Bulgaria Market Entry
- Market entry
- Forms and conditions of operation on the market
- Marketing and Communications
- Issues of intellectual property protection
- Public procurement market
- Payment terms, payment ethics and resolution of commercial disputes
- Visas, fees, specific conditions of travel to the territory
- Employment of citizens from the Czech Republic
- Fairs and events
Basic information for entering the market
According to cheeroutdoor.com, the Bulgarian market is globalized, which also brings strong competition. Quality goods are taken for granted, the main thing is a competitive price supplemented by favorable payment terms. The supplier must meet all logistics requirements, such as delivery dates, labeling and packaging of goods, etc. According to Euromonitor International, the Bulgarian distribution market continues to be mainly supported by traditional and often independent grocery stores and shops, the number of which is estimated at approximately 35,000. Gradually however, modern supermarkets and chains are gaining a larger market share, of which there were around 4,200 on the market in 2016.
- Moody’s Baa1 (Stable)
- S&P BBB (Stable)
- Fitch BBB
Distribution and sales channels
The infrastructure of the sales network is gradually improving. In addition to the capital city of Sofia and regional cities, supermarket and hypermarket chains are also expanding into smaller towns of regional importance, although for now most of the shops in smaller towns are owned by small entrepreneurs and their range of goods and services is at a lower level. Bulgarian chains:
- METRO Cash&Carry
- CBA Bulgaria
- dm Bulgaria
- Lilly Drugstore
– hobby markets
- Mr. Bricolage
In the larger cities, and especially in Sofia, Plovdiv, Varna and Burgas, a number of large and modern shopping centers have been built in recent years, which are comparable to similar centers in other developed countries.
Several gas station networks of multinational companies Shell, OMV, LukOil, as well as Greek and Bulgarian companies are currently operating in the fuel market in Bulgaria. Separately, networks of gas filling stations are also expanded here. For economic reasons, a significant part of passenger cars in Bulgaria, estimated at 20-30%, are converted to gas propulsion, a significant majority of which are LPG propulsion. The unified petrokaret payment system is not yet widespread in Bulgaria. At reputable fuel distributors, it is possible to pay with international credit cards VISA, MC, etc., some distributors offer their own credit cards intended for the purchase of fuel and services (e.g. Shell and OMV).
The expansion of foreign chains trading in fast-moving, black and white goods, as a result of which during the years 2009 to 2010 not only the number of stores in the whole of Bulgaria increased quite significantly, but also the range of products offered, led to the promotion of a new distribution model based on prioritizing the construction of own logistics centers before using the services of external logistics companies.
The chains Billa, Kaufland, Lidl and Technopolis were most inclined to the model of their own logistics platforms. Their central logistics bases are situated mostly within reach of the capital city of Sofia near the key traffic arteries, namely the Trakija highway (E 80) connecting Sofia to Plovdiv and the Hemus highway (E 772) towards Varna. Land near the town of Elin Pelin, located less than 30 km east of the capital, within reach of both mentioned highways, became a popular place for building such centers. Other favorable places for locating logistics centers are the industrial zones around Plovdiv, where, among others, the logistics platform of the Kaufland chain is located, which has an area of 67,000 square meters. m² so far the largest center of its kind in Bulgaria.
The local chain Fantastiko applies a dual distribution model (i.e. its own logistics infrastructure combined with the use of the services of other logistics companies). The mentioned model is more advantageous mainly for the reason that Fantastiko mainly operates a network of smaller stores such as corner shops or convenient stores.
The third logistics model is used by chains that do not have their own logistics centers. This logistic model is used, for example, by the Lithuanian T-market.
Retail chains are generally one of the biggest users of logistics space in Bulgaria. The above-described tendency to prefer investments in the construction of own logistics centers over renting already built objects leads to a decrease in the rental prices of the areas in question. The average rent for space in industrial parks in Sofia is around 4 euros/m² per month, while in other cities it varies between 1.5-3.0 euros/m² per month. As a result of the above, there is a slowdown in investment in objects of this type, which, at least for a certain period of time, will cause demand and supply to equalize and, therefore, stabilize their rental prices.
