Why choosing the right legal form for your company in Bulgaria is so important
Anyone wishing to start a business in Bulgaria faces an important decision: which legal form is the right one? Bulgarian business forms offer a wide range of options, from simple freelance activities and traditional trading companies to more modern forms with variable capital. However, each Bulgarian business form has different legal, tax, and economic implications.
Bulgarian company forms – what are they?
There are a wide variety of company forms in Bulgaria. As a German entrepreneur, the selection is quite familiar, as they are strongly based on the German system – some would even say that the Bulgarians simply copied and translated the German system. In the meantime, other forms have been added due to EU regulations. Below, we provide an overview of the various forms – it should be noted that most foreigners opt for the (E)ODD, but ultimately the decision is up to you and your situation.
Freelancer or tradesman (BULSAT): The easiest way to get started
Suitable for: Individuals who want to work independently without a large infrastructure – e.g. craftsmen or creative professionals
Bulgarian: БУЛСТАТ
Legal basis: BULSAT Act
Any natural person who carries out an economic activity in a non-commercial form must register with the BULSAT register. Whether you are a craftsman, yoga teacher, or graphic designer, as long as you want to work on your own account, you are required to register within one week of starting your activity.
Important: Proof of your qualifications (diploma, certificate) should be included with your registration.
Advantages:
- Low start-up barriers
- No capital contribution required/minimum capital
- Tax-friendly
Civil law partnership (GbR): Start together without a corporation
Suitable for: Two or more persons with a common economic goal, e.g. for projects that do not require registration in the commercial register.
Bulgarian: Гражданско дружество
Legal basis: Art. 357 ff. Zakon za zadalzhenijata i dogovorite (Law on Contracts and Obligations)
The shareholders contribute money, assets, and expertise and share joint ownership and risk. Unless explicitly stated otherwise, all shares are distributed equally.
Advantages:
- No entry in the commercial register required
- Flexibly configurable partnership agreement
- Uncomplicated taxation
- No capital contribution requirement/minimum capital
Please note: The shareholders are personally liable – there is no protection through limitation of liability.
Sole trader (ET): Personally liable entrepreneur
Suitable for: Sole founders with permanent business operations that require a commercial structure.
Bulgarian: Едноличен търговец (ET)
Legal basis: Commercial Code
In contrast to the BULSAT trade, this is a genuine commercial status. Registration in the commercial register is mandatory, and as a sole trader, you are liable with your entire assets, both business and private.
Advantages:
- No capital contribution requirement/minimum capital
- Quick start
Please note: Full liability with private assets
General partnership (OHG): Cooperation with full responsibility
Suitable for: Founding teams with equal responsibility who want to run a commercial business together.
Bulgarian: Събирателно дружество (с-ие)
Legal basis: Commercial Code
The OHG is founded by at least two persons who are personally and jointly and severally liable. Registration in the commercial register is mandatory.
Advantages:
- No capital contribution requirement/minimum capital
- Simple structure
- Strong entrepreneurial commitment
Please note: Full liability of each partner
Limited partnership (KG): Involve investors with limited liability
Suitable for: Combination of active founders (general partners) and passive investors (limited partners).
Bulgarian: Командитно дружество (КД)
Rechtsgrundlage: Commercial Code
The KG allows investors with limited risk to be involved without granting them a say in the company as in a GmbH. The general partners bear full liability, while limited partners are only liable up to the amount of their contribution.
Advantages:
- Flexible participation models
- Attractive for friends and family investors
Please note: Often not suitable for institutional investors
OOD & EOOD: The most popular Bulgarian company form
Suitable for: Anyone who wants to work with limited liability, whether alone or in a team.
Bulgarian:
- Limited liability company: Дружество с ограничена отговорност (ООД)
- Single-member company: Еднолично дружество с ограничена отговорност (ЕООД)
Legal basis: Commercial Code
Minimum capital: BGN 2 (approx. EUR 1)
The (E)OOD is by far the most popular legal form in Bulgaria, especially for small and medium-sized enterprises. Shareholders of an (E)OOD are only liable for their capital contribution. The company is established by entry in the commercial register.
Advantages:
- Limited liability
- Easy to get started
- Only $2 minimum capital required
Disadvantages:
- Accounting requirements
- Corporate income tax liability
Variable capital company (DPK): Flexible for start-ups
Suitable for: Start-ups with investors who want to allocate shares flexibly
Bulgarian: Дружество с променлив капитал (ДПК)
Legal basis: Commercial Code
The DPK is a new hybrid form of partnership and corporation. What makes it particularly interesting is that the capital does not have to be entered in the commercial register, which makes it easier to implement employee participation schemes, for example.
Conditions:
- Max. 50 employees
- Max. BGN 4 million in turnover or assets
Advantages:
- Innovative participation models possible
- Quickly scalable
- Ideal for venture capital
Please note: If the limits are exceeded, the DPK must be converted into an OOD.
Stock corporation (AD): For large projects with capital requirements
Suitable for: Companies with high capital requirements and many shareholders
Bulgarian: Акционерно дружество (АД)
Minimum capital: 50,000 BGn (approx. 25,000 EUR)
Legal basis: Commercial Code
The AG in Bulgaria is highly formalized. It is suitable for IPOs, large capital investments, or holding structures. Shareholders are not personally liable; the risk is limited to the company’s assets.
Advantages:
- Clearly defined structures
- High reputation
- Suitable for expansion
Disadvantages:
- Complex establishment
- High capital requirements
Which Bulgarian company form is right for you?
Choosing the right company form in Bulgaria depends largely on your individual situation. Here is some help to get you started:
| Your situation | Suitable company form |
| You are a creative freelancer | BULSAT |
| There are two or more of you and you are starting without a commercial structure | GbR |
| You are alone, want your own simple business and are willing to take risks | Sole trader |
| There are two or more of you and you want to act together but also be jointly liable | OHG |
| You are looking for an investor model with limited liability | KG |
| You want to start with limited liability | EOOD/OOD |
| Your goal is a scalable start-up | DPK |
| You need a lot of capital | AG |
Bonus: Further information and support
If you want to delve deeper or need support with the start-up process, we recommend our book “Start in Bulgaria”. It contains step-by-step instructions, drafts, and practical tips for getting started.
Get your copy at Amazon!
