Legal system in Bulgaria

Bulgaria has a civil law system that is influenced by the French, Italian and German legal systems. Its substantive civil law is not yet consolidated into a single civil code, although other major areas, such as administrative procedure and criminal law, are codified. As an EU Member State, Bulgaria also applies EU law, both through directly applicable regulations and through national implementation of EU directives.

Enforcement

The enforcement of the laws is generally efficient, with sector‑specific authorities overseeing compliance. Key examples include the Bulgarian National Bank (supervision of the banking sector), the Commission for Protection of Competition (competition and antitrust) and the Commission for Consumer Protection (consumer rights).

Court System

Bulgaria’s court system is divided into two main branches, each operating across three levels. The first branch consists of the judicial courts, which handle civil and criminal matters. These include the courts of first instance (covering civil, commercial, labour and criminal cases) followed by the courts of appeal and the Supreme Court of Cassation.

The second branch comprises the administrative courts, which are responsible for resolving disputes involving public law. Similarly to the judicial branch, they include courts of first instance, appellate courts and the Supreme Administrative Court. Access to the supreme courts is not automatic, with only a limited number of cases progressing to this third tier.

Alongside these branches stands the Constitutional Court, an independent body that rules on issues such as providing binding interpretations of the Constitution of Bulgaria and the separation of powers. Arbitration courts also play a role in resolving civil disputes, including matters involving gaps in contracts or the need to adapt agreements to new circumstances.

Certain cases involving questions of EU law may ultimately be referred to the courts of the European Union, which have jurisdiction over specific matters arising under EU legislation.

Investments in Bulgaria may require various reviews or approvals from national authorities. Whether such clearance is required depends on the sector involved, the regulatory status of the parties, and the competitive conditions within the relevant market. For example, transactions involving financial institutions may require authorisation from the Bulgarian National Bank. Further information on the applicable regulatory review processes is provided in 6. Antitrust/Competition, 7. Foreign Investment/National Security and 8. Other Review/Approvals.

In addition to the foregoing, in 2025 Bulgaria implemented a new framework for foreign direct investment screening. Under this regime, certain investors and transactions must be notified to and receive approval from the newly established regulatory authority before the investment can proceed. The FDI screening regime in Bulgaria is discussed further in 7. Foreign Investment/National Security.

General Business Climate

The business landscape in 2025 remained broadly consistent with previous years. Deal volumes did not experience any notable growth, and activity continued to centre on IT, real estate and energy transactions. The most significant Bulgarian deal of the year occurred in the financial sector. Foreign direct investments rose notably, recording a 20.9% increase compared with 2024. While long‑term drivers such as digital transformation and the green transition continue to support activity in certain sectors, global instability caused by changes in US trade policy, the ongoing conflict in Ukraine, and a challenging macro-economic backdrop marked by elevated interest rates, has created significant downward pressure.

Current indications suggest that investor interest in IT and energy will remain strong, while interest in the healthcare sector is gradually gaining traction. The Bulgarian market continues to be dominated by domestic investors, with foreign participation likely to be limited. However, exceptions remain in the TMT and energy sectors, where international interest is likely to stay comparatively stronger.

Adoption of the Euro

Bulgaria adopted the euro as its official currency on 1 January 2026, a move expected to remove currency‑related risks as the country joins the eurozone. European Commission projections indicate that GDP growth is expected to ease slightly in 2026, slipping from 3% in 2025 to 2.7%. This is largely due to weaker private consumption stemming from slower wage and social transfer growth. The Commission also anticipates that headline inflation will fall from 3.5% to 2.9% in 2026.

The transition to the euro has already had a visible impact on the capital markets as Bulgaria’s main stock index, the Sofia Stock Exchange Index (SOFIX) surged by 14.41% in the first trading week of 2026.

Political Uncertainty

The Bulgarian government proposed a highly unpopular budget for 2026, which triggered massive protests in December 2025 followed by the resignation of the government. The country is currently operating under an extended budget, which carries risks of increased spending and a widening deficit. Preparations are underway for new parliamentary elections, after which the incoming government will be responsible for establishing a new fiscal framework.

Developments in FDI Legislation

As mentioned in 1. Legal System and Regulatory Framework and further detailed in 7. Foreign Investment/National Security, Bulgaria introduced a foreign direct investment screening mechanism in July 2025, implementing Regulation (EU) 2019/452. The framework is aimed at safeguarding national security by reviewing certain foreign investments in sectors linked to critical infrastructure, sensitive technologies, and dual‑use items.

Later in 2025, Bulgaria amended its FDI rules in response to US and UK sanctions imposed on the Russian‑owned energy company Lukoil. Under the updated regime, any acquisition involving Lukoil’s Bulgarian subsidiaries or assets must first undergo a preliminary review by the State Agency for National Security. The transaction may proceed only if both the State Agency for National Security and the Council of Ministers grant formal approval. These steps apply in addition to other regulatory requirements, such as FDI screening and merger control.

Private and Public Companies’ Acquisitions

In Bulgaria, M&A activity is predominantly structured as either share transfers or asset transfers, with acquihire transactions becoming increasingly popular. The market is mostly driven by acquisitions of private companies, as Bulgaria currently has only around 200 publicly listed entities.

