Start a Holding Company in Bulgaria
Bulgarian Holding CompanyUpdated on Tuesday 23rd April 2019
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A Bulgarian holding company does not produce goods or provides services itself, but it owns shares in another company. Holding companies are generally regulated as any other companies in Bulgaria, although under special conditions they can benefit from a preferential tax system.
Our lawyers in Bulgaria can help you set up a holding company and commence your business activities as soon as possible.
The objectives of a Bulgarian holding company
Bulgarian holding companies can be set up in the form of a public limited company or a private limited company. Each type of company has its own particularities regarding the minimum share capital, the number of founding members and other specific legal provisions.
Holding companies in Bulgaria are opened by investors who want to buy, manage and sell commercial interests, bonds and patents in Bulgaria. Holding companies can also buy and manage shares of foreign legal entities. The holding company can finance the companies which are managed by it.
Bulgarian holding companies are required to invest at least 25% of their capital stock in a subsidiary. The holding company will thus own at least 25% of the subsidiary’s shares and will represent at least 50% of the management board of the subsidiary.
Special provisions for holding companies in Bulgaria
Bulgarian holding companies cannot participate or invest in a company that is not a Bulgarian legal entity. Although they can acquire shares in real estate companies, holding companies may not purchase real estate that is not meant to be used by the holding company.
Holding companies are subject to specific measures regarding financing other companies. They may finance companies in which they have direct control, but the total amount of the loan cannot exceed specific values.
Bulgarian holding companies have the same corporate taxation regime as other Bulgarian companies. The corporate tax rate in Bulgaria is 10%, dividends payable to non-residents are subject to a 5% withholding tax unless a lower rate applies. Bulgaria has signed double tax treaties with more than 68 countries in order to avoid double taxation.
The country is a good location for holding companies because of the special regime for dividend payments. The dividends received by a holding company in Bulgaria can be tax exempt, provided that the company making the payment (the subsidiary belonging to the holding) is a resident company in one of the EU or EEA member states. This exemption from the withholding tax on dividends also applies for dividend income received by a Bulgarian company from another legal entity incorporated in the country.
Our Bulgarian lawyers can provide more information about holding companies in Bulgaria and the taxation regime in the country.
Please contact our office, if you want to know more about other types of companies in the country or about how to open a company in Bulgaria.