Bulgaria vs Romania: Company Formation Comparison

Bulgaria and Romania are two of the most cost-competitive jurisdictions in the European Union for company formation. Both offer EU membership, relatively low corporate tax rates and straightforward registration procedures - yet they differ meaningfully in tax structure, bureaucratic complexity and practical setup costs. This guide compares the two jurisdictions across entity types, registration procedures, tax regimes, ongoing compliance and total cost of entry, so founders can make an informed choice before committing capital and time.

The fundamental difference between Bulgaria and Romania as incorporation destinations comes down to tax simplicity versus market scale. Bulgaria operates one of the flattest and most transparent tax regimes in the EU, with a 10% flat corporate income tax rate and a 10% flat personal income tax rate. Romania has a more layered system, including a micro-company revenue tax regime that can be attractive at low turnover levels, but which adds complexity as a business scales.

Bulgaria';s economy is smaller, but its tax code is consistently ranked among the simplest in the region. Romania, by contrast, is a significantly larger market - one of the largest in Central and Eastern Europe by population and GDP - which makes it attractive for businesses that plan to serve the local consumer or B2B market directly. For a holding structure or an international services company, Bulgaria is often the cleaner choice. For a business that needs physical presence in a large domestic market, Romania deserves serious consideration.

Both countries are full EU members, meaning companies incorporated in either jurisdiction benefit from access to the EU single market, EU VAT rules, EU banking infrastructure and the ability to operate freely across member states.

Both jurisdictions offer a private limited liability company as the standard vehicle for foreign founders. In Bulgaria, this entity is called an OOD (Дружество с ограничена отговорност), and in Romania it is called an SRL (Societate cu Răspundere Limitată). Both are functionally equivalent to a limited liability company in common-law terms: shareholders are liable only up to their capital contribution, the entity has separate legal personality, and there is no minimum share capital requirement that is commercially prohibitive.

In Bulgaria, the minimum share capital for an OOD is BGN 2 (approximately EUR 1), which is effectively nominal. In Romania, the minimum share capital for an SRL is RON 200 (approximately EUR 40). Neither figure represents a meaningful financial barrier. Both entities can be owned by a single shareholder and managed by a single director, who may be a foreign national with no residency requirement in either country.

For larger or publicly oriented structures, both countries offer joint-stock companies - the AD in Bulgaria and the SA in Romania. These require higher minimum capital and more complex governance, and are rarely chosen by foreign founders at the initial setup stage. Most international entrepreneurs begin with the OOD or SRL and restructure only if the business model demands it.

A non-obvious requirement in both jurisdictions is that the registered address must be a genuine, verifiable address in the country - a virtual office or registered agent address is acceptable in Bulgaria, while Romania has tightened its requirements around registered seat documentation in recent years, requiring proof of right to use the premises.

Bulgaria - registering an OOD involves the following stages. First, the founders prepare the articles of association and a specimen signature of the manager, both of which must be notarised. Second, the share capital is deposited into a bank account opened specifically for the purpose, and the bank issues a certificate confirming the deposit. Third, the application is submitted to the Commercial Register (Търговски регистър), maintained by the Registry Agency. The Registry Agency processes standard applications within three to five business days. Expedited processing is available for an additional fee and can reduce this to one business day. The entire process, from document preparation to registration, typically takes one to two weeks when handled by a local lawyer.

Romania - registering an SRL involves a similar sequence but with additional administrative touchpoints. The founders prepare the constitutive act (equivalent to articles of association), which must be authenticated by a notary or, in some cases, certified under the lawyer';s own seal under Romanian law. The registered seat documentation must be submitted alongside the application. The application is filed with the National Trade Register Office (Oficiul Național al Registrului Comerțului, or ONRC). Processing times at the ONRC have historically been slower than in Bulgaria, typically ranging from five to ten business days for standard applications, though online filing has improved turnaround in recent years.

A common mistake made by foreign founders in both countries is underestimating the notarisation requirements. In Bulgaria, the manager';s specimen signature must be notarised by a Bulgarian notary or by a foreign notary with an apostille. In Romania, the constitutive act notarisation adds both time and cost to the process. Founders who attempt to manage these steps remotely without local legal support frequently encounter delays.