Share Transfer v Asset Transfer

Most of the acquisitions in Bulgaria are structured as share transfers, where buyers acquire the target company as a whole, including all of its assets and liabilities. The share‑based structures are especially preferred in sectors where regulatory approvals have been granted to the target company. In these cases, acquiring the shares allows the buyer to retain these approvals without having to transfer or reapply for them.

By contrast, asset transfers involve purchasing selected assets rather than the entire company. This structure is attractive when a buyer is interested in a specific asset but does not wish to assume the broader obligations of the target. Asset deals are particularly common in the Bulgarian real estate sector.

Generally, asset acquisitions tend to be more administratively burdensome, since each asset must be transferred individually, which often requires multiple agreements, registrations, and third‑party consents. Where the buyer acquires a business as a pool of assets, liabilities and factual relations, the asset deal is typically structured as a transfer of a going concern. Such a transfer needs to be executed in a statutory prescribed form and is subject to registration in the commercial registry. It is advisable to assess carefully if an asset deal qualifies as a transfer of going concern or a transfer of distinct assets, since the legal and tax implications of the two structures are different.

Share deals are generally more straightforward, as ownership of the company, and therefore its entire business, is transferred through a single share-transfer document.

Acquihire Transaction

Acquihire structures, where the primary objective is to acquire the talent of a company rather than its assets, are gaining momentum in Bulgaria. This trend is particularly visible in technology‑driven industries, with Bulgaria experiencing a 7% increase in Information and Communication Technology (ICT) specialists within overall employment in 2025.

Minority Investments

Minority investments in Bulgarian companies are typically executed through share transfers, whereby the investor acquires shares from existing shareholders. Asset transfers or acquihire structures are generally unsuitable for minority positions, as they involve isolating specific assets or teams for operational purposes rather than making a passive investment in the company itself.

The regulation of M&A transactions in Bulgaria falls into two broad categories: general regulatory regimes and sector‑specific regulatory regimes.

General Regulatory Regimes

These regimes are applied on a case‑by‑case basis and may affect any transaction, depending on its structure and the parties involved. They include:

Competition law regime

Certain transactions must be notified to the Bulgarian Commission for the Protection of Competition for merger clearance (see 6. Antitrust/Competition).

Foreign direct investment regime

Depending on the investor’s profile and the target’s sector, the transaction may require approval from the Bulgarian Interdepartmental Council on Screening of Foreign Direct Investments (see 7.Foreign Investment/National Security).

Foreign subsidies regime

Where one or more parties receive financial contributions from non‑EU countries, the EU Foreign Subsidies Regulation may require notification and prior approval from the European Commission (see 7.Foreign Investment/National Security).

National security regime

Transactions involving assets or companies designated as strategically important for national security may require additional approval from the State Agency for National Security. This applies to certain assets in sectors such as energy, defence, and healthcare (see 7.Foreign Investment/National Security).

Securities regulatory regime

Companies listed on a recognised Bulgarian stock exchange must comply with additional requirements and notification obligations (see 5. Capital Markets).

Sector-Specific Regimes

These regimes apply when the target operates in a specific regulated sector:

Financial institutions regulatory regime

Acquisitions involving financial institutions, such as banks, require approval from the Bulgarian National Bank.

Investment and insurance regulatory regime

Transactions involving investment firms or insurance companies require approval from the Bulgarian Financial Supervision.

Specific regimes apply to transactions in other regulated sectors, such as energy, telecommunications and others.

In Bulgaria, corporate governance rules differ depending on the company’s legal structure, with the most common being the limited liability company (LLC) and the joint-stock company (JSC). Public companies can only be organised as JSCs.

Limited Liability Companies (LLCs)

For LLCs, governance is managed by the general meeting of shareholders (or sole shareholder) and the managing director(s). Shareholders are responsible for strategic decisions such as appointing or dismissing managing directors, while day-to-day operations are handled by the managing director(s), who are not part of a formal board. Although relatively independent, managing directors must act in good faith, adhere to the company's articles of association, shareholder resolutions, and management agreements (if applicable).

Joint-Stock Companies (JSCs)

JSCs, in contrast, have a more structured governance system. Like LLCs, the general meeting of shareholders holds similar powers. In terms of management, JSCs have either a one-tier structure (a board of directors) or a two-tier structure (a management and a supervisory board). The management or board of directors collectively manage the company, with executive members often holding individual representation powers. The supervisory board appoints and removes management board members, supervises the management activities, and protects shareholders' interests.

Public Companies

Public companies are subject to stricter rules compared to private JSCs. For example, directors of public companies require prior approval from the general meeting for certain transactions. Additionally, at least one third of the members of the board or supervisory board must be independent, meaning they are not closely tied to the company through employment, trade relations, or significant shareholding.

