How to achieve 0-10% corporate taxation
However, there are some stumbling blocks lurking in the form of dubious offers to set up a company online and legal pitfalls.
Get an overview of the most important aspects of setting up a company in Bulgaria on this page:
The choice of Bulgaria as a location is particularly suitable for start-ups and companies of small and medium size to use outsourcing potentials. The outsourcing of business processes is in vogue and Bulgaria ranks 2nd in Europe in terms of outsourcing, according to the Bulgarian Vice-Minister of Economy.
The possibilities are many, whether it is services or manufacturing. Bulgaria is one of the world’s leading destinations for BPO (Bulgarian Outsourcing Association) and ITO (Information Technology Outsourcing) outsourcing services.
In 2015, Bulgaria was named the best outsourcing destination by the UK National Outsourcing Association (NOA). The BPO sector’s contribution to the country’s economy that year was 3 per cent.
In addition, the Bulgarian government aims to improve the country’s business climate by offering a range of incentives to foreign investors and individuals. These measures significantly promote the offshoring industry. As a result, Bulgaria has maintained its top three rankings in recent years. Q: National Outsourcing Association
Bulgaria is a very liberal EU country from a business perspective, as you will see for yourself. This puts you in a position to build up a financial security, a catch basin for bad times, or in general reserves for the future, the use of which you alone decide. With the lowest taxation in the entire EU area you create an optimal basis;
For a holistic presentation of a company formation process, we have put together a free online seminar for you, in which all aspects of a company formation are explained in detail from our experience. In addition, you have the opportunity to ask our team individual questions about the formation and EU tax law.
Concrete advantages of setting up a company in Bulgaria
Next, let’s look at the concrete advantages of setting up a company in Bulgaria:
Excerpt from our free online seminar: Case Studies & Calculations
.- Setting up a company in an EU country
- EU Parent-Subsidiary Directive
- Freedom of establishment
- corporate tax rate of 0-10%
- Only 5% withholding tax
- Highly skilled workers
- Low labor costs
- Low tax burden
- Low rents and real estate prices
- Over 60 double tax treaties
- Stable financial sector
- Business-friendly company law
- Stable politics, economy and justice
- 20% or 9% (reduced) VAT (value added tax)
The low set-up costs are only one of many advantages that speak in favour of setting up a company in Bulgaria. The main advantage is the low income and corporate taxes, which are only 10% in Bulgaria. If your company is located in a region with a high unemployment rate, the tax burden can even drop to 0%. This means you will not have to pay any taxes at all with your fully-fledged EU company in such a case.
An important note for investors: In Bulgaria the withholding tax on liquidation shares and dividends is only 5%. In addition, there are double taxation agreements with more than 60 countries, which makes Bulgaria an attractive destination for investment.
Besides the low taxes, the low entrepreneurial costs (rent, personnel) are the main incentive for setting up in Bulgaria. These are really extraordinarily low in Bulgaria. From the low minimum wage for staff to low social security contributions and low rents for real estate. Accordingly, the purchase prices for real estate are also favourable. Since the population has a high level of education on average, 4-Europe can provide you with qualified personnel.
Learn in our free webinar all relevant aspects and practical advantages of setting up a company for entrepreneurs as well as an insight into our way of working.
The EU Services Directive
Excerpt from our free online seminar: Case Studies & Calculations
.Its successful implementation requires sustained political commitment and broad support at European, national, regional and local levels.
In concrete terms, this means that your involvement as a fully-fledged EU entrepreneur is also a possibility here. This interest is based on various support projects as well as EU funding (over €10 billion from EU funds until 2020). Learn more about the background in our free webinar;
Which sectors are worth starting up in?
Our EU tax experts have assisted companies from the following sectors with their company formation:
- Advertising agencies
- IT service providers/programmers
- Online shops
- Internet service providers/SEO/SEA/Web design
- Building contractors, property developers,
- Real estate services, capital investment sales
- Architects, engineers, experts
- Freelancers
- Trading companies/trade representatives
- Assembly companies / trade fair construction
- Aerospace engineering
- Import / export
- International freight forwarding
- Renewable energy
- Building cleaning
- Meat and poultry processing industry.
