Considering to open a branch office in Bulgaria? We’re happy to inform you about the registration of a branch office in Bulgaria. Our advisors can also advise you about the legal, tax and practical aspects of having a branch office in Bulgaria.
What is a branch office
A branch office is the registration of a Bulgarian enterprise driven by a foreign entity. Based on European law any legal entity of a member state of the European Union may register a branch office in another EU-member state to commence business in the other country,
A branch office isn’t a separate legal entity, but is directly connected to the foreign entity ‘owning’ the branch office. The foreign entity will be fully responsible and liable for the branch office.
Characteristics and requirements to the registration of branch offices in Bulgaria
- No capital requirements
- No separate entity, but a registration of a foreign entity
- A branch office needs to have at least one local representative
- Only physical persons can be a representative of the branch office
Every year certain obligations will have to be fulfilled, including filing of an annual return. In general the annual return of a small company is quite simple and audited accounts aren’t required.
When is registering a branch office interesting?
Usually registering a branch office is done by companies who don’t want to fall under Bulgarian law for corporate issues and companies who will have only limited activities in Bulgaria.
A UK Limited company is formed especially for registration in Bulgaria. De Ltd doesn’t have any business activities in the UK itself, but only in Bulgaria. The consequence is that the Bulgarian enterprise of the company will be liable to taxes in Bulgaria and will be treated equally to the Bulgarian OOD and therefore will fully benefit of the many business advantages that Bulgaria offers. Regarding corporate law issues, the company falls under the UK Companies Act. This way a business will benefit in two ways: Using the most flexible UK corporate law system while still qualifying for the tax, cost-saving, legal and practical benefits of Bulgaria.
A Dutch company, which works solemnly from the Netherlands, opens a modest office in Bulgaria. The office won’t be more than a simple sales office and will employ a few sales-agents whom will sell the products of the Dutch company on the Bulgarian market. All orders will be handled from the Netherlands and every part of the production is in the Netherlands. By registering a branch office in Bulgaria the Dutch company will have a ‘permanent establishment’ in Bulgaria. All profits made by the permanent establishment will be subject to only 10% Bulgarian corporation tax.
In certain cases other company types or business forms can be a better choice, like:
Companies with higher capital requirements will usually prefer the Bulgarian AD (plc / joint stock company), because they’ll be able to trade the shares more freely, for example by registering at the stock exchange or trade the shares by over the counter trading. Also only only Bulgarian AD can offer bearer shares.
When it’s not desirable to have physical persons as a director or when a company registration is required without forming a permanent establishment in Bulgaria the Bulgarian KD (Limited Partnership) is usually a better option.
In most other caes the Bulgarian OOD (Limited company) is usually the most proper solution. This company type is chosen most by our clients. It’s an untrue statement that the OOD is only for small companies, there are many large corporations in Bulgaria doing business through an OOD / EOOD.
Permanent establishment or not
The term ‘permanent establishment’ is a complex matter in tax law and is a serious issue to consider when doing cross-border business. Sometimes it’s desirable to have the enterprise in the other country be considered a permanent establishment and sometimes this isn’t desirable at all. In the latter registering a Bulgarian KD (Limited Partnership) is usually preferable above registering a branch office or a Bulgarian OOD (Limited company).
Our advisers are specialists on international tax treaties and cross-border tax situations. Please consult one of our specialists for more information about this complex and important subject. Don’t hesitate to contact us with your questions.
Our way of working
BulgariaCompanyFormations.com will take every part of the registration process for doing business in Bulgaria out of your hands. All our documents are bilingual (English and Bulgarian), when desired other languages are also a possibility.
BulgariaCompanyFormations.com also offers supplemental services:
- Accounting services
- Legal advice
- Tax advice
- Fiduciary services
- Provision of Bulgarian bank accounts
- Applying for a VAT number
- Translation services
- Supplying a Bulgarian registered office
- Consulting services for financing a Bulgarian enterprise through European funds, grants and subsidies
- Consulting services for finding the right location and real estate for Bulgarian companies
- Services to find Bulgarian business partners and starting a joint-venture
We’re very happy to give you more information about this subject or another subject on this website. Please contact us with the button below.Contact us