Private Companies

In an LLC, minority investors who hold at least 10% of the shares in the LLC can require the convocation of a general meeting of the shareholders. In a private JSC, shareholders who have for the preceding three months held at least 5% of the shares in the LLC can request the convocation of the general meeting of the shareholders. The Commercial Act confers other rights to the 5% minority shareholders in a JSC, such as the right to propose items on the agenda of the general meeting of shareholders and the right to request the appointment or release of a liquidator of the company.

Public Companies

In public companies, minority shareholders have the following additional rights:

• shareholders holding at least 5% can initiate court actions on behalf of the company if management fails to act and the company’s interests are at risk;
• minority shareholders can require a majority acquirer to purchase their shares following a tender offer if that acquirer obtains at least 95% of the voting rights in the general meeting. The rights of the minority shareholders in public companies are set out in the Public Offering of Securities Act.

Certain foreign investors are required to submit an FDI filing for investments in a Bulgarian company under the Bulgarian FDI screening regime. See 7.1 Applicable Regulator and Process Overview for more information.

Other than that, private companies or the shareholders therein are not subject to disclosure or reporting obligations pertaining to their shareholdings if they are not performing regulated activities. However, it should be noted that the shareholders in an LLC are registered and publicly visible in the Commercial Registry, whereby with respect to a JSC this would be the case if the JSC is solely owned. Furthermore, all companies with foreign shareholders must disclose their ultimate beneficial owners and the entities that exercise direct and indirect control over them.

Public companies are exempt from disclosing their beneficial owners, but they are subject to other disclosures and reporting obligations, eg, changes to the rights attached to separate classes of shares, decisions for issuance of new shares, annulment of shares and capital increases. 

Bulgarian companies usually rely on debt financing provided by banks and other financial institutions, rather than using capital markets. Nevertheless, a Bulgarian company that decides to go public can do so on the Bulgarian Stock Exchange (BSE) main market or the Bulgarian Enterprise Accelerator Market (BEAM) (the Markets in Financial Instruments Directive (MiFID) II small and medium-sized enterprise (SME) growth market). The BEAM’s listing requirements are not as stringent as the BSE main market and so the number of companies that can be eligible for listing on the BEAM is much higher. Respectively, since its start around five years ago, the BEAM market has had almost 20 listings.

Bulgaria’s recent entry into the eurozone is expected to boost interest in Bulgarian’s capital market and foreign investment in general. In fact, in the first two weeks of 2026 (Bulgarian joined the eurozone on January 1st) the Bulgarian stock market index SOFIX showed an 18% growth.

The Public Offering of Securities Act is the main legal instrument that regulates equity capital markets. Its texts are aligned with the EU Prospectus Regulation.

The key listing requirement for equity securities listings on the BSE main market is the publication of a listing prospectus approved by the Bulgarian Financial Supervision Commission (FSC) and published prior to the beginning of a public offer of securities in Bulgaria and/or the admission of securities to trading on a regulated market. 

The prospectus requirement is not applicable in several cases, most notably:

• offers of securities aiming exclusively at qualified investors;
• offers of securities aiming at fewer than 150 persons other than qualified investors; and
• offers of securities whose denomination per unit amounts to at least EUR100,000.

The BSE has created several segments on its main market (eg, premium, standard, etc) and each segment comes with a specific set of additional requirements towards listing on it. For instance, for a company to list its shares on the premium segment, it would need to have five full financial years, to have been listed on the standard segment for at least a year, and to have average monthly turnover of at least EUR100,000.

Listings on the BEAM require a listing memorandum (instead of a prospectus). Entities that can qualify for a listing on the BEAM:

• should have fewer than 250 employees;
• have a net annual turnover of no more than EUR50 million; and
• the total balance value of its assets should not exceed EUR43 million. 

In Bulgaria, foreign direct investment made through investment funds may be subject to screening under the national FDI regime. The regime applies to non-EU investment funds as well as to EU-established funds that are ultimately controlled by non-EU persons or entities, following a look-through assessment of ownership and control. Screening is generally required when a foreign investor acquires at least 10% of the shares or voting rights in a Bulgarian company or makes an investment exceeding EUR2 million, provided the target company operates in a sector relevant to national security or public order. For information on the available exemptions and the criteria applied in conducting the FDI review, see 7.1 Applicable Regulator and Process Overview.

The Bulgarian merger control regime is governed by the Bulgarian Protection of Competition Act (PCA). An investment is subject to notification to the Commission on Protection of Competition (CPC) if the following requirements are met cumulatively.

Firstly, the transaction should amount to a “concentration”, which exists when a permanent change of control occurs in cases of:

• a merger between two or more independent undertakings; or
• acquisition by one or more persons already controlling at least one undertaking, by means of the purchasing of securities, shares or assets, by means of a contract or in any other manner, of direct or indirect control over other undertakings or any parts thereof; or
• the establishment of a joint venture which permanently performs all functions of an economically independent business entity.

Secondly, the following turnover thresholds should be met:

• the combined group turnover of all participating undertakings from activities in Bulgaria for the preceding financial year exceeds BGN25 million (approximately EUR12.78 million); and
• one of the following conditions is present:
1. turnover on the territory of Bulgaria of at least two of the undertakings concerned exceeds BGN3 million (approximately EUR1.53 million) for the preceding financial year; or
2. turnover of the target on the territory of Bulgaria exceeds BGN3 million (approximately EUR1.53 million) for the preceding financial year.