Customs system and export control
- Agency “Celnice” (Agencia “Mitnici”), www.customs.bg
- Interministerial Commission for Export Control and Non-Proliferation of Weapons of Mass Destruction – falls under the Ministry of Economy of Bulgaria, http://www.exportcontrol.bg
- Ministry of Economy of the Republic of Bulgaria – responsible for trade agreements, compliance with obligations as a WTO member, etc., www.mi.government.bg
Information on customs procedures can be obtained here.
Documents for goods and other information here.
Forms and conditions of operation on the market
In Bulgaria, according to the Ministry of Economy, the following main forms of action on the market are most often used:
- a limited liability company (OOD, Дружество с облачные опросмотров) or a one-person limited liability company (EOOD, Еднолично дружество с оборудование опользовать)
- joint-stock company (AD, Акционерно дружество) or single-member joint-stock company (EAD, Еднолично акционерно дружество)
- sole trader (ET, Едноличен търговец)
Other legal forms listed in the Commercial Code are – public company (SD), limited partnership (KD) and limited partnership with shares (KDA). Since 2007, the OZ also enables the creation of a European company according to Directive (EO) 2157/2001 (Sociatas Europea/SE), which is, however, rarely used in practice.
The main advantages and disadvantages of the mentioned forms of action:
- limited liability company
+ partners are not directly responsible for the company’s obligations to creditors and in the event of bankruptcy they will only lose their share in the company; the minimum amount of capital is BGN 2; it is possible to increase the capital and recruit additional partners.
– the company registration fee is significantly higher than for ET; the liquidation of an OOD or EOOD is associated with a liquidation procedure that is lengthy and complex; partners must expect additional bank fees for setting up an account for depositing capital.
- joint stock company
+ shareholders do not directly guarantee the company’s obligations with their assets; if the company is declared bankrupt, the shareholders only lose their share of the capital; the company’s flexibility allows assets to be valued quickly and easily.
– a more complicated procedure for establishing a company; minimum capital of 50 thousand BGN; higher registration fees.
- independent entrepreneur
+ the simplest legal form, does not require capital or partners; the liquidation procedure is relatively simple; things acquired by the spouse/entrepreneur during the marital union for business and invested in it (e.g. inventory, machines) remain his personal property and are not jointly owned by the spouses.
– the entrepreneur is liable without limitation for the obligations he has accepted, i.e. with his entire property, including personal property; at the end of the year, the entrepreneur must pay social and health insurance and taxes.
The procedure for setting up the mentioned forms of business and the necessary documents can be found here.
Representation – foreign representation
The registration of a representative office (representative office) of a foreign company is carried out at the Bulgarian Chamber of Commerce and Industry in Sofia in accordance with the Law on Investment Promotion. The time required for the registration of a foreign representative office ranges from 1 to 3 days. The following documents are submitted for registration:
- application for office registration (the application and instructions for filling it out can be found on the website ),
- company registration in the Czech Republic (excerpt from the commercial register),
- official power of attorney for the person authorized to act on behalf of the company,
- statement of the company’s management on the establishment of a representative office in Bulgaria,
- an original or certified power of attorney authorizing a person to register and manage a representative office in Bulgaria specifying the scope of powers,
- certified signature specimen of the person representing the company in Bulgaria,
- confirmation of payment of the representative office registration fee (EUR 100) in cash or by transfer to the BCCI account,
- completed registration card at the Bulgarian Chamber of Commerce and Industry (BCCI).
Contact: Bulgarian Chamber of Commerce and Industry, Parchevitch Street 42, Sofia, phone: +359 2 9878884, 9811632, fax: +359 2 9873209, e-mail: [email protected], www.bcci.bg.
