Transfer of a Sole Trader (ET)

The transfer of a sole trader (ET) constitutes the transfer of the entire enterprise of the sole trader, which comprises a body of rights, obligations and factual relations. This means that all assets, such as real estate, motor vehicles and others, as well as liabilities, including loans and other obligations, clientele, distribution network and employment contracts, are transferred to the new owner.

Transfer of a Sole Trader's Enterprise to an EOOD or OOD

Most often, the enterprise of a sole trader is transferred to an EOOD or an OOD. In practice, the sole trader usually sets up its own EOOD to which it transfers its enterprise. There is nothing to prevent the enterprise from being transferred to another sole trader or to a natural person, who must register as a sole trader.

Notification to the НАП

Before proceeding with the transfer, the sole trader is obliged to submit a notification to the National Revenue Agency (НАП) under Article 77 of the Tax and Social Insurance Procedure Code. The НАП issues a certificate of this notification within up to 60 days, which is required for the registration of the transfer in the Commercial Register.

Requirements for the Transfer Contract

The transfer of the enterprise of a sole trader is carried out by means of a contract that must be notarised as to both the signatures and the content, executed simultaneously. Furthermore, the trade name of the sole trader may be transferred only together with its enterprise, which must be expressly stated in the contract.

Registration in the Commercial Register

The transfer of the enterprise of a sole trader is registered both in the file of the sole trader and in the file of the EOOD or OOD in the Commercial Register. If the transfer includes real estate or a right in rem over such property, the contract is also subject to registration with the Registry Office. Where the contract includes the transfer of trademarks and patents, it must also be recorded with the Patent Office.

Required Documents

The following documents are required for the registration of the transfer of a sole trader in the Commercial Register:

• An application, form В1;
• A contract for the transfer of the enterprise with notarisation of the signatures and the content;
• A declaration under Article 264, paragraph 1 of the Tax and Social Insurance Procedure Code with a notarised signature — where real estate is involved, this is no longer required;
• A declaration under Article 16, paragraph 2 in conjunction with Article 15, paragraph 4 of the Commerce Act concerning the absence of obligations to workers and employees;
• Minutes of the General Meeting of the OOD or of the sole owner of the capital of the EOOD regarding the purchase of the enterprise;
• A certificate under Article 77 of the Tax and Social Insurance Procedure Code;
• A declaration under Article 13, paragraph 4 of the Act on the Commercial Register and the Register of Non-Profit Legal Entities;
• A declaration under Article 13, paragraph 5 of the Act on the Commercial Register and the Register of Non-Profit Legal Entities, where filed by an authorised representative;
• A payment order for the state fee paid;
• A power of attorney, if the documents are filed by an authorised representative.

If the enterprise is transferred to a natural person, documents for the registration of that person as a sole trader must be submitted simultaneously with the filing.

State Fees and Particularities

The state fee for registering the transfer of a sole trader is BGN 30. Where the documents are filed through an attorney, notarisation of the attorney's power of attorney and of application form В1 is not required. Attorneys who file the documents electronically with an electronic signature benefit from a 50% reduction in the state fee.

Procedure for Deregistering a Sole Trader

It is important to note that the transfer of the enterprise of a sole trader does not automatically lead to its deregistration. The deregistration of a sole trader is carried out through a separate procedure.

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]