Recently, the CPC has had “call-in” powers to request the submission of a merger filing within six months from completion of a below-the-thresholds transaction if the following cumulative conditions are met:

• the combined turnover of the undertakings concerned on the territory of Bulgaria exceeds BGN25 million (approximately EUR12.78 million) for the preceding financial year; and
• the transaction raises concerns that it may significantly impede effective competition on the relevant market, in particular due to the creation or strengthening of a dominant position.

However, the CPC has not yet used its “call-in” powers.

In addition to the foregoing, parties may submit a voluntary merger filing, irrespective of the turnover thresholds.

Merger clearance should be obtained prior to completion of the transaction. The CPC should be notified by:

• the merging entities, jointly – in cases of mergers between independent undertakings;
• the entity that acquires control – in cases of acquisition of control; and
• the entities creating the joint venture – in cases of joint ventures.

The merger filing should be submitted to the CPC after the contract is concluded, or the bid is publicly announced, or control is gained, but before any steps are taken to implement the transaction. If the CPC requests a filing under its “call-in” powers, it should be submitted within the provided term.

In certain cases, the CPC may assess the concentration before a contract is concluded or a bid is announced, if the parties provide sufficient evidence of their intention to proceed.

Notifications must follow the CPC-approved template and include required documents (such as certificates of good standing and annual financial statements of the undertakings concerned, the transaction agreement, etc). The CPC may also request any additional information necessary for the assessment of the concentration. If any irregularities are found, the notifier will be instructed to eliminate them within seven days, otherwise the initiation of the proceedings will be refused.

The CPC opens merger clearance proceedings within five days of receiving a completed notification and publishes a notice in the electronic register. Within seven days of publication, any interested third party may present information or statements regarding the impact of the concentration on competition.

After opening the proceedings, the CPC conducts a Phase I investigation within 25 business days, extendable by ten business days. After Phase I, the CPC rules that either:

• the transaction does not constitute a concentration;
• the concentration is authorised;
• the concentration is authorised with commitments/conditions;
• it confirms, under its “call-in” powers, that the transaction does not significantly impede effective competition in the relevant market; or
• it launches a Phase II investigation.

A Phase II investigation is launched when:

• the concentration raises serious doubts about significantly impeding competition;
• the proposed Phase I commitments and measures are not appropriate or sufficient, or require a Phase II investigation;
• a specialised state body’s opinion is required;
• there are serious doubts regarding the acquirer’s ownership or the sources of funding for the transaction.

Phase II proceedings last 90 business days with possible extensions of up to 15 days if commitments are proposed, and up to 25 days for cases of legal or factual complexity. After Phase II, the CPC rules:

• to authorise the concentration;
• to authorise the concentration subject to measures for the preservation of effective competition;
• that, when based on the “call-in powers”, the transaction does not lead to a significant impediment to effective competition on the relevant market or imposes behavioural or structural measures; or
• to prohibit the concentration.

The CPC conducts a substantive analysis to determine whether the concentration would significantly impede effective competition, including through the creation or strengthening of a dominant position.

The CPC considers, among others, the relevant market, market shares of the undertakings, effective and potential competition, the economic and financial strength, barriers to entry, alternative supplies and the countervailing buyer power.

The notifying party may be requested to propose measures to preserve effective competition during both Phase I and Phase II investigations. These remedies may be structural, behavioural or a combination of the two, and may take any form.

Structural remedies may include the sale of assets, a requirement to create a new competitor by selling or licensing of IP rights, or divestiture of a standalone business to a suitable purchaser.

Behavioural remedies may include the creation of a “firewall”, prohibition on discriminations, mandatory licensing, transparency (usually in vertical concentrations), prohibition of “retaliation”, and prohibition of agreements with specified parties.

Combined remedies may include divesting certain customer contracts after the transaction (a structural remedy) and behavioural obligations not to engage in abusive practices.

The CPC may prohibit a concentration or condition its approval on commitments if it would result in a significant impediment of effective competition. The CPC’s decisions may be appealed before the Administrative Court – Sofia District by the parties and any third party with a legal interest. Appeals must be filed within 14 days of receipt, or – for third parties – from the date of publication. The first-instance court's decisions are subject to cassation appeal before the Supreme Administrative Court.

If a concentration is made without prior authorisation, the CPC may impose fines of up to 10% of the annual turnover for the preceding financial year. Furthermore, the CPC may prohibit the transaction or order measures to restore efficient competition.

Bulgaria’s foreign direct investment (FDI) screening mechanism is established with the Investment Promotion Act (IPA). The body responsible for FDI screening in Bulgaria is the Interagency Council on Screening of Foreign Direct Investment (FDI Council).

FDIs should be notified and authorised before implementation if the following criteria are met cumulatively:

• the investment qualifies as an FDI;
• the investor is a foreign investor within the meaning of the IPA;
• the investment relates to one of the economic activities explicitly listed in Article 4 (1) of Regulation (EU) 2019/452;
• the investment meets at least one of the statutory thresholds.