Legal entities registered abroad, or foreign entrepreneurs (natural persons) can register a branch of their company in Bulgaria. The branch is not a legal entity according to the Bulgarian legal system, but it must keep accounting records independent of the parent company and draw up a balance sheet and income statement independently, i.e. its own independent financial statements. No capital is required to establish a branch. The registration of a branch of a foreign legal entity is carried out at the Registration Agency in accordance with the Bulgarian Commercial Code.
In accordance with the Bulgarian Commercial Code, joint ventures may take the form of any commercial company (joint-stock company, s.r.o., limited partnership, public company, etc.) that may be established in Bulgaria in accordance with this law. The competent institution for joint venture registration is the Registration Agency and its subordinate Commercial Register. When registering a joint venture, the following shall be attached to the uniform application form:
- social contract
- signature patterns of statutory representatives of the joint venture
- the founding document of the company registered in the Commercial Register
- relevant concessions in case the joint venture carries out the concessioned activities
Detailed information regarding joint venture registration in Bulgaria can be obtained here. Foreign companies can also use the services of the state agency InvestBulgaria.
Marketing and communication
Despite the COVID-19 pandemic, advertising costs in Bulgaria fell by only 1.4% in 2020 compared to 2019 to around BGN 455m (€232m). In 2021, advertising costs in Bulgaria should increase again and exceed the level of 2019 with an estimated volume of BGN 502 million (EUR 257 million, approx. +10%).
According to the BACA association, television led in 2020 as well (state and private channels, 54%, approx. 247 million BGN, -5% year-on-year), followed by digital media (30%, e.g. Facebook and Google, approx. 127 mil. BGN, +17%), outdoor advertising/billboards, radio and print (dailies 24 Chasa, Trud, Kapital, Monitor, Standart, Sega, Dnevnik (only in electronic form), weekly Ikonomičeski život). Price ratios and advertising methods correspond to conditions in the Czech Republic. According to available information, digital media are strengthening, while advertising, television, radio and print are weakening cinema.
According to BACA’s forecast, in 2021 digital media will once again grow the most (about 13% to a 32% share), television should defend its position with 54%. Print should lose 10%, other media may recover their pre-pandemic position, with outdoor advertising performing best with an 8.2% share of the total. Media inflation in 2021 should be 10% for TV and 13% for digital media. The outlook shows an expected increase in advertising spending in 2023 to approximately BGN 590m, with TV expected to maintain a share of more than 50%, digital media to account for 32.5% and other channels excluding print also to grow.
For orientation, we provide a link to the ranking and contacts of digital marketing companies in Bulgaria from www.clutch.co or www.themanifest.com. The BACA website can provide further information.
According to a survey among companies, the most used digital media for advertising purposes in Bulgaria are Facebook (91%), Instagram (74%), LinkedIn (63%), YouTube (57%) and Twitter (18%). Of the key indicators of effectiveness, the audience’s engagement with the content, the number of impressions, the number of followers, the growth of brand awareness, etc. are the most used. The content of the company is most often created to acquire new customers, increase brand awareness, improve the image, and retain customers. The most common platforms for content distribution are social networks, own pages, newspaper websites.
In recent years, the Embassy has collaborated on several projects with one of the largest marketing agencies on the market – M3 Communications Group Inc. M. Bechara. Participation in international fairs and exhibitions is still an effective opportunity for promoting products on the Bulgarian market.
Issues of intellectual property protection
Intellectual property is protected at a standard level in accordance with EU rules. Bulgaria has faced considerable criticism in the past for violating intellectual property rights, especially in the field of film, music and game production. In connection with the entry into the EU and pressure especially from the USA and international organizations, there was a significant reduction in illegal activities.
