Buying a company in Bulgaria is an important step that requires serious consideration and attention to the legal, financial and administrative aspects of the transaction. This is a frequently asked question by clients who are interested in the possibilities of developing their business, but also the potential risks. Topics such as “What documents are needed to transfer a company?” or “What are the conditions for drawing up a purchase and sale contract for EOOD?” always arouse interest, as they are fundamental for starting the process of acquiring a business.
Often, customers also ask: “What is the responsibility after the sale of a company, if it has obligations?” or “Can the transfer of a company with obligations lead to penalties for the buyer?” Such issues are key because they relate to the joint and several liability of the parties to the transaction and to the risk of hidden liabilities. Discussions also include the practical side of the process, such as “What should we know about notifying the NRA when selling a business?” and “Are there specific tax obligations, including VAT, associated with the sale of a business?”
On the other hand, customers are often interested in price and financial aspects: “How is the price determined when selling a company or shares?” and “What are the income and expenses of such a transaction?” Accounting also plays an important role and leads to questions such as “How are the purchase and sale of company shares accounted for?” or “What should the financial statement include after the closing of the transaction?”
Another interesting aspect is the legal certainty of the transaction. Questions such as “What does the contract for the purchase and sale of company shares include?” and “What are the conditions for transferring a company between partners?” are often key for clients who want to ensure the protection of their rights. In more specific cases, such as a gratuitous transfer of shares or the sale of a company with liabilities, clients seek clarity about possible legal and financial consequences.
In this article, we will consider all these aspects in detail, including the procedure for notifying the NRA, the risks of selling a company with liabilities, the mechanisms for calculating the price, tax and accounting requirements, and the legal liability of the parties. The Elan Consulting team is ready to offer support and expert solutions on all these issues to ensure the successful implementation of any transaction, whether it is for clients in Sofia, Burgas, Nessebar or elsewhere in the country.
According to the Commercial Law, when selling a company in Bulgaria, the parties' responsibilities are regulated in a way that protects both creditors and other interested parties. According to Art. 15, para. 3 of the Law, if there is no other explicit agreement with the creditors, the alienator (seller) remains jointly and severally liable for the obligations of the enterprise together with the legal successor (buyer) to the amount of the rights received. This means that the creditors of the company can first turn to the seller for settlement of existing obligations, which guarantees the protection of their interests.
Additionally, when transferring an enterprise, the alienator is obliged to notify all creditors and debtors about the transfer made (Art. 15, para. 1). This notification is necessary to ensure clarity and transparency regarding changes in ownership. In the case of the presence of hired employees, the alienator must pay all unpaid wages, benefits and insurance contributions for a period up to three years before the transfer, unless the parties expressly agree that the buyer will assume these obligations (Article 15, paragraphs 4 and 5).
The transfer of an enterprise is entered in the Commercial Register at the same time in the case of the seller and the buyer, with a declaration by the alienator attached to the application that there are no receivables and unpaid obligations (Art. 16, para. 2). The Registry Agency shall notify the Executive Agency “General Labor Inspectorate”, which may carry out a check on the veracity of the declared facts.
After the sale of the company, the buyer assumes the rights and obligations of the enterprise. However, the legal successor is obliged to separately manage the enterprise transferred to him for a period of 6 months after the registration of the transfer (Art. 16a, para. 1). In this period, the seller's creditors, whose claims are not secured, can request collateral or performance of obligations. If this is not satisfied, creditors have the right to preferential satisfaction with the assets of the enterprise (Art. 16a, para. 2).
Liability during and after the sale of a company is clearly distributed between the parties in order to protect creditors and ensure the legal certainty of the transaction. This highlights the need for careful planning and arrangements to address all potential risks and liabilities.
The sale and transfer of a company in Bulgaria requires proper documentation in accordance with the requirements of the Commercial Law. The necessary documents include a contract for the purchase and sale of company shares or an enterprise, which must be drawn up in writing and notarized. A decision of the owners of the company on the approval of the transaction is also required, which is in accordance with the memorandum of association or the company agreement, as well as a protocol of the general meeting, when such a decision is required.
Documents for identification of the parties are required - certificates of current status of companies or identity cards for individuals. Financial documents such as a company's balance sheet and income statement are also necessary to provide transparency about the company's standing. The alienator must submit a declaration of absence of obligations, which must be certified and entered in the Commercial Register.
In addition, certificates from the NRA and insurance authorities about the absence of obligations to the budget, as well as notarization of all key documents are required. Notifications to creditors and debtors of the transfer carried out are also mandatory in order to ensure their awareness. Depending on the nature of the business, additional documents, such as those for ownership of real estate or licenses, may be required.
