Foreign companies may carry out business activities in Bulgaria either by setting up a branch or by establishing a subsidiary (usually a limited liability company).
The opening of a branch has certain advantages. For example:
- no minimum share capital at registration,
- the nationality of the representative doesn’t need to be Bulgarian,
- it does not have to be winding up when its activities cease,
- it is treated as a place of business in Bulgaria and is a taxable person under Bulgarian law (10% corporate tax), as well as it may also be registered for VAT in Bulgaria.
There is no maximum number of branches that a foreign company can register. However, only one branch can be established in a locality. An exception is provided only for banks and insurance companies. They may register more than one branch in one locality.
A Bulgarian branch is not a separate legal entity.
It is dependent on the parent company. Any branch of the foreign company shall keep its books of account as a separate company and draw up a separate balance sheet. Also, claims on any disputes arising from direct relationships with a branch may be raised against the parent company at the registered office of the branch.
The name of the branch must contain the name of the parent company and the addendum “branch”.
The decision to open a branch must determine the scope of the representative power of its manager. He may be granted full powers to manage and represent the branch. However, he may be authorised as a commercial proxy, i.e. with more limited rights. The branch manager may also be authorised as a procurator (business manager). In all cases, the branch manager must be given a notarised power of attorney.
A branch must be registered in the Bulgarian Commercial Register.
The following documents are needed for setting up a branch in Bulgaria:
- Certificate of good standing of the parent company, an extract from the commercial register of the foreign country or another document establishing the existence of the foreign entity, its right to carry out commercial activity according to its national law, the name of the persons representing it and the manner of representation.
- A decision of the competent body of the foreign company to open a branch.
- A license or permit to carry out the activity, if the subject of activity of the branch of the foreign company is subject to a permit regime.
- The Deed of Incorporation, Memorandum or Articles of Association of the parent company, with all amendments and supplements, including those made after the recording of the branch.
- Notary certified signature of the branch manager.
All documents that are in a foreign language must be translated and legalized into Bulgarian.
We can assist you with the registration of a branch in Bulgaria, providing also a virtual office and accounting services. For more information please do not hesitate to contact us by e-mail: office@kgmp-legal.com
