When It Is Time to Close Your Bulgarian Company

Business circumstances change. Perhaps you are relocating, your venture did not work out, or you simply no longer need the company. Whatever the reason, properly liquidating a Bulgarian company is essential. Abandoning a company without formal closure leads to ongoing obligations, potential fines, and complications that can follow you for years.

At our law office in Troyan, we guide foreigners through the entire liquidation process. Here is what to expect.

Types of Company Closure

There are several ways a Bulgarian company can cease to exist:

Voluntary Liquidation

The most common method when the company is solvent (can pay its debts). This is a structured, legal process managed by a liquidator.

Insolvency (Bankruptcy)

Required when the company cannot pay its debts. This is a court-supervised process with different rules and is beyond the scope of this guide.

Deregistration by the Registry

In rare cases, the Trade Register may initiate deregistration of a company that has failed to file annual accounts for multiple years. This is not recommended as a closure strategy.

Voluntary Liquidation: Step-by-Step

Step 1: Decision to Liquidate

The owner(s) must formally decide to liquidate the company. For an EOOD, the sole owner issues a decision. For an OOD, a General Assembly resolution is required.

The decision must include:

• Resolution to dissolve the company
• Appointment of a liquidator (can be the manager or another person)
• The liquidation address
• Deadline for liquidation (minimum 6 months)

Step 2: Register the Liquidation with the Trade Register

Within 7 days of the decision, file the following with the Trade Register:

• Application form (B6)
• Decision to liquidate
• Consent and specimen signature of the liquidator
• Declaration from the liquidator under the Commerce Act

The Trade Register will publish the liquidation and invite creditors to submit claims.

Step 3: Notify Creditors

The liquidator must:

• Send written notifications to all known creditors
• Publish a notice in the Trade Register inviting unknown creditors to submit claims within 6 months

This 6-month waiting period is mandatory and cannot be shortened.

Step 4: Settle Company Affairs

During the liquidation period, the liquidator must:

• Collect all receivables
• Sell company assets if necessary
• Pay all debts and obligations
• Terminate employee contracts (following labor law procedures)
• Cancel any existing contracts and subscriptions
• File final tax returns

Step 5: Tax Clearance

Before the company can be formally deregistered, you need tax clearance from the National Revenue Agency (NRA). The liquidator must:

• File a final corporate tax return
• Pay any outstanding taxes
• Deregister from VAT (if registered)
• Obtain a certificate of no outstanding tax debts

VAT deregistration has specific rules, including potential tax on remaining assets.

Step 6: Prepare Final Accounts

The liquidator prepares:

• A final liquidation balance sheet
• A report on the distribution of remaining assets
• A final accounting report

These must be approved by the owner(s).

Step 7: Distribute Remaining Assets

After all debts are paid, any remaining assets are distributed to the owner(s) according to their share percentages. This distribution may be subject to dividend tax.

Step 8: File for Deregistration

Once all steps are complete and the 6-month creditor period has passed, the liquidator files for deregistration with the Trade Register:

• Application for deregistration
• Final balance sheet and distribution report
• Proof that all creditors have been notified/paid
• Tax clearance certificate

Timeline

The minimum timeline for voluntary liquidation is approximately:

Phase	Duration
Decision and filing	1-2 weeks
Creditor notification period	6 months (minimum)
Asset settlement and tax clearance	1-3 months
Final filing and deregistration	2-4 weeks
Total minimum	8-10 months

In practice, complex liquidations can take 12-18 months or longer.

Costs of Liquidation

Typical costs in the Lovech region:

• Trade Register filing fees: 30-60 BGN per filing
• Accounting for liquidation period: 500-2,000 BGN
• Legal fees: 800-2,500 BGN
• Notary fees: 50-150 BGN
• Tax clearance procedures: Included in accounting fees
• Total estimate: 1,500-5,000 BGN

Common Mistakes During Liquidation

• Not starting the process formally: Simply stopping activity does not close a company
• Missing the 6-month creditor period: Attempting to deregister early will be rejected
• Forgetting about VAT deregistration: This must be done separately from the Trade Register
• Distributing assets before paying all debts: The liquidator can be held personally liable
• Not filing annual reports during liquidation: The company must continue filing until deregistered

Alternatives to Liquidation

Before committing to liquidation, consider:

• Selling the company: Someone may want to buy a ready-made company
• Making the company dormant: Reducing activity to zero while maintaining the entity (much cheaper than liquidation)
• Transferring shares: Selling your ownership stake

Get Professional Help

Liquidation involves multiple government agencies, strict deadlines, and potential personal liability for the liquidator. Our office in Troyan has extensive experience helping foreigners properly close their Bulgarian companies.

Contact Attorney Biser Dimov to discuss the best approach for closing your company.