- International event agencies
- Artists/art galleries
- Robotics/AI
- Architects, engineers, experts
- Internet shops, web designers
- Recruitment
From our experience, these 3 core target groups in particular benefit from a Bulgarian company:
- Companies affected by the Covid pandemic: For developing new strategies and implementing restructuring measures
- Scaling companies: Entrepreneurs who are making a profit of €100,000 or more with their business and are considering going international
- Start-ups: Innovative product ideas and digital services with growth potential
In the process, our team always noticed at the beginning of our cooperation with the companies that the companies initially had start-up difficulties when founding on their own and complications with founding law firms.
We would like to tell you about our experience in the following.
Unserious offers on long-distance foundations and stumbling blocks.
There is no denying the fact that there are many bait-and-switch offers on the net at a low-price level (especially with regard to long-distance start-ups). Agencies and start-up law firms that provide these offers do not give comprehensive advice or do so incorrectly. Downstream, companies incur follow-up costs and legal pitfalls. Therefore, when choosing a right partner, you need to ensure the following aspects:
- Offer of a legally secure formation according to EU law
- Fast communication and response to all your questions
- The character of a letterbox company is avoided by all measures
- Transparency and traceability of the steps taken to set up
- Support with the necessary restructuring measures
- Compliance with the German law on taxation in foreign relations (Foreign Tax Act; AStG)
Before you consider setting up a company, we recommend that you inform yourself comprehensively about these potential stumbling blocks and the background to EU tax law. Then you can focus on the right aspects both when choosing a partner and when setting up on your own and make the right decision for your company
Alles, was Sie wissen müssen: Ihr Gründungskompass
In our free online seminar “The complete legally compliant process of setting up a company in Bulgaria” you will learn all the relevant process steps of setting up a company in the EU state of Bulgaria and receive a basis on which you can develop your own, legally secure company formation plan. In the process, you will also get to know our system and our services.
The contents of the webinar at a glance:
- Advantages of setting up a company in Bulgaria
- EU Parent-Subsidiary Directive
- Entrepreneur profiles
- EU Gross Domestic Product
- Services Directive under EU Law
- Company Name & Branding
- Formation of Bulgarian Company
- Overview of formation documents
- Bank account & Domicile
- Commercial register & Equipment
- Restructuring
- Tax and reporting obligations
- Commencement of operations
- Stumbling blocks during formation
- Commencement of operations
- Incl. Documents on EU tax law, calculations, case studies, workbook with checklists and tips from the operational business of DE entrepreneurs
If you have any unanswered questions, we will be happy to help!
Just send a message to team@4-europe-consultung.com and our team will help you with your request.
What EU tax law offers you
As an entrepreneur, you may use such loopholes completely legally and profit from them. Good and transparent tax advisors proactively point out such loopholes to their clients in order to make use of tax saving potentials.
One such tax loophole is the possibility to collect salary compensation tax-free for the period of a non-competition clause with a German company. If, for example, you receive a salary of € 10,000 per month from your company and the same company grants you a non-competition clause for 2 years in Germany, this compensation is tax-free in Germany on future income, provided you adhere to the non-competition clause and do not work in Germany. The German company, on the other hand, can claim this payment as a business expense. As a result, you can collect € 240,000 tax-free privately while your company can claim € 240,000 in tax-reducing operating expenses. This creates a win-win for all parties involved;
Your free advice from EU tax experts.
We wish you all the best for your business and your professional future!
Your 4 Europe Consulting Team
Do you have any questions? We are here for you!
Write to us: team@4-europe-consulting.com
Panagiotis Alexandridis
Managing Director 4 Europe Consulting
Dr. Franziska Pühringer
EU Business Consultant
Philipp Kless
EU Business Consultant
4 Europe Consulting is a European provider
of services for business start-ups and tax consultancy.
As part of the European Accounting Association (EAA), which has been in existence for over 40 years,
we have a proven track record in registering international
companies and ensuring that they comply with local regulations.
