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Subsidiary vs Branch in Bulgaria

Subsidiary vs. Branch in Bulgaria

Updated on Monday 19th September 2016

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Foreign investors in Bulgaria can choose between setting up a branch or a subsidiary in order to expand their business in the country. These two options are different in terms of liability as far as the parent company is concerned but they also offer a series of advantages for company management and control in Bulgaria.
The choice between a branch and a subsidiary depends on the business activities the foreign company wishes to engage in Bulgaria. Foreign investments are allowed in the country and full foreign ownership is allowed for all types of companies. The favorable business and tax regime has attracted many foreign investors in the country. Entrepreneurs can rely on the help of a law firm in Bulgaria to commence the company registration procedures.

The branch in Bulgaria

The Bulgarian branch is an extension of the main foreign company and it fully depends on it for the debts and obligations in Bulgaria. While this business form does not have its own legal entity, it can enter into agreements, manage properties in Bulgaria and have a registered office. The branch also has to observe the annual reporting requirements and it is subject to taxation. The double tax treaties signed by Bulgaria with other countries can apply to the income derived by a branch in the country.
The branch needs to be registered with the Commercial Register. One of our lawyers in Bulgaria can help you during this step or can represent you through a power of attorney if the legal representative of the foreign company cannot be present in Bulgaria at the time of the registration.

The subsidiary in Bulgaria

The subsidiary is a separate business entity from the foreign company. It does not have to engage in exactly the same business activities and may have another or a slightly different name, according to the name availability on the Bulgarian market.
The subsidiary is a newly formed Bulgarian legal entity. Most often investors choose to open a limited liability company because of the clear distinction between the assets of the company and the personal assets belonging to the shareholders. This company will fully comply with the taxation principles in the country and also with the accounting and reporting requirements. 
Company registration is mandatory for all new companies in Bulgaria. According to the chosen business field, these companies will also ned to obtain special permits and licenses. The experts at our law firm in Bulgaria can give you additional information about these licenses.
If you would like to explore other business options, like opening a representative office before considering opening a branch or using a virtual office to operate a Bulgarian company, please feel free to contact our attorneys in Bulgaria.


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