Business Forms in Bulgaria: EOOD vs OOD vs DPC vs AD

Introduction

Choosing the right legal structure is one of the most consequential decisions a foreign entrepreneur makes when entering Bulgaria. Get it right and the structure supports your business through growth, investor rounds, and eventual exit. Get it wrong and you face expensive restructuring, tax inefficiency, constraints on bringing in investors, or an inability to implement employee equity programmes — all of which become harder to fix as the company grows.

Bulgarian company law offers four principal corporate forms for commercially active businesses: the EOOD (single-owner limited liability company), the OOD (multi-owner limited liability company), the DPC (Variable Capital Company, introduced in 2023), and the AD (joint-stock company). Each was designed for a different profile of business, and each has specific advantages and limitations that matter in practice.

The vast majority of foreign entrepreneurs in Bulgaria register either an EOOD or an OOD — the two forms are structurally identical apart from the number of owners, and together they account for the overwhelming majority of new business registrations in the country. The DPC is a newer form that is gaining rapid traction among technology startups and venture-backed projects. The AD is used primarily for large-scale capital market operations, regulated financial entities, and industrial groups.

This guide explains what each form is, who it is designed for, what its practical advantages and limitations are, and how to choose between them. It also covers the tax context that applies across all forms — including Bulgaria’s 10% corporate income tax and 5% dividend tax, which are the lowest rates for both in the EU — and provides worked examples of the right structure for common business scenarios.

The Four Main Business Forms — Overview

EOOD — The Single-Owner Limited Liability Company

What Is the EOOD and Who Is It For

The EOOD (Еднолично дружество с ограничена отговорност) is Bulgaria’s most commonly registered corporate form among foreign entrepreneurs, and for good reason. It is structurally simple, inexpensive to administer, and provides full limited liability with a single owner in complete control. There is no requirement for partners, co-founders, or multiple signatories.

The EOOD is the default choice for the following business profiles:

Key Advantages of the EOOD

• • Single owner — complete control without shareholder disputes or voting requirements
• • Limited liability — personal assets fully protected from company obligations
• • Minimal administrative burden — no annual general meeting, no partners’ assembly required
• • 100% foreign ownership permitted — no Bulgarian co-founder or partner required
• • Remote registration — can be registered via Power of Attorney without the owner being present in Bulgaria
• • 10% corporate income tax on profits — the lowest in the EU
• • 5% dividend tax on distributions — the lowest in the EU

Limitations of the EOOD

• • Cannot have more than one owner — adding a second shareholder requires converting to OOD
• • Less suited for external investment — investors typically want equity stakes, which requires a restructuring
• • Employee equity programmes are structurally awkward — ESOP arrangements require complex workarounds
• • Banks and counterparties occasionally prefer multi-owner structures for larger contracts, though this is uncommon

OOD — The Multi-Owner Limited Liability Company

What Is the OOD and Who Is It For

The OOD (Дружество с ограничена отговорност) is structurally identical to the EOOD in every respect except one: it has two or more owners. The minimum share capital is the same (2 BGN, approximately €1), the tax treatment is identical, the liability protection is the same, and the administrative requirements are similar. The key difference is governance: the OOD requires a Partners’ Assembly (General Meeting of Shareholders) and formal procedures for changes to ownership structure.

The OOD is the natural choice when two or more people are building a business together:

Key Advantages of the OOD

• • Accommodates multiple owners with flexible share splits — any percentage division is permitted
• • Well understood by Bulgarian banks — straightforward account opening process
• • Familiar structure to international clients and counterparties
• • 100% foreign ownership permitted — all owners can be foreign nationals
• • Same tax advantages as EOOD — 10% corporate tax, 5% dividend tax
• • Convertible to other forms if business needs evolve

Limitations of the OOD

• • Changes to ownership structure require a notarial act and Commercial Register filing — time and cost
• • Not optimised for venture capital investment — each new investor requires a formal capital increase procedure
• • ESOP arrangements are possible but require contractual workarounds rather than a native legal mechanism
• • Partners’ Assembly resolutions required for major decisions — coordination required between owners

DPC — The Variable Capital Company for Startups

What Is the DPC and Why Was It Created

The DPC (Дружество с Променлив Капитал — Variable Capital Company) is a corporate form introduced into Bulgarian law in 2023 specifically to serve the needs of technology startups, venture-backed companies, and internationally co-founded innovation businesses. It does not exist in most other EU member states, and its creation was the result of direct consultation between the Bulgarian legislature and the startup ecosystem.