An investment will qualify as an FDI if it is aimed at the establishment or maintenance of lasting and direct links between the foreign investor and the entrepreneur to whom, or the undertaking to which, the capital is provided for the purpose of carrying out an economic activity in Bulgaria. This includes investments through:

• the establishment of a new company;
• the effective participation in the management or control of a company carrying out economic activity; or
• the expansion of an existing investment.

The IPA adopts a broad definition of a foreign investor, namely:

• a natural person who is not a citizen of a Member State of the European Union, or a legal entity whose registered office is not located in a Member State, that has made or intends to make a foreign direct investment in Bulgaria;
• legal entities from the EU that are directly or indirectly controlled by a non-EU citizen, or a legal entity registered in a non-EU state;
• legal entities from the EU that:
1. are directly or indirectly controlled by one or more non-EU individuals or legal entities by virtue of a contractual agreement or internal rules of that entity; or
2. make the investment for the benefit of a non-EU person or an entity directly or indirectly controlled by such a non-EU person.

FDI screening is required if the investment relates to one of the areas provided in Article 4 (1) of Regulation (EU) 2019/452, namely:

• critical infrastructure, whether physical or virtual, including energy, transport, water, health, communications, media, data processing or storage, aerospace, defence, electoral or financial infrastructure, and sensitive facilities, as well as land and real estate crucial for the use of such infrastructure;
• critical technologies and dual-use items, including artificial intelligence, robotics, semiconductors, cybersecurity, aerospace, defence, energy storage, quantum and nuclear technologies, as well as nanotechnologies and biotechnologies;
• supply of critical inputs, including energy or raw materials, as well as food security;
• access to sensitive information, including personal data, or the ability to control such information;
• the freedom and pluralism of the media.

An FDI meets the statutory thresholds if at least one of the following criteria is met:

• the investment results in the acquisition of at least 10% of the capital of an enterprise operating in Bulgaria, or the value of the investment exceeds the threshold of EUR2 million;
• the investment results in the acquisition of ownership of at least 10% of the capital of an enterprise operating in Bulgaria and engaged in high-technology activities;
• a new investment is implemented, which exceeds the threshold of EUR2,000,000.

By way of exception, the following FDIs, which fall below the above-mentioned threshold, are subject to FDI screening:

• upon a proposal by a member of the FDI Council who is competent in the sector concerned wherein the investment is to be implemented, in consultation with the representatives of the State Agency for National Security and the State Intelligence Agency;
• any FDI in establishments, activities, enterprises or capital of persons involved in the production of energy products from oil and petroleum in facilities that are part of or adjacent to critical infrastructure;
• any FDI by a foreign investor from Russia or the Republic of Belarus;
• any FDI in relation to which there are indications that it may affect security and public order, where the State Agency for National Security and the State Intelligence Agency make a reasoned request to this effect;
• it is planned by foreign investors where there is a direct or indirect participation of a non-EU state, including where the foreign investor has received significant funding from a government body. An exception applies to certain low-risk countries. Currently, these are the United States of America, the United Kingdom, Canada, Australia, New Zealand, Japan, the Republic of Korea, the United Arab Emirates and the Kingdom of Saudi Arabia. The list can be subsequently amended by the Council of Ministers.

The foreign investor should submit an application for authorisation prior to making the investment. The application is submitted to the FDI Council through the InvestBulgaria Agency (IBA) in accordance with the template in Annex 3 of the IPA, accompanied by information and documents concerning the structure, ownership, financing, and management of the investment. Within 45 calendar days from the date of the application or from the date the inconsistencies of the latter were remedied, the FDI Council adopts a decision whereby it may authorise or prohibit the foreign investment. The investment may also be authorised subject to conditions, such as a reduction in the size of the share capital acquisition, mandatory instructions for the protection of personal data or confidential information, or other restrictions. The term may be extended once by a maximum of 30 calendar days pursuant to a decision of the FDI Council. Failure to issue a decision within the specified time limits is deemed tacit authorisation.

The FDI Council authorises the FDI if it does not affect security or public order, and if there is no likelihood of affecting projects or programmes of interest to the EU.

There are no differentiated assessment criteria for certain types of investment, such as joint ventures or acquisitions by governments.

If the FDI is likely to threaten public order or security, the FDI Council may request remedies and/or commitments to address these concerns such as:

• ownership restrictions – limiting the right to acquire up to 20% of the capital of a company or up to 10% of the capital of a company in high-technology manufacturing;
• management control – retaining special rights in favour of the state upon decision-making within the competence of the general meeting and the management for commercial corporations with a share capital (so-called "golden share") – for transactions under the Privatisation and Post-Privatisation Control Act;
• data protection – instructions for personal data protection, for safeguarding information security or other such security upon proposal by a competent regulatory authority.

The FDI Council may block an FDI by way of a prohibition decision if it deems that the FDI may affect security or public order, or if there is a likelihood that it will affect projects or programmes of interest to the EU.

The FDI Council may also impose a fine of up to 5% of the value of the investment, but no less than BGN50,000, if an FDI is implemented without prior authorisation or contrary to the conditions of a conditional authorisation.