Institutions responsible in Bulgaria for industrial property, copyrights and related rights include:
- Patent Office of the Republic of Bulgaria
- Ministry of Justice of the Republic of Bulgaria
- Council for the Protection of Intellectual Property at the Ministry of Culture of the Republic of Bulgaria
- Center for Intellectual Property (Center for Intellectual Property)
- National Portal for Intellectual Property
Applicable legal norms for the protection of intellectual property:
- Competition Protection Act, State Gazette (SV), No. 39, 1991
- Act on Patents and Registration of Utility Models (SV No. 64/2006, in force since November 9, 2006)
- Act on the Protection of New Plant Varieties and Animal Breeds, SV, No. 84, 1996
- Industrial Design Act, SV, No. 81, 1999
- Act on Trademarks and Geographical Indications, SV, No. 81, 14/09/1999
- Act on Topology and Integral Schemes, SV, No. 81, 1999
- Act on Genetically Modified Organisms, SV, No. 27, 2005
- Copyright and Related Rights Act, SV, No. 56, 1993
Procedure for suspected infringement of intellectual property rights in Bulgaria
- use of out-of-court dispute resolution ( APC )
- in the event of infringement of patent rights or trade secrets, refer to the relevant national court
- in case of counterfeit products with a trademark, contact the portal of the General Directorate “Taxation and Customs Union”
- in case of misuse of the trademark on the EU portal for intellectual property
- in case of violation of the rules of geographical indication of origin to the competent national authority.
Public procurement market
Public procurement system in Bulgaria
- Contract amount up to BGN 30,000 (EUR 15,385) – the state institution issues the public contract itself and subsequently selects from the 3rd bids. In the case of eminent interest and a favorable price, there is a fairly real chance of success.
- Contract amount over BGN 30,000 – Public Procurement Agency ( Agentsia za obshestveni porachki ) lists the public contract publication in the press and on the agency’s website, the menu is also in English, but the contract entry is only in Bulgarian. Any company from the EU can participate in the tender process. Company registration in Bulgaria is not necessary, but we are solving the problem of recognizing the digital identity and signature of Czech companies exposed in the Czech Republic. Greater chance of success: participating with a local partner.
Login and registration to the AOP system is available here.
Financing of public contracts usually comes from the state budget, EU funds and international organizations.
Competent authorities for public procurement:
- Public Procurement Agency
- Audit Court of the Republic of Bulgaria
- Agency for State Financial Control
- Commission for the Protection of Economic Competition
- Supreme Administrative Court
The public procurement process in BG continues to be quite often non-transparent. It is also characterized by an excessive number of canceled tenders, very often for very dubious reasons, tenders are contested with lawsuits immediately from the moment they are announced, and in addition, the current law allows tenders to be challenged with lawsuits even by such entities whose subject of activity is not at all related to the subject of the public contract. The government is trying to solve the situation with an amendment to the Public Procurement Act, severely limiting the range of entities authorized to challenge tenders with lawsuits.
For these reasons, some important large tenders are not closed even for several years.
Interesting data regarding the volume of orders on the market, including sector focus, rating, etc. can be found here.
Payment terms, payment ethics and resolution of commercial disputes
As with any international transaction worldwide, the method of payment is determined by the level of confidence in the buyer’s ability and willingness to pay. For the first few transactions/deliveries and when the importer is not yet known, full payment in advance is strongly recommended. All standard payment methods are common in Bulgaria.
Due date of invoices
Legal regulations on payment terms in Bulgaria for commercial transactions are set out in the Commercial Law. The relevant provisions of the Commercial Act transpose EU Directive 2011/7/EU on combating late payments in commercial transactions.
According to the Commercial Act, unless the parties agree otherwise, the due date is 14 days from the date of delivery of the invoice or other request for payment. In the case of the delivery of goods, when the buyer has the right to inspect and/or take over the goods, the payment period begins after the end of the inspection, or on the day of acceptance.
