Until 2018 all Bulgarian companies were subject to annual reporting to three different state authorities, no matter whether they had any activity during the reporting period. Firstly, every tax year all companies had to file a corporate income tax return with Bulgarian National Revenue Agency even if there was no tax due. Secondly, they had to submit a declaration for their activity to the National Statistical Institute. And finally, limited liability companies, even dormant ones, were obliged to file with Bulgarian Commercial Register annual financial statements and balance sheets signed by a qualified Bulgarian accountant. Those redundant procedures were very inconvenient, time and cost involving, especially to foreign shareholders of Bulgarian companies.
Fortunately to all foreign investors, from 2018 on, dormant companies in Bulgaria will benefit from a simplified procedure although reporting has not been waived completely. According to the new amendments of Bulgarian Corporate Income Tax Act, legal entities which have not carried any activities during previous year are exempt from the obligation to submit an annual tax return with National Revenue Agency.
The bad news is that such entities are still not 100% relieved from reporting. The obligation to declare the non-activity of the company with the National Statistical Institute (NSI) stays and this declaration should be submitted not later than 30 April 2018. The declaration must be submitted in the relevant NSI department depending on the registered address of the company. It can be submitted personally, online by email or by registered post.
Additionally, in accordance to the new amendments of Bulgarian Accountancy Act, companies that did not carry any activities during previous year are exempt from the obligation to publish annual financial statements and balance sheet with Bulgarian Commercial Register. This circumstance, however, has to be declared by the legal entities by publishing the declaration of no activity with the Commercial Register by 31 March (as an exception to the rule – by the end of June 2020 due to the COVID-19 crisis). There are no state fees for the publishing of the declaration.
The declaration for lack of activity can be filed either by the manager of the company (personally offline or electronically signed online) or by a Bulgarian lawyer, explicitly authorised by the company. It should be noted, that Bulgarian Commercial Register came up with an unambiguous instruction that accountants are not entitled to announce the non-activity declaration with their electronic signatures even if they have a power of attorney given by the company. Online announcements can be filed only by an electronic signature of the company manager or by a Bulgarian lawyer. The good news is that lawyers do not need a notarised power of attorney, a simple POA is quite enough.