Irrespective of the fine, the FDI Council may impose restrictive measures necessary to ensure security or public order, including change of control, change and/or cessation of activity, suspension of the foreign direct investment and other appropriate measures. These measures shall be applied following negotiations between the foreign investor and an empowered representative of the FDI Council.

The decisions of the FDI Council may be appealed before the competent administrative court within 14 days from their receipt.

Foreign investors whose companies are registered in preferential tax jurisdictions, or who control such companies, are barred from entering or acquiring significant stakes in a wide range of licensed, concession‑based, or state‑sensitive activities in Bulgaria, such as those relating to the banking, insurance, energy and other sectors. They cannot be involved in transactions with state or municipal assets. Moreover, those foreign investors cannot apply for a certificate of investment class A, B, C or a priority investment project. As an exception, companies from preferential tax jurisdictions are allowed to participate when:

• their shares are traded on an EU/EEA regulated market and their beneficial owners are disclosed;
• they belong to a group whose parent company is based in a state with a tax treaty, exchange‑of‑information agreement, or is a Bulgarian resident, with beneficial owners registered;
• they operate in publishing with disclosed beneficial owners, or are tax residents of countries covered by the World Trade Organization Agreement on Government Procurement (WTO GPA), EU bilateral procurement agreements, overseas association rules, or other international trade/economic agreements, with beneficial owners registered.

In addition, the acquisition of companies active in certain industry sectors may be subject to a regulatory review or approval process. In particular, the acquisition of a company in the financial, energy or insurance sector is subject to authorisation from the competent regulatory authority. In the financial sector, natural or legal persons may not, without the prior approval of the Bulgarian National Bank, acquire, directly or indirectly, shares or voting rights in a bank licensed in the Republic of Bulgaria, if as a result of the acquisition their participation becomes qualified or if this participation reaches or exceeds the thresholds of 20%, 33%, or 50% of the shares or voting rights on the shares, as well as when the bank becomes a subsidiary. In the energy sector, energy companies licensed under the Energy Act should seek prior approval from the Energy and Water Regulatory Commission in the event of corporate transformations, such as, among others, merger, spin‑off, and change in legal form. In addition, the owners of such companies should disclose in the annual compliance reports any planned (intended) corporate transformations, disposal of shares representing more than 20% of the capital or sale of part or all of the licensed company’s assets. In the insurance sector, a company acquiring, directly or indirectly, a qualifying holding in an insurance or reinsurance joint-stock company, or directly or indirectly increasing such a qualifying holding, as a result of which the proportion of the voting rights or capital held would reach or exceed 20%, 30%, or 50%, or the insurance or reinsurance joint-stock company would become their subsidiary, shall notify the Financial Supervision Commission in writing of the decision prior to the acquisition, indicating the size of the intended participation.

The Bulgarian corporate taxation operates under a straightforward framework: companies established in Bulgaria are subject to a flat 10% tax on their worldwide income, meaning that both domestic and foreign‑sourced profits are taxed under the same rate. In addition to this, certain expenses, such as in‑kind employee benefits and representation costs, are subject to a separate one‑off 10% tax. To avoid double taxation, Bulgarian companies may claim a foreign tax credit for comparable taxes paid abroad, and in some cases, Bulgaria’s double-tax treaties enable the exemption of foreign‑sourced income, eliminating the overlap entirely.

Foreign companies doing business in Bulgaria are treated similarly but are taxed only on profits attributable to a permanent establishment in Bulgaria, which are also subject to the 10% corporate income tax.

Taxable income is determined by starting with the company’s annual accounting result prepared under International Financial Reporting Standards or Bulgarian Generally Accepted Accounting Principles. This figure is then adjusted through required tax add‑backs and deductions. All forms of business and investment income, including interest, royalties, dividends, and capital gains, are taxed at the same flat 10% rate, and the tax year follows the calendar year.

Bulgaria also allows companies to carry forward tax losses for up to five years, providing a valuable mechanism for offsetting future profits, although losses cannot be carried back. Additional fiscal incentives are available, though they apply only when specific statutory conditions are met.

For larger corporate groups, Bulgaria has implemented the global minimum tax rules. Multinational and large domestic enterprises with consolidated turnover above EUR750 million in at least two of the preceding four years fall under a 15% global minimum profit tax regime. This operates as a top‑up tax, ensuring that the group’s effective tax rate in Bulgaria reaches the required minimum threshold; the turnover threshold determines whether the rules apply, not the tax base itself.

Foreign companies may be subject to withholding tax on Bulgarian source income, including:

• Dividends and liquidation proceeds – 5%. Exemption applies to EU/EEA tax-resident companies, except in cases of hidden profit distribution.
• Interest and royalties – 10%. Exemption applies to EU tax-resident companies, subject to certain conditions.
• Income from financial assets issued by Bulgarian entities, municipalities, or the state – 10%.
• Capital gains from the sale of financial assets issued by Bulgarian entities, municipalities, the state, and immovable property in Bulgaria – 10%.
• Technical services fees – 10%.
• Income under franchise and factoring agreements – 10%.
• Lease of movable property – 10%.
• Lease of immovable property located in Bulgaria – 10%.

