How Not to Start a Business in Bulgaria as a Foreigner

Introduction

This guide reveals the most common mistakes foreign entrepreneurs make when launching a company in Bulgaria and how to avoid them. From failing to understand legal requirements to mishandling bank account openings, from neglecting registered addresses to ignoring tax obligations, we explain each pitfall clearly and offer practical advice to help you bypass them.

1. Mistake: Assuming You Can’t Register a Company as a Foreigner

One of the biggest misunderstandings is the belief that foreigners cannot open a business in Bulgaria unless they are residents, EU citizens or have a local partner.

Reality: Bulgaria places no citizenship restrictions on company ownership. A foreigner, whether from the EU or outside the EU can form and own 100% of a Bulgarian company. There are typically no residency requirements for shareholders in the registration process.

Why people get this wrong: Many assume that company ownership abroad requires residence permits or years of local presence. While those topics matter for immigration, they are usually separate from company formation. Latest Taxes in Bulgaria and Why to move to Bulgaria you can find on the links.

• Confirm that non-residents can own and manage companies in Bulgaria.
• Choose a structure (LLC, branch, representative office) based on your real needs.

2. Mistake: Starting Without Knowing the Legal Forms

Another frequent error is jumping into the process without understanding which legal structures are suitable for foreigners.

In Bulgaria, the most common company types are:

• EOOD – Single-member limited liability company (one founder)
• OOD – Limited liability company (multiple founders)
• AD / EAD – Joint-stock company (more complex governance)
• Branch / Representative office – Extensions of a foreign entity (not separate legal persons)

Mistake: Many foreign founders pick overly complex forms (like joint-stock) when an EOOD/OOD is enough for most startups.

• Use EOOD/OOD for most small and medium businesses.
• Pick AD/EAD only if your plan truly needs it (e.g., large investors, share issuance).

3. Mistake: Not Securing a Valid Registered Address

Every Bulgarian company must have a registered office address in Bulgaria to receive official correspondence and legal notices.

Mistake: Many foreigners try to register without an address, hoping it’s optional or can be added later.

Why this is a problem: Without a valid address, your registration can be rejected. A foreign address is not acceptable as the Bulgarian registered seat.

• Use a legitimate local address: rented premises, coworking, or a virtual office service.
• Ensure you have the right paperwork proving your right to use the address.

4. Mistake: Ignoring Company Name Rules — Especially Cyrillic

In Bulgaria, company names are registered in Cyrillic, although a Latin equivalent can often be used in branding.

Mistake: Picking a name only in Latin and skipping name availability checks.

• Check name availability early.
• Prepare at least 2–3 backup names.
• Think about how your name looks and sounds in Cyrillic.

5. Mistake: Assuming You Can Do Everything Remotely With No Notarization

Remote incorporation is possible in many cases, but there are still legal steps that may require notarization, apostille, or properly authenticated signatures. Find our company formation Bulgaria detailed report here.

Mistake: Believing you won’t need a notary or formal document legalization at any point.

• Plan for notarization of signatures where required.
• If signing abroad, prepare for apostille/legalization and certified translation.
• Use a professional service familiar with remote setups to avoid repeated rejections.

6. Mistake: Underestimating Bank Account Opening Challenges

You usually need a bank account to deposit share capital and to run daily operations. Many foreigners assume this is automatic — but banks must comply with strict AML checks.

Mistake: Expecting a quick approval without preparation.

• Prepare: ID documents, proof of address, business description, and source-of-funds evidence.
• Choose banks experienced with foreign clients.
• Be ready for a director’s in-person visit if the bank requires it.

7. Mistake: Forgetting to Deposit the Initial Share Capital Correctly

For EOOD/OOD, the minimum share capital is low (often symbolic), but it still must be deposited into the correct account type, and you typically need a bank certificate for the registration file.

Mistake: Skipping this step or using the wrong account.

• Open the correct capital contribution account.
• Deposit the share capital before filing registration documents.
• Request the bank’s share capital deposit certificate.

8. Mistake: Ignoring Translation and Local Language Requirements

Bulgarian authorities typically expect official documentation in Bulgarian. Foreign documents may require certified translation and, depending on the origin, legalization/apostille.

Mistake: Submitting documents only in English.

• Use certified translators for official paperwork.
• Check if notarized translation is needed for your specific documents.

9. Mistake: Not Understanding Tax Registration Requirements

Commercial Register approval is only the beginning. Your company has ongoing obligations such as accounting, tax filings, and (if applicable) payroll-related registrations.

Mistake: Thinking “company registration = fully done.”

• Work with an accountant from day one.
• Understand your corporate tax and reporting duties.
• Register properly if you hire staff or pay management remuneration.

10. Mistake: Assuming VAT Registration Is Mandatory for Every Business

VAT can be mandatory once you pass a turnover threshold, but voluntary VAT registration may or may not make sense depending on your model (EU clients, B2B services, imports, etc.).

Mistake: Registering for VAT too early without a plan.

• Check whether VAT is required for your turnover and activity.
• Consider whether VAT helps or adds compliance burden in your situation.
• Consult a Bulgarian tax specialist before deciding.

11. Mistake: Overlooking Licenses, Permits or Regulatory Requirements

Some industries require licenses or permits beyond company incorporation (e.g., finance, tourism, food, health, transportation).

Mistake: Starting operations without checking sector rules.

• Identify your business activity code and verify licensing requirements.
• Confirm local permits (municipal, sanitary, fire safety) if you operate physical premises.

12. Mistake: Neglecting Annual Financial Reporting & Compliance

Bulgarian companies generally need bookkeeping and annual filings. Even if your company is “inactive”, you may still have reporting requirements.

Mistake: Forgetting compliance after the company is registered.

• Set calendar reminders for annual reporting deadlines.
• Hire a reliable accountant who handles filings and compliance.
• Keep clean records from the start to avoid problems later.

13. Mistake: Trying to Do Everything Yourself Without Local Support

Bulgaria can be efficient, but small errors in documentation or procedure often lead to rejections and delays.

Mistake: Assuming you can “figure it out later” after submitting.

• Use local professionals (lawyer/accountant/company formation specialist).
• Ask for review before filing, not after rejection.

14. Mistake: Underestimating Language and Cultural Barriers

Bulgaria uses Cyrillic and many official interactions are handled in Bulgarian. Relying only on basic English can cause misunderstandings, missed notices, and delays.

Mistake: Navigating bureaucracy without translation support.

• Work with bilingual professionals where possible.
• Use certified translation for official paperwork and correspondence.

15. Mistake: Not Factoring in Ongoing Costs and Practical Realities

Incorporation can be affordable, but it still involves costs such as translations, notary fees, a registered address service, accounting, and banking.

Mistake: Treating Bulgaria as a “no-cost” startup jurisdiction.

• Budget for setup costs and monthly accounting/compliance support.
• Plan for bank fees and possible extra paperwork for AML checks.
• Include registered office costs if you don’t rent a physical location.

Conclusion — Start Smart, Not Hard

Starting a business in Bulgaria as a foreigner is possible and often advantageous — but it’s not automatic. Most problems come from assumptions: assuming you can skip an address, assuming you can avoid notarization, assuming banks won’t ask questions, assuming “registration means done”.

If you approach the process strategically, prepare your documentation, and get local support early, you can avoid the pitfalls that slow down so many foreign founders.