The DPC was not created because the OOD is a bad structure. The OOD is excellent for the majority of businesses. It was created because the OOD was designed in an era before venture capital, before ESOP programmes, and before companies needed to change their cap table multiple times per year. Every time a startup raises a new round in an OOD, it requires a notarial act, a Commercial Register filing, and a wait for the registry to process the change. Do this three or four times in two years and the administrative burden becomes a material operational constraint. The DPC eliminates most of this friction.

The DPC’s defining feature is its variable capital mechanism. Instead of a fixed registered capital amount, the DPC’s Articles of Association define a minimum and maximum capital range. New shares can be issued to investors or employees within this range without triggering a formal capital increase procedure. The change simply moves the actual capital to a different point within the defined range — clean, fast, and without registry delays.

Key Advantages of the DPC

Variable Capital — Frictionless Investment Rounds

In an OOD, every share issuance to a new investor requires: a notarised amendment to the Articles of Association, a Commercial Register filing, and processing time. In a DPC, new shares can be issued within the variable capital range without any of these steps. This is not a minor convenience — for a company raising multiple rounds in rapid succession, the difference in time and legal cost is substantial.

Native ESOP and Vesting Support

The DPC was explicitly designed to support employee equity programmes. An option pool can be reserved in the Articles of Association at formation. Shares can be granted to employees with vesting schedules and cliff provisions embedded directly in the share grant agreement — enforceable under Bulgarian law without contractual workarounds. This makes the DPC’s employee equity capability legally clean and credible to the employees receiving it.

Multiple Share Classes

The DPC permits multiple classes of shares: ordinary shares for founders, preference shares for investors (with priority rights, anti-dilution provisions, and information rights), and ESOP shares for employees. This multi-class structure is standard in US and UK venture deals and is precisely what international investors expect to see.

Convertible Instruments

Convertible notes and SAFEs — the standard instruments for pre-money seed financing — can be structured within the DPC framework. This makes Bulgaria a viable jurisdiction for early-stage financing using the instruments that angel investors and seed funds use across the US and Europe.

DPC Size Limitations — A Critical Constraint

The DPC is designed for small and medium-sized enterprises. Bulgarian law imposes size thresholds, and a company that exceeds them is obliged to convert to an OOD or AD. This is not a flaw — it reflects the DPC’s intended purpose as a startup vehicle — but it must be understood before registration.

The DPC for Foreign Founders

The DPC is accessible to foreign founders on exactly the same terms as any other Bulgarian corporate form. There is no requirement for a Bulgarian co-founder, no minimum local shareholding, and no restriction on a foreign national serving as the sole director. A DPC can be 100% owned by a foreign individual, a foreign company, or a multinational group of co-founders. Registration can be completed remotely via Power of Attorney — the same process as for an EOOD or OOD.

AD — The Joint-Stock Company

What Is the AD and When Is It Required

The AD (Акционерно дружество) is Bulgaria’s joint-stock company — the equivalent of a German AG, a French SA, or a UK plc. It is the most complex corporate form available in Bulgarian law and is used for a specific set of business profiles where its particular features — publicly tradeable shares, a formal supervisory board structure, and the ability to issue bonds and other capital market instruments — are necessary.

For the vast majority of foreign entrepreneurs, the AD is not the right choice. Its administrative complexity, higher minimum capital requirement, mandatory auditing obligations, and governance requirements represent a significant overhead that is only justified when the specific capabilities of the AD are actually needed.

The AD is appropriate for:

Key Advantages of the AD

• • Publicly tradeable shares — the only Bulgarian form that can list on a stock exchange
• • Highest credibility with institutional investors and large corporate counterparties
• • Bond and debt instrument issuance capability
• • Formal two-tier governance (Management Board + Supervisory Board) — suits large operations

Limitations of the AD

• • Significantly higher minimum share capital than OOD/EOOD/DPC
• • Mandatory annual audit — cost and administrative obligation
• • Complex corporate governance — Management Board, Supervisory Board, or one-tier board with mandatory composition rules
• • Higher ongoing administration costs — legal, accounting, and compliance overhead
• • Not necessary — and disproportionately complex — for the vast majority of SME and startup profiles

Comparative Analysis Across All Four Forms

Minimum Capital Requirements

Administrative Complexity

Suitability for Investment and Fundraising

Overall Suitability Ratings

Choosing the Right Form — Common Scenarios

Recommended Structure by Business Profile

The table below maps the most common foreign entrepreneur scenarios to the recommended corporate form, with the reasoning behind each recommendation.

Practical Examples — Three Worked Examples

Conversion Between Forms

Bulgarian law permits conversion between corporate forms, and this is more commonly used than might be expected as businesses evolve. The most frequent conversions are: