Understanding Capital Requirements in Bulgaria

One of Bulgaria’s most attractive features for foreign investors is its remarkably low minimum capital requirements for the most common company types. This low barrier to entry, combined with the 10% flat corporate tax rate, makes Bulgaria one of the easiest and most affordable places in the EU to start a business.

Capital Requirements by Company Type

EOOD and OOD: BGN 2 Minimum

The Limited Liability Company (OOD) and its single-owner variant (EOOD) require a minimum registered capital of just BGN 2 (approximately EUR 1). This was reduced from the previous BGN 5,000 requirement, making company formation accessible to virtually anyone.

Key points about EOOD/OOD capital:

• The minimum share value is BGN 1 per share
• Capital can be contributed in cash or in kind (non-monetary contributions)
• Non-monetary contributions must be appraised by three independent experts
• At least 70% of the registered capital must be paid in before registration

AD: BGN 50,000 Minimum

Joint-Stock Companies (AD) require a significantly higher minimum capital of BGN 50,000 (approximately EUR 25,000). For certain regulated industries, the requirements are even higher:

• Insurance companies: BGN 5,000,000 or more
• Banks: BGN 10,000,000 or more
• Pension fund companies: BGN 5,000,000

For an AD, at least 25% of the nominal value of each share must be paid in before registration.

Other Company Types

• Sole Trader (ET): No minimum capital requirement
• General Partnership (SD): No minimum capital requirement
• Limited Partnership (KD): No minimum capital requirement
• Cooperative: Varies based on membership

How the Capital Deposit Process Works

Step 1: Open an Accumulation Account

Before registering your company, you must open a special accumulation account (набирателна сметка) at a Bulgarian bank. This is a temporary account specifically designed for depositing the initial capital of a company that is not yet registered.

Step 2: Deposit the Capital

Transfer the required minimum capital into the accumulation account. The bank will issue a certificate confirming the deposit, which you need for the Trade Register application.

Step 3: Convert to a Regular Account

After the company is registered in the Trade Register, the accumulation account is converted into a regular business current account. The deposited capital becomes available for business operations.

Practical Considerations for Foreign Investors

Is BGN 2 Really Enough?

While you can legally register an EOOD or OOD with just BGN 2, there are practical reasons to consider a higher registered capital:

1. Credibility: Business partners, banks, and clients may view a company with minimal capital as less serious
2. Banking: Some banks may be reluctant to open accounts for companies with very low capital
3. Financing: A higher capital base may improve your chances of obtaining loans
4. Certain activities: Some business licenses require demonstration of adequate financial resources

A common practical minimum is BGN 5,000 to BGN 10,000 for small businesses, though this is not a legal requirement.

Non-Monetary Contributions

Foreign investors sometimes prefer to contribute assets rather than cash. Non-monetary contributions can include:

• Real estate
• Intellectual property
• Equipment and machinery
• Vehicles

These contributions must be evaluated by a committee of three independent experts appointed by the Registry Agency. The appraisal process adds time and cost to the registration.

Currency Considerations

The registered capital must be denominated in Bulgarian Lev (BGN). However, you can deposit the equivalent in EUR or other major currencies. The bank will convert it at the applicable exchange rate. Note that Bulgaria maintains a fixed exchange rate with the Euro (1 EUR = 1.95583 BGN) as part of its Currency Board arrangement.

Capital Increases and Decreases

After registration, you can increase or decrease your company’s capital through formal procedures:

• Capital increase: By new contributions or by converting retained earnings
• Capital decrease: Requires a resolution and must not reduce capital below the legal minimum

Both procedures require amendments to the company’s articles of association and registration in the Trade Register.

Seek Professional Guidance

Understanding capital requirements is essential for proper company formation. Attorney Biser Dimov in Troyan assists foreign investors with capital planning, bank account opening, and the complete registration process. Contact us for a consultation tailored to your business needs and investment goals.