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Tuesday, December 10, 2013

Investment – Why Bulgaria?

By Pavel Velchev (Velchev & Co.)

The strategic geographical position of the country and the membership with the European Union provide a wide range of investment opportunities in Bulgaria not only for local, but for foreign investors as well. The advanced process of harmonization of the Bulgarian legislation with the EU one and the favorable macroeconomic environment also serve as a good basis for attracting foreign investments.

Below is an overview of some of the major advantages and incentives set forth by the Bulgarian legislation in favor of the legal entities and the natural persons starting business in the region.

Setting up a Company

Bulgaria is well known for the simplified registration procedures and the minimum capital requirements for the incorporation of a company. There are no restrictions relating to qualification and nationality for officers and directors of a company.

The most popular types of companies under Bulgarian law are as follows: a limited liability company, a joint-stock company, a general partnership, a limited partnership, and a partnership limited by shares.

Benefits Under the Investments Promotions Act

Foreign and local investors are entitled to apply for a special certificate before the Bulgarian Investment Agency depending on the scope of the investment. Thus, they can benefit from special incentives such as reduced administrative terms, financial support for construction of separate elements of the technical infrastructure, qualification courses for the personnel, etc.

Favorable Tax Regime

The corporate tax in Bulgaria is set at a flat rate of 10%, being one of the lowest in the EU. The current income tax rate for individuals is also 10%. Dividends distributed to corporate shareholders are exempt from withholding tax, while the average withholding tax is 5% of the gross income. The standard VAT rate is 20%, and a reduced rate of 9% applies to certain services in the tourist sector.

Outsourcing Opportunities

With increasing globalization and technological developments, investors may grow their companies and generate more income irrespective of the location. Large-scale businesses which seek to cut costs by outsourcing their activities may easily make use and take advantage of the local resources.

For example, foreigners seeking to acquire land may do so by the mere incorporation of a local company which shall be a party to the transactions.

In addition, the good level of English language knowledge and the technical and business competencies of the personnel, the market potential and the quality of the infrastructure all mark Bulgaria as an attractive outsourcing destination.

To learn more about investing in Bulgaria, check out the full article in the latest edition of Dickinson Wright’s Gaming Legal News.