Depending on the foreign company’s country of tax residency, Bulgarian withholding tax may be reduced or eliminated under an applicable double-tax treaty, provided the treaty conditions are met. If annual income exceeds EUR256,000, the foreign company must obtain prior approval from the Bulgarian tax authorities before applying for treaty relief.

Bulgaria applies a beneficial ownership test for treaty purposes.

Bulgaria has ratified the Multilateral Convention (MLI) to implement tax‑treaty Base Erosion and Profit Shifting (BEPS) measures.

Bulgarian tax planning commonly focuses on optimising depreciation by aligning accounting and tax rules, thereby maximising tax‑allowable deductions. Companies also structure their intercompany financing carefully, using related‑party debt within the thin‑capitalisation and interest‑deduction limits; any interest exceeding those limits is simply deferred. Loss‑making entities can improve future efficiency by carrying forward tax losses for up to five years to offset later profits.

Intellectual property and royalty flows are often arranged in compliance with transfer‑pricing rules, and in some cases EU exemptions may reduce the cost of cross‑border payments. As Bulgaria does not permit tax‑group consolidation, corporate groups typically rely on internal restructuring or contractual arrangements to achieve planning efficiencies.

In acquisition scenarios, Bulgaria does not offer a formal step‑up in asset basis. However, purchasers can still optimise future depreciation and financing outcomes through careful application of the corporate income tax rules. Cross‑border investors also frequently rely on Bulgaria’s network of double-tax treaties to reduce withholding tax and improve the overall tax burden on outbound payments.

Bulgaria generally taxes capital gains earned by foreign investors, as most disposals, such as sales of non‑listed shares, Bulgarian financial instruments, or Bulgarian real estate, are subject to a 10% tax. However, only gains realised from securities listed on regulated markets within the EU or EEA are exempt from this rule.

Foreign investors may, however, benefit from reduced taxation where an applicable double-tax treaty provides relief, as the treaty terms can override the domestic rules. Nevertheless, structuring an investment through a so‑called “blocker” corporation does not offer any special capital‑gains advantages in Bulgaria. A Bulgarian holding entity is taxed in the same manner as any other company and pays the standard 10% corporate income tax on its gains.

Bulgaria applies transfer-pricing rules that follow the Organisation for Economic Co-operation and Development (OECD)’s arm’s‑length standard, ensuring that transactions between related parties (particularly in a cross‑border context) reflect market‑based values. In situations where such related‑party dealings occur, companies are required to prepare supporting documentation to demonstrate compliance with these principles.

The country’s tax framework also incorporates a comprehensive set of anti-tax abuse measures. These incorporate both general and specific anti‑avoidance rules that stem from the EU anti‑tax avoidance directives, giving the authorities broad powers to counter arrangements considered artificial or primarily tax‑driven.

In addition, Bulgaria has implemented detailed anti‑hybrid rules, including provisions addressing reverse hybrid mismatches, to prevent companies from exploiting differences in tax treatment between jurisdictions.

Further safeguards are embedded in the tax‑treaty network through Bulgaria’s adoption of the MLI, which introduces treaty‑level anti‑abuse mechanisms such as the principal‑purpose test and measures aimed at preventing artificial avoidance of permanent establishment status.

Employment relationships in Bulgaria are governed by statutory legal regulations, which are strongly influenced by EU legislation, individual employment contracts and, where applicable, collective bargaining agreements. These regulations are designed to protect employees, who are considered the weaker party in the employment relationship. Bulgarian courts also tend to favour employees in employment-related disputes.

The Bulgarian Constitution guarantees employees the right to form trade unions, and employers the right to establish organisations that protect their collective interests. Employees are also entitled to elect their representatives, who are responsible for representing their interests in cases specified by law. Collective bargaining is a key mechanism for negotiating more favourable working conditions than those set out in the law, particularly in industries with traditionally lower pay or poorer working conditions, such as transport and construction. This mechanism is less commonly used in the technology sector.

Employers must provide equal pay for the same work, or for work of equal value, regardless of protected characteristics such as sex, race, nationality, religion, disability, etc. They must also ensure safe and healthy working environment, which includes assessing working conditions (through an occupational health service provider), conducting trainings, and organising medical examinations.

In Bulgaria, employee compensation consists of two main components: a basic salary and additional remunerations. The basic salary is a fixed amount that the employee receives each month. The additional remunerations may either be statutory, provided by law, or discretionary (offered at the employer’s discretion) and performance-based. An example of a statutory additional remuneration in Bulgaria is the remuneration for length of service and professional experience. It is calculated at 0.6% of the basic salary for each year of relevant service and is paid monthly, along with the basic salary. Performance-based bonuses, food vouchers, transport allowances, and sports cards are commonly provided discretionary benefits. The frequency and eligibility criteria for these benefits are usually defined in the employer’s policies. Equity compensations are typical for companies in the technology and the financial services sector, as well as in companies backed by private equity (PE) or venture capital (VC) investors.

