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Company
Formation
Bulgaria:
In Pursuit of Success
and Happiness? Try Bulgaria!
Professional offshore incorporations and offshore banking services
In Pursuit of Success
and Happiness? Try Bulgaria!
Hit hard by the financial crisis, citizens from across Eastern Europe
can, and often do, tell tales of economic woe. But a number of surveys,
indices, analysts and international media have lately shown that
economic optimism is found in some surprising places, such as Bulgaria.
Bulgaria’s ruling GERB party won July parliamentary elections by
promising to uproot rampant corruption and shield the emerging economy
from the global economic crisis. Broadly speaking Borissov has done a
good job in reassuring the rest of Europe that he means business.
The government has successfully implemented a number of reforms aimed to
rid Bulgaria of its reputation as the European Union’s most corrupt
country and free up millions of euros in EU aid which Brussels froze due
to fraud and lack of results in fighting graft. The new cabinet has
undertaken steps to prosecute senior officials for graft and to curb the
grey economy.
Bulgaria has managed to win back the trust of Brussels, which has
unfrozen more than one billion euros of aid since the new center-right
government came into office. Herman Van Rompuy, the new EU president,
visited Sofia in December. 2009 and stated: "Bulgaria is again on the
right track."
Following is a list of the positive changes that Bulgaria has recently
seen, in the fields of economics and corruption combat, as covered by
international organizations (Moody's Transparency International) and
foreign media (Wall Street Journal, Reuters): • According to Moody’ s ‘Misery Index,’ which adds projections of fiscal deficits to unemployment numbers as a measure of economic gloom, the least miserable of the 23 states ranked will be Bulgaria. Slammed by the financial crisis and enduring spending cuts from a center-right government determined to balance 2010’s budget, this may come as a surprise for many in the EU’s poorest member state. But Moody’s says expectations of a negligible 2010 budget deficit combined with predictions of a jobless rate below 10% will see the EU newcomer even less downbeat than super-rich Switzerland, where real economy indicators have fared far better than the European average.•
Bulgaria is among the countries with the strongest index in the
fight against corruption, according to the latest report of the
US Global Integrity
organization. With a "strong" index of 87 (out of 100) Bulgaria
ranks second behind Poland among the 57 countries included in the study,
followed by Hungary and Japan. The Index assesses the existence,
effectiveness, and citizen access to key anti-corruption mechanisms at
the national level in a country.
• Bulgaria has become less corrupt in 2009 according to the corruption perceptions index (CPI) published by Transparency International (TI). Bulgaria moved up one place from 72 to 71 and has become less corrupt than its close neighbors Romania and Greece according to the index. • Bulgaria's government has announced plans that the Value-Added Tax (VAT), which currently stands at 20%, could be cut to 17% in 2011, either at an one-off move or gradually by 0,5% every six months, starting as early as 2010. • Bulgaria has the lowest personal and corporate income tax in the EU at 10%, which was introduced at the beginning of 2008, replacing the previous system, which combined several different tax rates - between 20 and 24%, depending on income. • Bulgaria is the only country, whose outlook was lifted to stable from negative by Standard & Poor's Ratings Services in 2009 due to its strong track record of prudent fiscal policy and low gross debt. • The country will apply at the end of January 2010 to join the exchange-rate mechanism, the two-year currency stability test prior to euro adoption, and seek to switch to the common currency by 2013. Joining the exchange-rate mechanism would bring Bulgaria closer to the umbrella of the euro region and the protection of the European Central Bank.•
The lev is already linked to the euro in a currency board that
keeps the Bulgarian currency at 1.9558 to the euro. Joining the exchange-rate
mechanism may allow the lev to fluctuate by as much as 15 % around a
central band, though the central bank has said it will leave the lev
tightly pegged to the euro through the duration of the two years. •
Bulgaria joined the EU in 2007 and posted the smallest budget
deficit among the 27 member states last year, according to the finance
ministry. It is expected to be the only EU nation to balance its budget
in 2010. Foreign economists say Bulgaria's economic and fiscal
management has made it a role model for other countries in Europe. • Bulgaria's new government has linked information systems between its tax and customs authorities in order to clamp down on the fraud and corruption. •
The new cabinet has patched up Bulgaria's leaky budget by cutting
spending by 15 percent and taking steps to crack down on smuggling and
tax evasion to boost revenues. It has also sacked hundreds of customs
officers and taxmen in efforts to stamp out official corruption and
organised crime.
Company Formation Bulgaria Bulgaria (10% income tax rate, independent of profits, no taxation of distribution of profits, EU company: EU freedom of establishment applicable, therefore EU directive on parent companies and their subsidiaries, DTA concept). There are several types of company appropriate for conducting business in Bulgaria. Regardless of the type of business, all details must be entered in the Commercial Register, which is maintained by the District Court of the area in which the business is to be located. The whole registration process should be completed within 30 days. Registration at the local tax office and the National Social Security Institute are mandatory. Once the company has been registered, the National Statistical Institute issues a BULSTAT number, but this must be requested and, again, is a mandatory legal requirement.
A Private Limited Company has share capital and the liability of shareholders is limited to the amount of each individual’s shareholding. One or more individuals can form this type of company. The minimum start-up capital is BGN5,000, which must be divided into shares of BGN10 each. A minimum of 70% of share capital must be paid up on foundation of the company. Shareholders must meet at least annually and a Board of Directors must run the company. The main requirements to set up a Private Limited Company are the availability of the Articles of Association, the appointment of a managing director, and confirmation of paid-up share capital.
This is a form of company that is owned by a single shareholder, who appoints a Board of Directors (or Managing Director) to run the business. The legal requirements for the foundation of a Single Person Private Limited Company are the same as for a Private Limited Liability Company. Proper accounts (balance sheet and financial statement) must be prepared annually.
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