According to Bulgarian law, the parties to a business transaction can set a maturity period in the contract, but it should not exceed 60 days. A longer maturity period can be specified in the contract exceptionally in duly justified cases or if the nature of the goods or services requires it. However, any extension beyond 60 days should not violate the principles of good faith and should not be grossly unfair to the creditor. The maximum maturity period for transactions involving a public supplier may be 30 days. In this case, it is also possible to negotiate a period longer than 30 days, provided that the above conditions are met, but the period may not exceed a maximum of 60 days.
In the event of the debtor’s delay in payment, and unless the parties have expressly agreed on the consequences of such a delay, the aggrieved creditor is entitled to compensation for late payment in the amount of the statutory interest for the delay and compensation for the costs of enforcement in the amount of at least EUR 40, without the need for a reminder. The creditor can claim damages in excess of the statutory compensation, but in such a case bears the burden of proof regarding the amount of damages.
Resolution of commercial disputes
In the event of a dispute during the performance of commercial agreements, it can be resolved with the help of the Bulgarian Chamber of Commerce and Industry in Sofia, which also has an International Commercial Arbitration with a statute that meets international requirements. Its activities are regulated by the International Commercial Arbitration Act. BOPK offers competent assistance in all questions of the foreign trade regime. In case of disputes, the foreign investor can turn to state authorities competent in matters of supervision of compliance with legal conditions and equal access, such as the Commission for Securities and Financial Markets, the Control Authority, the Commission for the Protection of Competition, etc. In March 2000, Bulgaria signed the Convention on settlement of international investment disputes. The aforementioned convention settles disputes arising between foreign investors and the states in which they invested funds.
Local market risks
In the case of larger investments in already existing enterprises, especially in connection with the subsequent restructuring and streamlining of production processes and the resulting layoffs, Czech companies can expect certain risks. Here, foreign investors often encounter resistance from trade unions inciting strike action by employees and use the media for coercive actions. The problem remains the insufficient practical implementation of EU legislation, the lower quality of the infrastructure, slow judiciary, bureaucracy and related corruption. The recommended payment instrument is either an advance payment or a documentary letter of credit.
Visas, fees, specific conditions for traveling to the territory
Free movement of EU citizens has been applied in Bulgaria since 1 January 2007, but the country is still not part of the Schengen area. The entry and stay of EU citizens in Bulgaria is governed by the Act on the Entry and Stay of EU Citizens and Their Family Members. If an EU citizen intends to stay in Bulgaria for more than 3 months, he is obliged to appear at the migration police department in the place of residence (in Sofia, it is possible to appear directly at the “Migration” Directorate of the Police Directorate of the Ministry of the Interior) and request a temporary residence certificate. According to the law, the confirmation is issued on the same day for a maximum of 5 years depending on the purpose of the stay. To obtain the aforementioned confirmation, an EU citizen must provide at least one of the following documents: employment contract (in the case of an employment relationship), confirmation of the school establishment (in the case of studies),
Travel to Bulgaria with a valid passport of the Czech Republic, the validity of which should cover at least the time required for the stay in Bulgaria and the journey back to the Czech Republic. From 1 January 2007, it is also possible to travel to Bulgaria with a valid ID card of the Czech Republic containing a machine-readable zone (these cards have been issued since the second half of 2000).
In the case of Bulgaria, it is not possible to clearly distinguish geographical parts of the country in which the risk of residence for foreigners would be higher or lower. In general, from the point of view of the safety of tourists, individual tourism can bring greater risks, especially traveling by car. Therefore, in the case of individual tourism by car, or by bus, it is recommended to avoid driving in the dark, and it is especially not recommended to sleep in a car in unguarded places. For parking, it is worth using guarded or hotel parking lots. When stopping at gas stations, do not leave cars unattended and place them in a clearly visible place. Special vigilance is recommended in the event of a sudden puncture of a car wheel and an almost immediate “selfless” offer of help from “passing-by” strangers. In these cases, money and personal documents are usually stolen from the car thanks to distraction. Police officers are not authorized to fine foreigners on the spot. with a block fine, payment of the fine is to be made at the counters of regional traffic police stations. The police officer must prove himself with a service card with a photo, name and rank.