As part of the integration process following a transaction, employee compensation is usually aligned with the compensation policies and practices of the new employer. In most cases, this requires the employee’s consent. The new employer may unilaterally withdraw or reduce only non-contractual discretionary benefits. However, in cases where the transaction results in an automatic transfer of employment (eg, Transfer of Undertakings (Protection of Employment) (TUPE)-like transfers), any such withdrawal or reduction by the employer, even if it pertains to non-contractual and discretionary benefits, may be considered a substantial deterioration of the employee's working conditions. This would entitle the employee to terminate the employment contract without notice. Therefore, such measures should be taken with caution, if at all.

Bulgaria has transposed the Acquired Rights Directive, providing safeguards for employees' rights in the event of business transfers, similar to the TUPE regulations. Depending on the structure of the transaction, it may or may not trigger an automatic transfer of employment.

Transactions structured as a transfer of a going concern (or part thereof) or an asset deal will typically trigger an automatic transfer of employment. In such cases, the employment relationship of the affected employees continues with the buyer as the new employer under the same terms and conditions. No specific “transfer” agreement needs to be signed with the employees, as the transfer occurs automatically by operation of law. No specific payments related to the transaction are due to employees. The automatic transfer of the employees should be preceded by a process of providing information and in some cases, carrying out consultations with the trade unions and the employees’ representatives, at least two months before the transfer date.

Transactions structured as a share deal do not involve a change of employer (as the legal entity of the employer remains the same) and do not trigger an automatic transfer of employment. Generally, there are no specific implications for employees – the employment relationship continues as it is. There are no specific information or consultation requirements, unless a collective bargaining agreement or individual employment contracts address changes in the employer's ownership and impose certain obligations on the employer.

In Bulgaria, intellectual property (IP) may constitute a relevant factor in the FDI screening process. Part of the information required by the competent authority concerns whether the Bulgarian target company, as well as other legal entities of the target corporate group located in other EU Member States, hold patents or other IP rights related to national security or public order. Such rights may include those related to critical infrastructure, critical technologies, or critical raw materials. The criticality of a patent is determined by the extent to which the companies depend on licences for it.

The Bulgarian FDI screening framework entered into force in July 2025. At present, there is no official guidance or established administrative or judicial practice regarding its application. It therefore remains difficult to assess how the competent authority will apply IP-related criteria in practice.

Bulgaria is generally regarded as providing solid and modern intellectual property protection, with a legal framework that is largely aligned with European Union law and aligned with major international treaties.

Copyright protection arises automatically upon creation. Patent protection can be obtained through national filings or via the European Patent Office, while trade marks and designs may be registered either nationally or on an EU-wide basis. Registration timelines are broadly comparable to those in other EU Member States.

Enforcement mechanisms are well established. Rights' holders may pursue civil, administrative and, in certain cases, criminal remedies. Border measures are also available, and specialised bodies co-operate in anti-counterfeiting and online enforcement efforts.

There are no industry sectors in which IP protection is systematically unavailable. Limitations mainly arise from subject-matter exclusions under EU law. Patent protection is not available for inventions that are contrary to public order or morality, methods for treating humans or animals, and plant and animal varieties. While software as such is not patentable, computer-implemented inventions that produce a technical effect may be protected. Pharmaceutical patents and supplementary protection certificates are recognised.

Bulgarian patent law allows compulsory licensing only in limited and exceptional circumstances, such as non-use of an invention, refusal to license on fair terms, or when required to protect the public interest.

Following EU principles, Bulgarian copyright law only protects works created by natural persons. Therefore, purely AI-generated content is not eligible for copyright protection and is typically safeguarded through trade secrets and contractual arrangements.

No secondary political or administrative authorisation is required to obtain, exploit, or enforce intellectual property rights in Bulgaria.

The main data protection legislation in Bulgaria consists of Regulation (EU) 2016/679 – the General Data Protection Regulation (GDPR) and the Bulgarian Personal Data Protection Act (PDPA), which are supplemented by sector-specific rules applicable to, inter alia, employment, healthcare, electronic communications and public sector processing. Compliance is supervised by the Commission for Personal Data Protection (CPDP).

The GDPR applies in Bulgaria in the same way as in other EU Member States and may extend to foreign investors even where no local establishment exists. Processing falls within the scope where goods or services are offered to individuals in Bulgaria or where their behaviour is monitored. As a result, non-EU investors frequently become subject to Bulgarian and EU data protection requirements through cross-border operations and digital platforms.

The CPDP is authorised to conduct investigations, issue binding instructions and impose administrative fines. In practice, however, enforcement has historically been moderate. To date, sanctions imposed have generally remained well below the statutory GDPR maxima and are usually proportionate to the scale and gravity of the infringement. High-value penalties and aggressive multiplier effects remain uncommon, particularly outside cases of repeated or systemic non-compliance.

Nevertheless, data protection compliance is an area of growing regulatory focus. Foreign investors are expected to maintain a baseline level of GDPR compliance, including appropriate documentation and internal governance. While Bulgaria is not generally viewed as a high-risk enforcement jurisdiction, non-compliance may still result in administrative sanctions, corrective measures, and reputational consequences.