Why Bulgaria for Your IT Business?

Bulgaria has emerged as one of Europe’s most attractive destinations for IT companies. With a 10% corporate tax rate, a growing pool of skilled developers, competitive salaries, and EU membership, the country offers a compelling package for tech entrepreneurs. The Troyan area and broader Lovech region, while not traditional tech hubs, offer even lower operating costs and an improving digital infrastructure.

Choosing the Right Legal Structure

For IT companies, the EOOD (single-member LLC) is the most popular choice among foreign founders. Here is why:

• Limited liability protects personal assets
• Minimum capital of just 2 BGN
• Simple management structure for solo founders
• Easy to add partners later by converting to an OOD

For larger ventures or those seeking investment, an AD (joint-stock company) might be more appropriate, but the vast majority of IT startups begin as an EOOD.

Registration Process for IT Companies

The registration process is the same as for any Bulgarian LLC, with a few IT-specific considerations:

Step 1: Choose Your Business Activities

Select the appropriate NACE codes (KID codes in Bulgarian). Common codes for IT companies include:

• 62.01 - Computer programming activities
• 62.02 - Computer consultancy activities
• 62.03 - Computer facilities management activities
• 62.09 - Other IT and computer service activities
• 63.11 - Data processing, hosting, and related activities
• 63.12 - Web portal activities

You can register multiple activity codes at no additional cost.

Step 2: Standard Company Registration

Follow the standard process:

• Deposit capital in a bank account
• Prepare articles of association
• File with the Trade Register
• Obtain a company identification number (EIK)

The entire process takes 3-5 business days.

Step 3: Register with NRA and Social Security

After Trade Register registration:

• Register as an employer (if hiring)
• Register for social security as a self-insured person
• Consider voluntary VAT registration

Step 4: Open a Business Bank Account

Bulgarian banks are familiar with IT companies. Required documents typically include:

• Trade Register certificate
• Articles of association
• Manager’s identification
• Description of business activities

Tax Advantages for IT Companies

Corporate Tax: 10%

Bulgaria’s flat 10% corporate tax rate is one of the lowest in the EU. For IT companies with high margins, this translates to significant savings compared to Western European rates.

Dividend Tax: 5%

When distributing profits to individual shareholders, the additional tax is only 5%, resulting in an effective combined rate of approximately 14.5%.

VAT Considerations for IT Companies

IT companies often have international clients, which affects VAT treatment:

• B2B services to EU clients: Reverse charge applies (no Bulgarian VAT)
• B2B services to non-EU clients: Zero-rated (no VAT)
• B2C services within the EU: May require registration in the customer’s country or use of the OSS (One-Stop Shop) system
• Domestic sales: Standard 20% VAT applies

Many IT companies benefit from voluntary VAT registration to reclaim VAT on equipment purchases.

Hiring Developers in Bulgaria

Employment Costs

Total employer cost for a developer in Bulgaria includes:

• Gross salary: 3,000-8,000 BGN/month for experienced developers
• Employer social security contributions: Approximately 18-19% of gross salary
• Total cost: 3,500-9,500 BGN/month

This is significantly lower than Western Europe while accessing strong technical talent.

Freelancer Contracts

As an alternative to employment, you can engage developers as contractors. However, be aware that Bulgarian authorities may reclassify contractor relationships as employment if certain criteria are met.

Remote Work

Bulgaria’s labor code now accommodates remote work arrangements, making it easier to hire developers who work from different locations within the country.

Intellectual Property Considerations

For IT companies, protecting intellectual property is crucial:

• Copyright: Software is automatically protected under Bulgarian copyright law
• Employment agreements should include clear IP assignment clauses
• Contractor agreements must specify IP ownership
• Trade secrets: Use non-disclosure agreements
• Trademarks: Register your brand with the Bulgarian Patent Office or EUIPO

Data Protection (GDPR)

As an EU member state, Bulgaria applies the General Data Protection Regulation (GDPR). Your IT company must:

• Appoint a data protection officer if processing large amounts of personal data
• Maintain records of processing activities
• Implement appropriate security measures
• Report data breaches to the Commission for Personal Data Protection (CPDP) within 72 hours

Practical Tips for IT Entrepreneurs

• Internet connectivity: Major Bulgarian cities have excellent fiber coverage. Troyan and the Lovech region have good broadband availability
• Coworking spaces: Available in larger cities; remote work from the Lovech area is increasingly common
• Banking: Some Bulgarian banks offer online-friendly business accounts suitable for international transactions
• Payment processors: Stripe, PayPal, and Wise all work with Bulgarian companies

Startup Ecosystem Support

Bulgaria offers several programs supporting tech startups:

• EU structural funds for innovation and digitalization
• Sofia Tech Park and other accelerator programs
• Tax incentives for research and development activities
• Free trade zones for certain qualifying activities

Get Started Today

Our law office in Troyan helps IT entrepreneurs from around the world set up their Bulgarian companies efficiently. We handle all legal formalities so you can focus on building your product.

Contact Attorney Biser Dimov to register your IT company in Bulgaria.