek company. Thus the profit is generated by the Bulgarian company, hence, taxes are due in Bulgaria. A further advantage of the above scheme is that the revenues from the transactions are paid directly into Bulgarian bank accounts which are safer as compared to banks in Greece. In this regard it is no wonder why there is an increasing interest by Greek citizens to deposit their money with Bulgarian banks.
It is true that currently most of the companies that undertake such movement of headquarters and capital are small and medium sized enterprises but tax consultants announce that they have received a number of enquiries lately by big corporation that have been considering moving to Bulgaria.
Preferred destination of the Greek capital is the town of Blagoevgrad. This has been confirmed by the statistics provided by Bulgarian National Revenue Agency, announcing that almost half of the Greek companies with 100% Greek capital were registered in Blagoevgrad, then come the cities of Sofia and Plovdiv. Romanian companies choose Ruse, Sofia and Varna respectively.