A company that already trades abroad and wants a permanent presence in Bulgaria has three vehicles to choose from. A representative office can promote the parent but may not trade on its own account. For real commercial activity — signing contracts, invoicing, employing staff — the choice is between a branch of the foreign company and a Bulgarian subsidiary. The decision shapes who carries the risk, which documents you need from home, how profits travel back and how banks, landlords and clients deal with you.
What a branch is — and what it is not
A branch is not a separate legal person. It is the foreign company itself, operating in Bulgaria through a registered establishment. Contracts are concluded in the parent’s name, and the parent is liable for the branch’s obligations with all of its assets, wherever they are.
In practice a branch can do most of what a company does. Once entered in the Commercial Register it receives a Bulgarian UIC, can register for VAT, open bank accounts, rent premises, employ staff and take part in public tenders. It is run by a branch manager whose powers are entered in the register. For tax purposes it is a permanent establishment: the profit attributable to the Bulgarian activity is taxed in Bulgaria at the 10% corporate rate, and the branch keeps its own accounts here.
What a subsidiary changes
A subsidiary is an ordinary Bulgarian company — usually an EOOD with the foreign company as sole owner. It is a separate legal person, so creditors of the Bulgarian business look to the subsidiary’s assets, not to the parent’s, unless the parent has given a guarantee. The minimum capital is EUR 1, and the formation steps are the same as for any Bulgarian limited company.
The difference shows when profits go home. A branch simply transfers its profit to head office; nothing is distributed. A subsidiary pays dividends, which can attract Bulgarian withholding tax unless an exemption applies — parent companies in the EU that meet the conditions of the Parent-Subsidiary Directive are generally exempt, and double tax treaties can reduce the rate for others.
Side by side
| Branch | Subsidiary (EOOD or OOD) | |
|---|---|---|
| Legal personality | None — part of the foreign company | Separate Bulgarian company |
| Liability for Bulgarian debts | The whole foreign company | The subsidiary’s own assets |
| Capital | None required | At least EUR 1 |
| Documents from abroad | Proof of the parent’s existence and representation, its articles, the decision to open the branch | Proof of the parent’s existence and representation, the decision to form the company |
| Corporate tax | 10% on the profit attributable to the branch | 10% on the subsidiary’s profit |
| Profits to the parent | A transfer to head office, not a dividend | Dividends; withholding tax unless an exemption or treaty applies |
| How it ends | Deletion of the branch from the register | Liquidation, or a sale of the company as a whole |
What to prepare
- Proof that the parent exists and who represents it: a recent certificate or extract from its home commercial register.
- The parent’s articles in their current wording, and the decision of its competent body to open the branch or form the subsidiary.
- The manager’s notarised consent and specimen signature.
- An apostille or legalisation and a certified Bulgarian translation of every foreign document — see our guide on powers of attorney and documents signed abroad.
- Information on the group’s ultimate owners: a subsidiary owned by a foreign company declares its beneficial owners in the Commercial Register, and Bulgarian banks ask for the same chain of ownership before opening an account.
Which one fits
A branch suits activity that is really an extension of the parent’s own business: delivering a project the parent has contracted for, serving clients who want to deal with the parent’s name and balance sheet, or a presence that may be temporary. It also keeps the corporate structure simple — one company, one set of statutory accounts at group level.
A subsidiary suits a business that will stand on its own in Bulgaria: one that employs a sizeable team, owns property, signs long-term contracts, may take in local partners or investors, or may one day be sold. Ring-fencing Bulgarian risk is often the deciding argument, and Bulgarian banks, landlords and public bodies tend to find a local company more familiar to deal with.
Tax is rarely decisive on the Bulgarian side, because both pay 10%. The real difference usually lies in the parent’s home country — some countries exempt foreign branch profits, others tax them and give a credit — so the choice should be checked with the parent’s own tax adviser as well.
Residence for non-EU managers and staff is a separate question that follows its own rules; see residence options in Bulgaria.
Questions clients ask
Can a branch be turned into a subsidiary later?
Not by a simple amendment. The subsidiary is formed as a new company and the branch’s contracts, staff and assets are moved across before the branch is closed. It can be done, but it takes planning, so it is worth choosing carefully at the start.
Does a branch need its own bank account and accountant in Bulgaria?
Yes, in practice. A branch keeps its own accounting in Bulgaria, files Bulgarian tax returns and, if registered, VAT returns, and a local bank account is almost indispensable for paying salaries, taxes and suppliers.
Do the parent’s directors have to travel to Bulgaria?
No. The documents can be signed before a notary in the parent’s country, apostilled and sent to us; we translate them, file the application and handle the registration under a power of attorney.
This guide is general information about Bulgarian law as it stood on the date of publication. It is not legal advice for your specific case.