After collecting all the documents, they are submitted for entry in the Commercial Register on the affairs of the seller and the buyer, with which the formal transfer is considered complete. This process requires attention to every detail to ensure legality and protection of the rights of all parties.
According to the Commercial Law and the practices regulated in the Commercial Register, the following documents are necessary for the successful execution of the transaction:
Once all documents have been prepared, they are submitted for entry in the Commercial Register simultaneously in the affairs of the seller and the buyer. Successful registration is the final stage of the process and completes the formal transfer of the company. This process requires careful planning and legal consultation to avoid mistakes and future disputes.
Notifying the National Revenue Agency (NRA) when selling a business is a key step in the process that ensures transparency and legality of the transaction. The procedure is regulated by Article 77 of the Tax and Insurance Procedure Code (DOPC) and is applicable in cases of termination of a legal person — trader, transfer of an enterprise under Article 15 of the Commercial Law, conversion under Chapter Sixteen of the Commercial Law or submission of an application for liquidation.
The law does not set a deadline for submitting a notification to the NRA. The trader or the applicant must submit the notification on his own initiative before declaring the relevant intention to the Registry Agency. This ensures consistency of actions and avoidance of administrative complications.
Notifications can be submitted in three main ways:
After filing, the notification is processed by the NRA. If it is submitted as an electronic document, it is considered valid if it is signed with the CEP. The result of the processing — notification accepted or rejected — is sent to the e-mail address of the obliged person. In the event of errors or discrepancies, the NRA requires a corrected notification within 7 days. Within 60 days of receipt of the notification, the NRA issues a certificate of notification, which is necessary for the follow-up actions, including deletion of the company in the Commercial Register.
Filing a notification to the NRA is free. According to Art. 3 para. 3 of the National Revenue Agency Act (NRA), no fees are required for these actions.
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The transfer of a company between partners in Bulgaria is legally regulated in the Commercial Law, which clearly defines the conditions and requirements for carrying out such transactions. The process is relatively facilitated when the transfer is between existing partners in the company, but includes specific requirements for legality and protection of the interests of all parties.
According to Art. 129, para. 1 of the Commercial Law, the company share may be freely transferred between the partners. This means that, unlike the sale of shares to third parties, where consent is required to accept a new partner, internal transfers do not require prior approval by the general meeting. However, the transfer is possible only if there are no unpaid accrued labor wages, benefits or compulsory insurance contributions, including for employees whose legal relations were terminated up to three years before the transaction.
The transfer procedure involves drawing up a contract, which must be concluded with notarization of signatures and content carried out simultaneously (Art. 129, para. 2). This contract is the legal basis for the transfer and must be entered in the Commercial Register. Together with him, the manager of the company and the transferor submit a declaration that there are no receivables and unpaid obligations. Entry in the register is a condition for the completion of the transaction and recognition of the new legal position.
The joint and several liability of the parties also plays an important role in the transfer. According to Art. 130, the legal successor (buyer) is jointly and severally liable with the legal representative (seller) for all contributions due at the time of transfer against the company share. This provides protection for the company and its creditors, but also highlights the need for careful legal and financial due diligence before the transaction.
The division of a share between several persons or the pooling of rights to a share, pursuant to Art. 131 and Art. 132, requires the express consent of the other partners or an agreement in the partnership agreement. The co-owners of a share must exercise their rights jointly and severally and severally liable for the obligations under that title by designating one person to represent them before the company.
From a financial-accounting point of view, the transfer of shares is treated as a change in the equity of the company, without affecting the nominal value of the capital. However, these changes must be adequately reflected in the accounting books of the company, in accordance with the Accounting Act.
The transfer of shares between partners is a convenient tool for reorganizing property, but requires compliance with legal requirements and careful structuring of the transaction. The Elan Consulting team is ready to offer professional legal and accounting support for the successful implementation of these processes.
The transfer of a company with liabilities in Bulgaria is a legally binding transaction that carries serious risks, especially with regard to outstanding and receivable public liabilities. These risks are regulated in detail in the Commercial Law and the Tax and Insurance Procedure Code (DOPC), and the legislation explicitly emphasizes the responsibility of the parties and managers in such transactions.
According to Art. 15, para. 3 of the Commercial Law, when transferring an enterprise, the alienator (seller) and the legal successor (buyer) are jointly and severally liable for all existing obligations of the enterprise, unless otherwise agreed with the creditors. This means that if the buyer has not conducted a legal and financial check, he may face claims for settlement of significant debts that arose before the transaction. The law gives creditors the right to apply to any of the parties for the fulfillment of obligations.
Particular attention deserves unpaid tax debts. According to Art. 19 of the DOPC, the managers, as well as the persons who effectively manage the company, may be held jointly and severally liable for taxes, insurance and interest if it is established that their actions or inactions have led to a reduction in the company's assets to the detriment of public claims. For example, if, prior to the transfer, the firm had assets that were deliberately taken out in order to avoid liabilities, managers may be personally liable for unpaid amounts.
