Bulgaria: Registration of foreign companies

An increasing number of Greek and Romanian companies register in Bulgaria, one of three EU countries with the lowest corporate taxes. More than 272 Romanian companies are registered in Bulgaria and file their tax declarations there. In 2006, one year before Romania and Bulgaria’s EU accession, only 33 Romanian firms were registered in Bulgaria. Bulgaria’s corporate tax rate stands at 10% while the rate in Romania is 16%.

The number of Greek companies registered in Bulgaria is even higher. Over the last year, 2,072 Greek firms have filed their tax declaration in Bulgaria. The corporate tax rate in Greece is 25%.

More than a third of the Romanian companies registered in Bulgaria have their headquarters in Ruse, a city just across the Danube River, 70 km from the Romanian capital Bucharest. Another 93 are registered in Sofia and 22 in Varna, on the Black Sea coast.

According to the Romanian tax administration, the decision of many firms to establish their headquarters in Bulgaria is due to the low tax rates, but also less burdensome procedures for setting up a business. Experts say another factor could be the macroeconomic stability in Bulgaria and the fact that the national currency is pegged to the euro at a fixed rate.

Bulgaria’s lower wages and rents are also important attractions for investors. According to the Bulgarian Finance Minister Simeon Djankov this situation will not last for long because income levels in Bulgaria are expected to exceed those in Romania over the next two years.

The Minister specified in an interview that GNP per capita in Bulgaria currently stood at 43% of the EU average, while in Romania it was a bit higher, at 45%. According to the World Bank, GDP per capita in Bulgaria is 6,423 dollars per year, compared to 7,500 for Romania and 29,240 for Greece.

 

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