When a sole trader (ET) is inherited, the heirs face various challenges and decisions that have to be made. They must determine whether to continue the activity of the sole trader, who will take over the enterprise, or whether to deregister the ET and dispose of the inherited property.
Liability for the obligations
A sole trader is liable for their obligations with all of their property, not only with the property included in the enterprise. Following the trader's death, their heirs assume liability for these obligations, even if they do not take over the enterprise itself. Where the obligations exceed the assets, the heirs are entitled to renounce the inheritance.
Assets in the enterprise
The enterprise of a sole trader may include a variety of assets such as real estate, motor vehicles, cash deposits, shares in an EOOD/OOD and others. These are regarded as the personal property of the trader and do not form part of the matrimonial community of property, even if they were acquired during the marriage, which is significant for the distribution of the inheritance shares.
Deregistration of the sole trader
If none of the heirs wishes to take over the enterprise, the ET must be deregistered from the Commercial Register. This is necessary so that the inherited property can be distributed and managed.
Taking over the enterprise
Where an heir wishes to continue the activity of the sole trader, an agreement must be signed between all the heirs. The enterprise may be taken over by only one heir, and minor heirs cannot take over the activity.
Most commonly, the heirs conclude a contract of sale, donation, voluntary partition or settlement regarding the taking over of the enterprise. These contracts must bear notarial certification of the signatures and of the content.
Notification to the НАП
The heir who is to take over the enterprise must file a notification under Article 77 of the Tax and Social Insurance Procedure Code with the National Revenue Agency (НАП). The НАП issues a certificate within up to 60 days from the date on which the notification is received.
Amendment of the trade name
The given name and surname of the heir who takes over the activity are added to the trade name of the deceased sole trader.
Documents for registration in the Commercial Register
The following documents are required in order to register the taking over of the enterprise in the Commercial Register:
- An application, form В1;
- A contract of sale, donation, voluntary partition, or an agreement between the heirs;
- An abridged transcript of the death certificate;
- A certificate of heirs;
- A certificate under Article 77 of the Tax and Social Insurance Procedure Code;
- A declaration under Article 13(4) of the Commercial Register and Register of Non-Profit Legal Entities Act;
- A declaration under Article 13(5) of the Commercial Register and Register of Non-Profit Legal Entities Act (if the documents are filed by an authorised representative);
- A payment order for the state fee;
- A power of attorney (if filed by an authorised representative).
Additional documents may be required, such as permission from the district court where there is a minor heir.
Registration of a new sole trader
Together with application В1, application А1 must also be filed for the registration of the heir as a new sole trader.
State fee
The registration fee is BGN 30. If the documents are filed by an attorney, notarial certification of applications В1 and А1 is not required. When filed electronically, the fee is reduced by 50%.
If you need legal advice or assistance with the registration, transfer, inheritance or deregistration of a sole trader, contact us on telephone 0887550706 or by e-mail: [email protected]
