Sole Trader in Bulgaria

What is required to register an ET?

The Commerce Act states that any legally capable natural person residing in Bulgaria may register as a sole trader. Nevertheless, there are certain nuances here.

So, to register you need:

• to be of legal age;
• to reside in Bulgaria;
• not to have been convicted of bankruptcy;
• not to have been declared insolvent;
• not to have been in the past the manager of a bankrupt enterprise;
• not to have been in the past a director or a member of a management or supervisory body of a company that failed to fulfil its obligations to create and maintain the established levels of stocks under the Act on the Stocks of Oil and Petroleum Products.

The registration application must state:

• name, place of residence and EGN (unified civil number);
• the company name;
• the address;
• the scope of activity.

Thus, although the law does not say that only a Bulgarian citizen or a foreigner with a permanent or long-term residence permit may become a sole trader, in practice this option is available only to those who have an EGN. This means that Ukrainian refugees who have received “временна закрила” and a personal foreigner’s number (LNCh) cannot register as sole traders.

Registration procedure

1. Choosing a name. It must contain, without abbreviation, the first name, patronymic and surname of the natural person.
2. Preparation of the application for entry of the circumstances concerning the ET (form A1)
3. Preparation of the Declaration under Art. 57 and 58 of the Commerce Act.
4. Preparation of the Declaration under Art. 57 para. 4 of the Commerce Act.
5. Preparation of the declaration on the truthfulness of the declared information.
6. Obtaining a licence (required only for activities subject to mandatory licensing).
7. Preparation of the sole trader’s specimen signature.
8. The completed documents are submitted to the Registry Agency (this can be done in person or through a lawyer).
9. Payment of the fee for ET registration.
10. The registration period is 1 – 3 working days. After that, the name and details of the company appear in the Commercial Register.

Taxation specifics for a sole trader

Sole traders are obliged to pay osiguровki (social contributions) on their income. These are payments to the NZOK (medical care) and to the mandatory and supplementary pension insurance funds. They must be made monthly by the 25th.

As a rule, a certain income is declared initially and contributions are paid on it, and at the end of the year the social contributions on the profit actually received are topped up. The maximum amount on which social contributions are paid is 3.4 thousand leva per month. If the income is higher, contributions are still paid only on this amount, and only 10% is paid on the excess. The same requirements apply to companies, but unlike companies, ETs pay advance profit tax instalments during the year regardless of the amount of profit for the previous year.

As for the profit tax itself, for sole traders it is higher than for ordinary companies and amounts to 15% rather than 10%. Income must be declared from 1 March to 30 June of the following year, and the tax is paid at the same time. If the declaration is not filed within the set deadline, the fine for a first violation will be 500 leva, and 1000 leva for subsequent ones.

It is important to remember that sole traders, if they have debts to creditors, are liable for them not only with the ET’s property but also with their own personal property.

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