The joint and several liability also extends to the new owner of the company if it is established that he has accepted obligations of which he was not expressly informed. According to Art. 16a, para. 2 of the Commercial Law, in the six-month period after the transfer, any creditor may request security or enforcement of his claims arising before the transaction, and this right is specifically protected by law. If the buyer does not separately manage the passed enterprise during this period, he and the members of the management body may be held liable for damages.
In addition, Art. 87, para. 3 of the DOPC obliges the seller to declare to the NRA all public obligations of the company, failure to comply with this obligation may lead to refusal to enter the transfer in the Commercial Register. For the buyer, this is a risk that can block the business activity of the company until these obligations are settled. In addition, pursuant to Article 102 (4) of the DOPA, any notification with inaccurate data submitted to the NRA is subject to correction within seven days, which may delay the process and lead to additional administrative complications.
Another key risk is related to the possibility of declaring the company bankrupt if its liabilities exceed the assets. According to Art. 608 (1) of the Commercial Law, any person with an interest — including creditors or the new owner — may apply for the opening of bankruptcy proceedings if the company is unable to meet its obligations. This production may result in a sale of the firm's assets to satisfy creditors.
The risk of enforcement is also significant. The NRA authorities have the right to impose security measures such as seizure of bank accounts or foreclosure on real estate of the company. If these measures are in progress at the time of the transfer, they remain in place, which may limit the new owner's ability to use the firm's assets.
To minimize these risks, it is mandatory for the buyer to conduct a thorough inspection of the company, including a review of tax and insurance obligations, before signing the contract of sale. The contract should include clear clauses on the seller's liability in the presence of hidden obligations. In addition, timely notification to creditors and the NRA of the transfer and the negotiation of special conditions for the settlement of obligations can prevent future disputes.
The transfer of a company with obligations requires careful planning, legal expertise and detailed structuring of the transaction in order to avoid serious legal and financial consequences for the parties. The Elan Consulting team provides the necessary support for the successful management of such cases.
Joint and joint responsibility of governorsthe sale of a company in Bulgaria is regulated in the Commercial Law and related normative acts, and is aimed at protecting creditors and ensuring financial stability in the event of a transfer of a company or its enterprise.
According to Art. 15, para. 3 of the Commercial Law, when transferring an enterprise, if there is no explicit agreement with creditors, the alienator and the legal successor are jointly and severally liable for the obligations of the enterprise. That is, creditors can demand fulfillment of obligations from both the seller (alienator) and the buyer (successor), up to the amount of assets that have passed to the buyer. Joint and several liability ensures that debts existing before the sale do not go unsettled.
The members of the management body of the successor shall be jointly and severally liable for the management of the undertaking after its transfer. According to Art. 16a, para. 3 of the Commercial Law, if the managers of the successor do not ensure the separate management of the transferred enterprise within six months from the date of registration of the transfer, they are jointly and severally liable to the creditors. This separate management obligation is intended to protect the assets of the entity from being used for other purposes that may prejudice the rights of creditors.
Additional regulations for joint and several liability are provided for in Article 19 of the DOPC. If the directors or members of the management body of a company fail to comply with their obligations to declare and pay taxes and social security contributions, they may be held liable for these obligations. Their liability covers debts incurred due to default or mismanagement, which led to damage to the budget.
The joint and several liability of governors serves as an additional mechanism to protect creditors. This responsibility also applies in cases of bankruptcy of the company, when the actions or inactions of managers have led to a deterioration in the financial situation of the company.
When selling a company, the buyer should be aware that if the transfer involves significant liabilities or hidden debts, joint and several liability may extend to the new managers of the company. This underlines the importance of legal and financial due diligence prior to the conclusion of the transaction.
The risk of joint and several liability can be minimized by detailed structuring of the transaction and explicit clauses in the contract of sale, which specify the distribution of obligations between the seller and the buyer. In addition, the requirement to notify creditors and reach an agreement with them further limits the risk of future disputes.
The joint and several liability of managers is a powerful tool for guaranteeing creditors' rights and preventing wrongful evasion of obligations. Proper understanding and management of this aspect is key to the successful transfer of a company. The Elan Consulting team can provide the necessary legal and accounting support to minimize all associated risks.
The gratuitous transfer of shares in a Bulgarian company is possible, but it is associated with a number of legal and tax consequences that must be carefully considered. Legislation in Bulgaria, including the Commercial Law, allows the possibility of transferring company shares free of charge, but requires compliance with certain conditions and procedural requirements.