When exchanging currencies, it is also recommended to exercise extra caution, to pay attention to exchange rate signboards in exchange offices (in some tourist centers on the Black Sea coast and in the mountains, the exchange rates are noticeably less favorable to the local currency than, for example, in the capital).
Public transport in Sofia and other large cities can be considered safe, caution is advised when moving on foot.
The taxi service is affordable and if the traveler uses a proven company such as OK Supertrans Taxi, Yellow, etc., he should not have any problems. Car rental is offered by Top Rent A Car Sofia, for example, in Sofia the traveler can also rent electric cars from the company Spark.
Transport from the airport and railway station works without problems – taxi, public transport (bus, metro), or car rental.
The quality of accommodation is at a good level, in Sofia and big cities there is a fairly wide offer at affordable prices. It is recommended to check hotel ratings on e.g. booking.com or tripadvisor.com.
Payment cards can be used in Bulgaria without any problems, there is also a fairly dense network of ATMs, however, you have to take into account withdrawal fees and certain restrictions regarding the amount of cash issued, cash is needed for small purchases.
Due to the poor quality of the water supply network, it is recommended not to use water from the tap for drinking, at most for cooking. Bottled water is commonly available.
Employment of citizens from the Czech Republic
Since 1 January 2007, free movement of EU citizens to Bulgaria has been possible, and citizens of the Czech Republic do not need a work permit to work in Bulgaria. In the case of sending employees of the parent (Czech) company to Bulgaria, this fact needs to be notified to the National Employment Agency and, in cases where the posting period exceeds 183 days, to the National Revenue Agency (financial office). Forms E 101 and E 102 are used for notification to the National Revenue Agency. In the event that a citizen of the Czech Republic starts working in Bulgaria, he must contribute to the local social security system and thus acquires the right to all benefits arising from this system.
Regarding health insurance, in the event of a sudden illness during their temporary stay in Bulgaria (on vacation, business trip or internship), EU citizens are entitled to medical treatment that is urgent and cannot wait until returning home. Health care must be provided to the same extent as local insured persons are entitled to. You must have a European health insurance card for the trip. If a citizen of the Czech Republic does not have it or cannot use it (for example, in a private medical facility), no one can refuse to treat him, but he will probably have to pay for the care on the spot and request reimbursement of this amount after returning home. During a long-term stay in Bulgaria, we recommend that you check the specific conditions with your health insurance company. More information about health insurance in Bulgaria can be found here.
Additional information regarding securing real estate and related tax obligations can be found here.
The minimum wage in Bulgaria is BGN 710 with effect from 04/01/2022, an hourly wage of BGN 4.29. The average gross salary reached the level of BGN 1,676 (EUR 857) in December 2021.
Fairs and events
The most important exhibition events include:
- International agricultural exhibition AGRA, wine VINARIA and food FOODTECH in Plovdiv
- International agricultural exhibition BATA AGRO in Stará Zagora
- WORLD OF FURNITURE exhibition in Sofia
- International fair of machines and technologies in metalworking Machtech in Sofia
- International technical fair in Plovdiv
- International fair of medical technology BULMEDICA BULDENTAL in Sofia
- International construction of defense technology HEMUS in Plovdiv
- International medical, pharmaceutical and dental exhibition MEDICUS DENTO GALENIA in Plovdiv
- International construction exhibition STROIKO in Sofia
- International exhibition Interfood&Drink in Sofia
- Calendar of events in Bulgaria
- International fair in Plovdiv
- Inter Expo Center in Sofia
In 2022, the PaulTrade foreign office plans to support Czech companies by participating in:
- of the Machtech fair (September 13-16, 2022 in Sofia)
- International technical fair (September 20 – October 1, 2022 in Plovdiv)
- of the Interfood&Drink fair (5-8 October 2022 in Sofia)