Last Updated on October 10, 2023 by Bulgarian attorney
Capital increase of a Bulgarian company
There are various reasons why one should consider increasing the capital of his company. Obvious ones are reputation and credibility. More capital means you are serious about your business. A 2 EUR company capital can be considered too low for businesses that operate in manufacturing, construction, transportation, or other value-added businesses.
Building trust in the digital era is not only Google My Business reviews and FB ads. Building trust can be also business profiles and reports by organizations like Duns & Bradstreet where your financial data can be easily accessed. Duns & Bradstreet might be too much for a digital nomad, however, if you approach big clients or governments, your company financial and capital data will be analyzed in depth.
Capital increase of a Bulgarian company will improve your company image and eventually turn into more sales.
Increasing capital is decreasing tax
Capitalizing profits does not exempt your company from corporate tax obligations, but it can result in savings on dividends tax. In Bulgaria, dividends tax is 5% of the amount remaining after corporate tax has been paid. To illustrate, if your pre-tax profit is 10,000 EUR, and you deduct the 10% flat corporate tax, you are left with 9,000 EUR. The 5% dividends tax is then calculated on this 9,000 EUR, resulting in a modest 450 EUR in dividends tax.
This strategy can prove advantageous, particularly if you are not a tax resident of Bulgaria and face substantial dividends tax in your home country. For example, the dividends tax in France is 34% in 2022. It might prompt you to consider establishing tax residency in Bulgaria.
It’s important to note that capitalized profits are not locked in your accounts; instead, they can be utilized for other purposes related to the development of your company.
How to increase the capital
Given that your company is already established, there’s no need to open a new deposit account. Our team is fully equipped to facilitate a seamless increase in the capital of your Bulgarian company, ensuring a hassle-free process.
The capital of your Bulgarian company can be increased within 5-7 working days for monetary contributions and within a month for non-monetary contributions.
For more details, please get in touch with our team.