Set Up a Foundation in Bulgaria

The foundation is a legal entity set up by one or more individuals that have a certain purpose or goal. Traditionally, these foundations were established for charitable purposes. However, today, foundations in Bulgaria may be formed for a variety of purposes, from charity to the promotion of cultural activities and education. Our lawyers in Bulgaria are at your service with foundation setup solutions.

The characteristics of the foundation in Bulgaria 

In order to set up a foundation in Bulgaria, entrepreneurs will need to observe the local registration rules as well as the particularities related to the foundation’s scope of activity. 

The foundation in Bulgaria is a legal entity with a non-profit scope that may perform activities for private or public interests. Both individuals and other companies in Bulgaria can set up a foundation and, in most cases, this legal entity is incorporated by means of a donation.

What differentiates the foundation from other types of companies in Bulgaria is that the profits are not distributed amongst the founders and are merely used to perform the scope for which the foundation exists, which is clearly specified in the Articles of Association.  

Special taxation regimes, incentives, and, most importantly, exemptions are in place for foundations in Bulgaria. One of our attorneys in Bulgaria can give you up-to-date information on the taxation regime.

Set up process for a foundation in Bulgaria

All foundations operating in Bulgaria must be entered in the Register of Non-Profit Legal Entities kept by the Registry Agency. Since 1 January 2018 this is performed with the Registry Agency (previously with the district court), whatever the city where the registered office of the foundation will be located, either in Sofia or another Bulgarian city. No separate second registration is needed: the foundation receives its unified identification code (UIC) upon entry in this register.

Foundations that are being set up for public benefit are entered with public-benefit status in the same register at the Registry Agency (the former Central Register at the Ministry of Justice was merged into it in 2018).

Foundations in Bulgaria publish their annual financial statements in the Register of Non-Profit Legal Entities (and file a tax return with the National Revenue Agency if they carry out economic activity). Public benefit foundations are also required to publish annual activity reports in the same register.

One of the experts at our law firm in Bulgaria can help you with complete information about the status, obligations, and liabilities for a foundation in the country.

Types of foundations in Bulgaria

The Bulgarian legislation acknowledges two types of foundations:

• created for public benefit;
• established for private purposes.

This distinction matters for registration, reporting and taxation; the founder rules differ between foundations and associations:

• a foundation (public or private benefit) may be set up by a single founder, whereas a public-benefit association must have at least 7 members, if they are natural persons, and minimum 3 if they are legal enterprises;
• a private-benefit association must have at least 3 members and as a governing body, it must appoint a chairman and constitute a managing board.

Should you need details on the type of foundation you want to create, do not hesitate to ask for advice from our Bulgarian lawyers.

The statute – the main document for creating a foundation in Bulgaria

The creation of a Bulgarian foundation relies on drafting various documents, among which are identification papers of the founders and the statute. The latter is the equivalent of the Articles of Association used to register companies in Bulgaria.

The statute must contain the following information:

• the name of the foundation;
• the purpose for which it is created;
• the registered address of the entity;
• the number of members appointed in the board of directors;
• how the directors are appointed and removed from the board;
• the process through which the statute of the foundation is amended.

Bulgarian foundations must be created in accordance with the Non-Profit Legal Entities Act. As such, when drafting their statutes, it is important to respect this law. Our law firm in Bulgaria can assist with this procedure.

The foundation as a tool for immigration to Bulgaria

A less known fact about the foundation is that it can be used by foreign citizens seeking to obtain residency in Bulgaria. Specifically, non-EU citizens can file for long-term residence permits if they create such an entity here. It also eases the way to Bulgarian citizenship, as the resident card does not need multiple renewals.

Apart from this benefit, a Bulgarian foundation is a great tax planning tool for foreign citizens and investors.

Taxation of foundations in Bulgaria

The foundation can be a great tax optimization tool. This is because it can benefit from various exemptions. Even when they are not available, the taxes paid are quite low compared to other European countries. Here are some of the most important aspects to consider:

• when receiving donations (of any amount) or other non-economic income, the foundation will be exempt from the corporate tax;
• if engaging in commercial activities, it will only pay a 10% tax.

We can also advise on immigration matters. Get in touch with us if you’re a British national seeking a residence permit in Bulgaria following Brexit. If you have never resided in another EU country, you should first think about applying for a visa. You can then relocate here and stay for the required amount of time to qualify for permanent residency.

Contact us for more information and complete legal services in Bulgaria.