How to Register a Sole Proprietorship (Едноличен търговец) in Bulgaria

Many freelancers, consultants, and independent contractors in Bulgaria prefer registering as a sole proprietorship (in Bulgarian, Едноличен търговец, often abbreviated ET) because it gives flexibility, simplicity, and low start-up cost. You can get going with minimal formalities, and you retain full control. However, there is still paperwork, liability, and ongoing obligations to manage.

The main challenges include meeting the registration requirements (residency, legal capacity), paying social security and income tax, and keeping records. On the positive side, you benefit from simpler accounting, you can invoice clients, deduct allowable expenses, and you avoid many of the formalities required for companies.

Disclaimer: This article is for informational purposes only and is not a substitute for legal advice. Please always check official sources or seek professional guidance before taking action.

What is a sole proprietorship in Bulgaria?

In Bulgaria, a sole proprietorship is officially called Едноличен търговец (ЕТ). Depending on context, it may also be referred to as:

• Sole trader
• Self-employed worker
• Independent contractor

These terms all describe the same business model: one person legally running a business without forming a company (i.e., a separate legal entity).

How does a sole proprietorship (Едноличен търговец) work in Bulgaria?

Едноличен търговец vs. other business structures in Bulgaria

While becoming a sole proprietor is the simplest option, many entrepreneurs in Bulgaria also consider setting up a limited liability company (EOOD/OOD). The table below highlights the key differences to help you choose the right structure for your business.

Step-by-step guide: How to register a sole proprietorship in Bulgaria

Step 1: Check your eligibility

You must:

• Be at least 18 years old and legally capable
• Have permanent residence in Bulgaria (foreign citizens need a permanent residence permit)
• Not be declared bankrupt or prohibited from conducting business

Step 2: Choose your business name

Your name must include your full first and last name and be unique in the Commercial Register. You can check and reserve names via the government website.

Step 3: Gather required documents

You will need the following documents:

• Application form A1 (available via the website of the Registry Agency)
• Identity document (ID card or passport + proof of residence)
• Specimen of signature
• Declaration of non-bankruptcy / eligibility
• If applying online, you will need a qualified electronic signature (QES), which can be obtained from a licensed service provider for a small fee

Step 4: Register with the Registry Agency

Once you have prepared your documents, you need to submit them to the Registry Agency for entry in the Commercial Register. This can be done either in person at one of the local Registry Agency offices or online through the Commercial Register portal (using a QES).

When applying online, you upload scanned versions of the necessary forms and declarations. If applying in person, you will hand over your paper documents directly. In both cases, you must provide the completed A1 application form, your specimen signature, and the declaration confirming that you are eligible to operate a business as a sole proprietor.

Step 5: Pay registration fees and contributions

Registration of a sole proprietorship comes with a small state fee. If you file your application in person, the fee is BGN 30. If you file electronically, the fee is reduced to BGN 15, though you will first need to pay for a QES.

After registration, you will also need to consider your mandatory social security contributions. For 2025, the minimum monthly insurance base is set at BGN 1,077, and the maximum base is BGN 4,130. Your contributions for pension, health, and social security are calculated on the income you declare, but they must always fall between these thresholds.

Step 6: Post-registration obligations

Registering your business is only the first step. After your sole proprietorship is established, you must register with the National Revenue Agency (NRA) for tax and insurance purposes. You will need to file annual personal income tax returns, which are subject to Bulgaria’s flat 10% tax rate on business profits. You are also required to maintain proper accounting records, including invoices, receipts, and expense documentation, in order to remain compliant. If your annual turnover exceeds BGN 100,000 in a 12-month period, you must register for VAT with the NRA and submit VAT returns regularly. Ongoing compliance with these obligations ensures that your sole proprietorship remains in good legal standing.

Financial and tax obligations for sole proprietors in Bulgaria

You are responsible for:

• Personal income tax: Sole proprietors in Bulgaria are taxed under the Income Taxes on Natural Persons Act. Business profits are subject to a flat 10% personal income tax after allowable deductions and social security contributions. Tax returns are filed annually with the NRA, and advance payments may be required depending on income levels.
• VAT (ДДС): The standard VAT rate is 20%, with reduced rates of 9% (e.g., for certain tourism services) and 0% for exports. Registration is mandatory once your annual turnover exceeds BGN 100,000 in a 12-month period (as of April 2025). VAT returns are usually filed monthly through the NRA’s online portal.
• Social security contributions: Sole proprietors must register as self-insured persons with the NRA. Contributions cover pension, health, and social insurance. In 2025, the minimum monthly insurance base is BGN 1,077, and the maximum is BGN 4,130. The exact contributions depend on your chosen insurance base and apply every month, regardless of income.
• Record-keeping: You are required to maintain accurate records of all income, expenses, invoices, and receipts. Documentation must generally be retained for at least five years (and in some cases ten years) so that authorities can review it during audits.
• Invoicing: Each invoice must include your trade name, UIC/BULSTAT number, client details, date, description of goods or services, and applicable VAT if registered. Invoices must be issued in Bulgarian, numbered sequentially, and copies must be stored in your records.

Launch your contracting career and stay compliant with Deel

Registering as a sole proprietor gives you independence, but it also means handling taxes, invoices, and records on your own. Deel’s all-in-one platform helps you manage obligations without the stress. With Deel, you can:

• Automate invoicing and expense tracking with essential Bookkeeping tools
• Create, send, and sign localised work agreements
• Keep accurate records for tax season
• Access expert tax advice and compliance support
• Get paid through multiple payment and withdrawal methods
• Spend your earnings in USD with the Deel Card
• Access funds early with Deel Advance
• Enjoy contractor perks from 150+ partners

Stay independent, without the admin overload. Sign up to Deel for free today.

FAQs

What is the minimum capital required to start an ET in Bulgaria?
None.

Do ETs need to register for VAT?
Yes, if turnover exceeds BGN 100,000 annually.

How much are the standard monthly contributions?
At least based on BGN 1,077 monthly base (2025).

Can an ET hire employees?
Yes, but you must comply with labor law and pay employer contributions.

How long does it take to register?
A few business days if documents are complete.

Can foreign nationals register as an ET?
Yes, with permanent residence in Bulgaria.

Do ETs need a business bank account?
Not mandatory, but recommended for accounting clarity.

What happens if I stop operating?
File for deregistration with the Registry Agency and settle final taxes.

Are there government incentives?
General incentives exist for small businesses, but no specific ET discounts.

Can I use Deel as an ET to get paid by international clients?
Yes, Deel supports compliant invoicing and payments.