In practice, founders should consider appointing a local lawyer or formation agent from the outset. The cost of professional assistance is modest relative to the time lost to administrative errors, and both jurisdictions require documents in the local language.

This is where the two jurisdictions diverge most sharply, and where the choice of incorporation destination has the greatest long-term financial consequence.

Bulgaria';s tax regime is built around simplicity. The corporate income tax rate is 10% flat, applied to net profit. Dividends distributed to non-resident shareholders are subject to a 5% withholding tax, one of the lowest in the EU. There is no progressive rate structure and no turnover-based alternative minimum tax. VAT registration is required once annual turnover exceeds BGN 100,000 (approximately EUR 51,000), though voluntary registration is possible from day one. Bulgaria has an extensive network of double tax treaties, covering most major business jurisdictions.

Romania';s tax regime is more layered. The standard corporate income tax rate is 16%, but Romania operates a parallel micro-company regime for companies with annual revenue below a threshold set by law. Under this regime, tax is levied on gross revenue rather than net profit, at a rate that varies depending on whether the company has employees. This can be advantageous for early-stage, low-cost businesses, but it becomes less efficient as margins improve or as the company scales beyond the threshold. Above the threshold, the standard 16% corporate rate applies. Dividends distributed to non-resident shareholders are subject to an 8% withholding tax under domestic law, though treaty rates may reduce this.

Romania also imposes a minimum turnover tax for certain categories of company, which was introduced in recent legislation and adds a layer of complexity that Bulgaria does not have. This is a non-obvious cost that many founders discover only after incorporation.

For a holding company, an IP holding structure or an international services business, Bulgaria';s 10% flat rate and 5% dividend withholding make it the more tax-efficient choice in most scenarios. For a business generating revenue primarily in Romania from Romanian customers, the local SRL may be preferable for practical and regulatory reasons, even if the headline tax rate is higher.

If you are weighing these options and need a structured analysis of your specific situation, contact info@vlolawfirm.com. We can help structure the setup correctly the first time.

Neither Bulgaria nor Romania is an expensive jurisdiction for company formation, but the cost components differ.

Bulgaria - cost components:

• State registration fees at the Commercial Register are low, with expedited processing available at a modest additional charge.
• Notarial fees for the manager';s specimen signature are generally in the low hundreds of EUR.
• Professional fees for a local lawyer or formation agent typically start from the low hundreds to low thousands of EUR, depending on complexity.
• Bank account opening for the capital deposit is straightforward at most Bulgarian banks, though some banks require an in-person visit or additional due diligence for non-resident founders.
• Registered address costs vary but are available from providers at modest annual fees.

Romania - cost components:

• State registration fees at the ONRC are similarly low.
• Notarial fees for the constitutive act are higher than in Bulgaria, as the notarisation is more substantive and involves a licensed notary';s professional fee.
• Professional fees for a Romanian lawyer or formation agent are comparable to Bulgaria in absolute terms, but the process tends to require more billable hours due to additional administrative steps.
• Registered seat documentation - proof of right to use the premises - adds a step that may involve a lease agreement or a notarised declaration from the property owner.
• Ongoing accounting and compliance costs in Romania are generally slightly higher than in Bulgaria, reflecting the greater complexity of the tax and reporting regime.

Many underestimate the ongoing cost differential. Bulgaria';s simpler tax system means that monthly accounting and annual audit requirements are less burdensome, which translates into lower professional fees over the life of the company. In Romania, the micro-company regime requires careful monitoring of revenue thresholds, and the transition between regimes requires proactive planning.

Bulgaria - after registration, an OOD must file annual financial statements with the Commercial Register. Companies with turnover above the VAT threshold must file monthly or quarterly VAT returns. Corporate income tax is filed annually, with advance payments required during the year. Employment-related filings are managed through the National Revenue Agency (Национална агенция за приходите, or NAP). The overall compliance burden is considered light by EU standards.

Romania - after registration, an SRL must file monthly or quarterly tax returns depending on its regime, annual financial statements with the ONRC and the Ministry of Finance, and employment-related filings with the relevant authorities. The micro-company regime requires quarterly revenue declarations. Companies transitioning between the micro and standard regime must file additional notifications. Romania';s compliance calendar is denser than Bulgaria';s, and errors in filing deadlines attract penalties that are proportionate to the tax owed.