According to Art. 129 of the Commercial Law, the transfer of company shares must be carried out by a contract concluded with notarization of the signatures and contents, which is entered in the Commercial Register. Even when the transfer is gratuitous, it must be supported by documentary justification to ensure that the transaction is valid and complies with legal requirements.
Particular attention should be paid to the tax consequences of the grant. According to the provisions of the Tax and Insurance Procedure Code (DOPC) and the Corporate Income Tax Act (CPA), grant transactions can be treated as disguised donations. This means that the NRA authorities have the right to examine whether a grant transfer is not a means of avoiding taxes or of transferring property in the presence of public obligations. In these cases, the donation may be subject to gift tax under the Local Taxes and Charges Act (ZMDT), unless it is between close relatives who are exempt from taxation.
In addition, in the presence of obligations of the company, the gratuitous transfer may pose a risk to the successor in title. According to Art. 130 of the Commercial Law, the legal successor is jointly and severally liable with the legal entity for the contributions to the capital of the company at the time of the transfer. If the company has outstanding debts to creditors or the state, the new owner may be subject to claims for settlement of these debts.
Additionally, in order to avoid legal and tax problems, it is advisable to draw up a detailed contract that explicitly specifies the gratuitous nature of the transfer, as well as the absence of chargeable obligations on the part of the transferred company. All declarations required by law that there are no unpaid wages, social security contributions and other public obligations must be included in the contract.
In view of the above, the gratuitous transfer of company shares is possible, but requires careful structuring and compliance with all applicable legal and tax regulations. It is advisable for the parties to consult with lawyers and tax specialists to ensure the legality and financial security of the transaction. The Elan Consulting team can provide professional assistance in making grants while minimizing risks and complying with legal requirements.
The accounting of the purchase or sale of company shares of a Bulgarian company should be carried out in accordance with the National Accounting Standards (NSS) and the Accounting Act. This process includes a number of key steps that ensure transparency and compliance with regulatory requirements.
When purchasing company shares, the acquisition costs, including the amount paid and the associated costs (notary fees, commissions, etc.), are accounted for as an investment. According to IAS 32, if the company intends to hold the shares for a long-term period, they are classified as financial assets. In this case, the acquired shares are valued at an acquisition price, which includes all direct costs of the transaction.
In the case of the sale of shares, the proceeds from the sale are recorded at their current sale value. According to Art. 26 of the Accounting Act, the difference between the sale value and the book value of the shares is reflected as a financial result - profit or loss. If the sale results in a loss, it must be reported in the income statement, and if it leads to a profit, it increases the income from investment activity.
There are also specific rules if the company shares are part of the capital structure of the company. When consolidating the financial statements, if the units sold are in a related entity, it is necessary to account for the effects on the equity of the parent entity. The IAS and IAS (International Accounting Standards) provide for different approaches to the valuation of shares, including the use of fair value, which must be substantiated by documentary evidence.
It is important to note that any transaction with company shares must be supported by primary accounting documents, which include the contract of sale, evidence of payments and, if any, documents certifying the registration of the transfer in the Commercial Register.
When accounting for income or expenses from the sale, enterprises should comply with the provisions of the GDPR, which regulate the tax consequences of transactions in company units. According to Art. 37 of the Corporate Income Tax Act (CPA), income from the sale of shares may be exempt from taxation under certain conditions, which must be carefully evaluated by the accounting team.
These processes highlight the need for accuracy and clarity in accounting for equity transactions in order to avoid penalties and misreporting of financial performance. The Elan Consulting team can provide assistance in fulfilling all legal requirements related to these transactions.
Buying or selling a company in Bulgaria involves various expenses, among which notary fees play a major role. According to The tariff for notary fees to the Law on Notaries and Notarial Activities, the notary fee for certifying contracts with material interest is calculated according to the following table:
For example, for a contract with material interest of BGN 20,000, the fee is calculated as follows:
In addition to the notary fees, there are costs for registration in the Commercial Register, which are currently fixed at 30 BGN for electronic filing of documents or 60 BGN for filing on paper. If legal services are used to draw up the contract and check the documents, the lawyers' fees can vary greatly depending on the complexity of the transaction, usually ranging from 300 to 1,500 BGN.
When transferring a company to a foreign person or if the documents are not in Bulgarian, certified translations will be required, which usually cost between 20 and 50 BGN per page depending on the language. If the payment of the transaction price is made by bank transfer, bank fees can vary from 10 to 50 BGN, and for international transfers - even more.
Other possible costs include fees for financial and accounting due diligence, which usually start at BGN 500 for small companies and can reach several thousand BGN for larger companies.
The final amount of all costs will depend on the specific parameters of the transaction and the selected services. Therefore, it is advisable to make a detailed calculation in advance and plan all possible expenses in order to avoid unexpected financial burdens.
