A foreign company holding the control of one or several subsidiaries in other countries is called a holding company. If we are talking about the legal definition, the holding company will much depend on the legal system because it can require to own about 80% of shares of the subsidiary, while others must have a minimum of 5%. Our company formation agents in Bulgaria can help you set up a holding company in the country, in order to properly start your activities.
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Reasons to set up a holding company in Bulgaria
| Quick Facts | |
|---|---|
| Legal entities used | Private Limited Liability Company, Joint-Stock Company, Partnership |
| Incorporation method | With the Bulgarian Trade Register |
| Incorporation time | Around 3 days |
| Advantages | Entitled to EU funding |
| Precautions | Investing at least 25% of capital stock to subsidiaries |
| Shareholding structure | 1 or 2 shareholders, depending on the structure |
| Minimum Capital | EUR25,000 for JSC |
| Taxation | 10% corporate tax rate |
| Control | Foreign ownership available |
| Accounting and Reporting | Standard accounting rules |
| Number of double taxation treaties | 64 |
Foreign investors choose to open holding companies in Bulgaria to buy, sell and manage bonds, copyrights, commercial interests or foreign legal entities stocks. In Bulgaria, a holding company can financially support its administered businesses. Holding companies in Bulgaria can be created with special conditions, and here we mention the possibility to receive a preferential taxation system.
We recommend the services offered by our accountants in Bulgaria who have experience in this field and who can provide the necessary services for a company. Legislation can change frequently, and one of our specialists can implement any kind of changes, in addition to offering payroll, audits and bookkeeping services. So, contact our experts to benefit from complete accounting services.
What you need to know about the holding companies in Bulgaria
In order to establish a holding company in Bulgaria you need to consider a few important requirements, as follows:
- According to the Commercial Code, at least 25% of the capital of the holding company needs to be paid to the company in which owns interests. A holding company in Bulgaria can be set up with the purpose of dealing with bond investments, in order to control another company.
- It is good to know that holding companies in Bulgaria cannot participate in businesses with no legal entities, and cannot purchase licenses that are not planned for use by its controlled companies.
- Foreign investors who wish to open a holding company in Bulgaria can choose between limited liability companies, joint stock companies or limited partnerships.
- The corporate tax for a holding company in Bulgaria is settled at 10%, and the payable dividends are matter to a 5% withholding tax.
Are you ready to open a startup in Bulgaria? Our specialists are at your disposal to help in preparing documents, opening a bank account, registering a business address, registering for paying taxes, and much more. It is much more advantageous to call on a team of company formation agents in Bulgaria than to act on your own for the advantages offered. Contact us today to benefit from a free case evaluation and guidance.
The corporate tax for holding companies in Bulgaria
The corporate tax rate in Bulgaria is set at 10% and it is applicable for holding companies in this country. Also, the dividends are subject to a withholding tax of 5%, but it may vary, depending on the double tax treaties and their provisions. The interests are levied with a 10% withholding tax rate, but deductions can be applied as in the case of taxation of dividends.
Tax advantages of Bulgarian holding companies
Foreign entrepreneurs interested in holding companies in Bulgaria need to know the benefits of such a structure in terms of taxes. For example, for this structure, corporate income tax is set at a rate of 10%, applied to worldwide income. It is important to note that holding companies in Bulgaria are exempt from tax on dividends received. It is also valid for dividends paid by a holding company established in Bulgaria for a foreign company registered in this country. Here is other information and advantages about this structure:
- • Bulgaria has signed more than 60 double taxation treaties with countries around the world in order to protect against double taxation and prevent tax evasion.
- • Annual distributions are subject to a 5% withholding tax, which is a great advantage over foreign investors.
- • In addition, companies established in the cities with the highest unemployment rate can benefit from a total exemption from the corporate tax rate.
- • Financing is possible for holding companies managed in Bulgaria.
- • Bulgarian holding companies can set up and control shares in international companies.
- • EU funding is possible with a holding company in Bulgaria.
You can find out more about the charging system of the Bulgarian holding company from our specialists. The registration of business in Bulgaria can be done with the help of our local agents.
Frequently Asked Questions
Our specialists are at your disposal with information about Bulgarian holding companies, and the questions below can help you in the decision to open such a structure. Do not hesitate to talk to us and benefit from support if you are interested in setting up a holding company in Bulgaria.
1. What can a holding company in Bulgaria be used for?
Control in other existing companies can be done with the help of a holding company in Bulgaria. It can buy and sell bonds, securities, patents, copyrights, but it can also manage them.
2. What is the minimum share capital for holding companies in Bulgaria?
If the holding company in Bulgaria operates under the rules of the joint-stock company, the minimum share capital of EUR 25,000 is required. At least 25% of this amount must be paid upon establishment. In the case of LLC, the minimum share capital is EUR 2.
3. How many shareholders are needed to register a holding company in Bulgaria?
At least 1 investor or shareholder can set up a holding company in Bulgaria, and two are required if you are interested in the LLC structure.
4. What costs are required to set up a holding company in Bulgaria?
This structure is subject to low costs, including low rental costs. In addition, taxes are much more advantageous for the holding company in Bulgaria.
5. What is the corporate income tax imposed on holding companies in Bulgaria?
10% is corporate income tax for Bulgarian holding companies, one of the smallest in the European Union. These business structures can also benefit from other low taxes or even their elimination if they open businesses in areas with high unemployment.
6. Can a holding company in Bulgaria control shares in a foreign company?
Of course, this is possible and represents another benefit offered to foreign investors in Bulgaria. For more details, you can contact our team of company formation agents in Bulgaria.
7. Can a Bulgarian holding company control shares in another foreign company?
Yes, according to Company Law in Bulgaria, holding companies established in this country can manage shares in other foreign companies.
8. What is the dividend tax system for holding companies in Bulgaria?
There are no dividend payments received by holding companies in Bulgaria. Also, the payment of dividends by a holding company in Bulgaria to a company in the EEA area is exempt from taxes.
9. Is the holding company in Bulgaria protected by double tax agreements signed by Bulgaria?
Yes, Bulgaria has signed a number of double taxation treaties in order to prevent tax evasion and protect against double tax payments. These treaties are also valid for holding companies registered in Bulgaria.
10. Can subsidiaries open financial deposits in a Bulgarian holding company?
Yes, this is possible if a deposit is not exceeded by up to three times the value of the stock capital, according to the same Company Law in Bulgaria.
You are invited to contact our company formation agents in Bulgaria for additional information about how to open a holding company in the country. We can also help you incorporate a company in other countries with the help of our local partners.