Both countries require beneficial ownership declarations to be filed with their respective registers, in line with EU anti-money laundering directives. This is a mandatory step that is sometimes overlooked by founders who complete the initial registration but do not follow through with beneficial ownership filings.

A common mistake in Romania is failing to register for the micro-company regime correctly at the point of incorporation, which can result in the company defaulting to the standard 16% corporate rate from the outset - an outcome that is correctable but administratively burdensome.

In Bulgaria, a non-obvious requirement is that companies with no activity must still file a declaration of inactivity with the Commercial Register each year. Failure to do so can result in the company being struck off the register after a period of non-compliance.

Scenario one - international services company with no local market dependency. A founder based outside the EU wants to establish a company to provide software development or consulting services to clients across Europe and beyond. The company will have no employees in the country of incorporation initially, and the founder wants to minimise tax and administrative burden. In this scenario, Bulgaria is the stronger choice. The 10% corporate tax rate, 5% dividend withholding and simple compliance calendar make it operationally lean. The OOD can be managed remotely, and the registered address requirement is easily satisfied through a local provider.

Scenario two - e-commerce or retail business targeting the Romanian market. A founder wants to sell physical goods to Romanian consumers, manage a local warehouse and hire Romanian employees. In this scenario, incorporating an SRL in Romania is the practical choice. Operating through a Bulgarian entity would create a permanent establishment in Romania in any case, triggering Romanian tax obligations. The SRL structure keeps the business legally clean, allows direct employment under Romanian labour law and positions the company correctly for local VAT and customs purposes. The micro-company regime may reduce the initial tax burden if revenue is below the applicable threshold.

These two scenarios illustrate the central principle: the choice between Bulgaria and Romania should be driven by where the business actually operates and generates value, not solely by the headline tax rate.

What are the main risks of choosing the wrong jurisdiction?

Choosing a jurisdiction based on tax rate alone, without considering where the business actually operates, is the most common structural error. If a company incorporated in Bulgaria has its management and control exercised from Romania, or generates all its revenue from Romanian customers through a fixed place of business in Romania, Romanian tax authorities may treat it as having a permanent establishment in Romania and subject it to Romanian corporate tax regardless of where it is registered. The same logic applies in reverse. Founders should ensure that the chosen jurisdiction reflects the genuine economic substance of the business, including where decisions are made, where employees work and where clients are located.

How long does company formation take, and what does it cost in total?

In Bulgaria, the full process from document preparation to registration typically takes one to two weeks, with expedited registration possible in one business day once documents are ready. In Romania, the process typically takes two to three weeks, including notarisation and ONRC processing. Total costs in Bulgaria, including professional fees, notarisation and registered address, generally fall in the range of a few hundred to low thousands of EUR. Romania is broadly similar but tends to be slightly higher due to more substantive notarisation requirements and a more complex formation process. Neither jurisdiction requires prohibitive capital contributions.

Can a foreign national be the sole director and shareholder without residing in the country?

Yes, in both Bulgaria and Romania, a foreign national can be the sole shareholder and sole director of an OOD or SRL respectively, without any residency requirement in the country of incorporation. There is no obligation to appoint a local director or local shareholder. However, the director must be able to sign documents and, in some cases, appear before a notary - either in person or through a duly authorised power of attorney. For bank account opening, some banks in both countries require the director to attend in person for identity verification, though this requirement varies by institution and has become more flexible with the expansion of digital onboarding.

Bulgaria and Romania both offer credible, EU-compliant environments for company formation, with low costs and accessible procedures. Bulgaria is the cleaner choice for international structures, holding companies and service businesses where tax efficiency and simplicity are the priority. Romania is the more logical choice when the business has genuine economic activity in the Romanian market. The decision should be grounded in substance, not just in the headline tax rate.

VLO Law Firms advises international clients on company formation in Bulgaria and Romania. We can assist with entity selection, document preparation, registration filings, tax structuring and ongoing compliance in both jurisdictions. To request a consultation, contact: info@vlolawfirm.com