Choosing the Right Company Type in Bulgaria
One of the first decisions any foreign entrepreneur faces when setting up a business in Bulgaria is selecting the appropriate legal form. The Bulgarian Commercial Act provides several options, but three dominate the landscape: EOOD, OOD, and AD. Each has distinct characteristics, advantages, and requirements.
EOOD: Sole-Owner Limited Liability Company
The EOOD (Еднолично дружество с ограничена отговорност) is the most popular choice for foreign entrepreneurs who want full control over their business.
Key Features
- Single owner - one natural person or legal entity
- Minimum capital: BGN 2 (approximately EUR 1)
- Liability limited to the company’s assets
- Owner can also serve as manager
- Simplest governance structure
Best For
- Solo entrepreneurs and freelancers
- Small to medium businesses with a single investor
- Foreign nationals who want straightforward management
- Startups and consulting businesses
The EOOD is governed by the sole owner’s decisions, which are recorded in protocols. There is no need for shareholder meetings or complex corporate governance.
OOD: Limited Liability Company
The OOD (Дружество с ограничена отговорност) is the Bulgarian equivalent of a standard LLC, designed for businesses with two or more owners.
Key Features
- Two or more owners (up to unlimited number)
- Minimum capital: BGN 2 (approximately EUR 1)
- Liability limited to the company’s assets
- Managed by one or more managers (who may or may not be partners)
- General Assembly of partners is the supreme governing body
Best For
- Joint ventures between foreign and Bulgarian partners
- Businesses with multiple investors
- Family businesses
- Partnerships where shared decision-making is desired
Partners in an OOD hold shares proportional to their capital contributions. Important decisions require a General Assembly resolution, with voting rights based on share ownership.
AD: Joint-Stock Company
The AD (Акционерно дружество) is the Bulgarian equivalent of a corporation, designed for larger enterprises.
Key Features
- One or more shareholders
- Minimum capital: BGN 50,000 (approximately EUR 25,000)
- Capital divided into shares (which can be traded)
- Two-tier management: Board of Directors or Management Board + Supervisory Board
- Mandatory annual audit
- More complex regulatory requirements
Best For
- Large-scale investments
- Businesses planning to raise capital from multiple investors
- Companies intending to list on a stock exchange
- Insurance, banking, and other regulated industries (where AD is mandatory)
Side-by-Side Comparison
| Feature | EOOD | OOD | AD |
|---|---|---|---|
| Minimum owners | 1 | 2 | 1 |
| Minimum capital | BGN 2 | BGN 2 | BGN 50,000 |
| Liability | Limited | Limited | Limited |
| Share transfer | Owner decision | Requires consent | Freely transferable |
| Management | Owner/Manager | Manager(s) | Board structure |
| Annual audit | No (unless thresholds met) | No (unless thresholds met) | Yes (mandatory) |
| Registration cost | Lower | Lower | Higher |
| Complexity | Low | Medium | High |
Practical Considerations for Foreigners
Taxation
All three company types are subject to the same 10% corporate income tax rate. The choice of legal form does not affect your tax rate but may influence how profits are distributed and taxed at the personal level.
Converting Between Types
It is possible to convert from one type to another as your business grows. An EOOD can become an OOD by admitting new partners, and an OOD can be reorganized into an AD. However, these transformations involve legal procedures and costs, so choosing the right form from the start is advisable.
Practical Recommendation
For most foreign entrepreneurs starting a business in Bulgaria, particularly in the Troyan and Lovech region, the EOOD is the recommended starting point. It offers maximum flexibility, minimal bureaucracy, and full owner control. As the business grows and partners or investors come on board, it can be converted to an OOD or AD.
Get Professional Advice
Choosing the right company structure is a decision with long-term legal and financial implications. Attorney Biser Dimov in Troyan provides personalized consultations to help foreign investors select and register the optimal company type for their specific situation. Contact us to discuss your business plans and find the right path forward.
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