In summary: Company creation for e-commerce. Establishing a company in Bulgaria for e-commerce or digital services provides web entrepreneurs with a highly optimized, fully compliant gateway into the European Single Market. Operating through a flexible OOD or EOOD structure secures limited liability protection with a symbolic initial share capital requirement of just 2 BGN (around €1). The jurisdiction stands out for its exceptional financial efficiency, combining a low 10% fixed corporate income tax rate with a competitive 5% withholding tax on dividend distributions and reduced operational overhead. Furthermore, cross-border invoicing is streamlined through standard intra-EU VAT mechanisms, utilizing reverse-charge protocols for B2B transactions and One-Stop-Shop (OSS) registration for B2C European sales.
Bulgaria has become one of Europe’s most attractive destinations for web entrepreneurs looking to set up a new company. Whether you’re launching an online store or a service-based business (consulting, marketing, IT development) targeting the European Union, this country offers a favorable legal and tax framework.
Here’s a comprehensive guide to understanding the advantages, incorporation steps, and tax obligations about company creation for e-commerce and services in the EU.
1. Why choose Bulgaria for your web business?
Bulgaria offers highly competitive economic conditions for digital businesses:
- Favorable taxation: The corporate tax rate (profit tax) is fixed at just 10%. This is one of the lowest rates in the European Union.
- Reduced operating costs: Accounting fees, salaries, and social security contributions are significantly lower than the European average.
- Access to the Single Market: As an EU member, your Bulgarian company benefits from the free movement of goods and services. You can legally invoice your European clients.
2. The Ideal Legal Structure: The OOD
For online commerce and the sale of services, the most common and secure legal structure is the OOD, the equivalent of a French SARL or a Belgian SRL. If there is only one shareholder, it is called an EOOD.
Its main characteristics are:
- Limited Liability: Your personal assets are protected only up to the amount of your investment.
- Minimum Share Capital: The minimum capital required by law is only 2 Leva (approximately 1 Euro).
3. The Steps to Setting Up a Business
The business setup process is quick and can usually be completed remotely in two to three weeks through a lawyer or specialized firm:
- Choosing a Name and Business Purpose: The name must be available, and the business purpose must explicitly mention e-commerce or service provision.
- Opening a Share Capital Account: You must open a temporary bank account in Bulgaria to deposit the share capital (even a nominal amount).
- Drafting the Articles of Association: The documents must be drafted in Bulgarian (often bilingual for foreign founders) and notarized.
- Registration with the Commercial Register: Once the application is submitted, registration takes approximately 3 to 5 business days.
4. International Taxation: VAT and Invoicing in the EU
This is the most crucial point for e-commerce and cross-border services. As soon as your company engages in intra-EU transactions, it must apply for a Bulgarian intra-EU VAT number.
For the sale of services (B2B)
If you sell services to other EU businesses (B2B), you generally invoice without VAT (excluding VAT) by applying the reverse charge mechanism, provided you verify your customer’s VAT number.
For e-commerce and services to individuals (B2C)
Since the European reforms, you must register with the OSS (One Stop Shop). This allows you to declare and pay the applicable VAT in your individual customer’s country of residence (if you exceed the overall EU threshold of €10,000 in sales outside Bulgaria).
5. Tax Substance and Day-to-Day Management
To prevent your Bulgarian company from being reclassified as a “shell company” by the tax authorities in your home country, you must establish a genuine business presence there:
- Have a real registered office (administrative address).
- Appoint a manager (yourself or a third party) and, ideally, hire or outsource locally if the business grows.
- Appoint a manager (yourself or a third party) and, ideally, hire or outsource locally if the business grows.
Dividend taxation in Bulgaria is only 5%, making the repatriation of profits very advantageous after corporate tax payment.
In conclusion, setting up a Bulgarian OOD is an excellent strategy for optimizing the costs of an online business while remaining fully compliant with European law.