The formation of a sole-owner limited liability company (EOOD) offers a number of advantages for carrying on a business activity. An EOOD is the optimal choice for starting a small business, especially when the owner personally manages all of the company's operations. The capital of an EOOD may be held either by a natural person or by another legal entity.

The minimum capital required to register an EOOD is BGN 2.

Benefits of registering an EOOD

An EOOD is often used as an alternative to an employment relationship. High-earning specialists set up sole-owner companies and work through them for their employer, which reduces the amount of social security contributions. If the owner decides to be self-insured as the sole owner of the capital, rather than entering into a management contract, they can benefit from lower social security contributions. Self-insured persons, unlike those employed under an employment contract, are not insured against all social risks and may choose the minimum social security income.

In addition, an EOOD allows the use of various business expenses, which reduce the profit and thereby the tax liability. Profit is taxed at 10% corporate tax, and thereafter the additional income may be distributed as a dividend, which is taxed at 5%. No social security contributions are levied on the dividend amount.

This model is also advantageous for employers, since they will not owe social security contributions and will save on the cost of sickness benefits, occupational health service fees and other expenses.

Documents required for the registration of an EOOD

When preparing the documents, a company name and address must be chosen, as well as the field of activity and who the manager will be. It is advisable to check in the Commercial Register whether the chosen name is available, in order to avoid a refusal of registration in the event of a match with an already registered name or one reserved by another person.

Documents to be submitted for the registration of an EOOD in the Commercial Register:

  • Minutes of incorporation
  • Founding act (instrument of incorporation)
  • A transcript of the founding act with personal data removed
  • A notarised specimen of the manager's signature
  • A declaration under Article 141(8) of the Commerce Act, signed by the manager
  • A declaration by the manager under Article 142 of the Commerce Act
  • A declaration as to the truthfulness of the declared circumstances and the acceptance of the documents for announcement
  • A declaration under Article 13(5) of the Commercial Register and Register of Non-Profit Legal Entities Act (if the documents are submitted by an authorised representative)
  • A payment order or bank certificate for the contributed capital
  • A document evidencing payment of the state fee
  • A power of attorney (where filed by an attorney)
  • Application form А4

If the capital is owned by another legal entity, a decision by the competent body of that company to participate in the incorporation of the EOOD is required.

The capital must be paid into a capital-raising account at a bank. When the capital is paid into the bank, the originals of the incorporation minutes and the founding act are presented.

The process of registering an EOOD is more complicated when the capital is contributed as a non-monetary contribution (contribution in kind). In this case, a prior valuation carried out by three experts appointed by the Registry Agency is required. If the contribution in kind includes real estate, the founding act must be notarised.

The registration documents may be filed by an attorney holding a written power of attorney, which saves the notary fees for certifying the power of attorney and the А4 application, as well as half of the state fee.

What are the fees for registering an EOOD?
  • The fee for registering an EOOD when filing documents at the counter of the Registry Agency is BGN 110.
  • When documents are filed electronically by an attorney, the fee is reduced to BGN 55.
Time frame for registering an EOOD

An EOOD is registered in the Commercial Register on the next working day after the documents are submitted. If there are missing documents or discrepancies, instructions will be issued which must be complied with within three days. Once these instructions have been complied with, the registration will be finalised.

In the event of an error in the documents that cannot be corrected, a direct refusal of registration will be issued. Such a refusal may be issued if a company with the same name already exists, or if the field of activity specifies an activity for which prior authorisation is required.

Should you need additional information, a consultation or assistance with registering an EOOD, please contact us on tel.: 0887550706 or by e-mail: [email protected]