Before starting a business or leaving a regular job to go freelance, your first big decision is which legal form to choose. In Bulgaria there are six main options — EOOD, OOD, VCC (the new startup form, Bulgarian: ДПК), ET, self-insured person, and liberal profession. Each has a different tax burden, liability, and administrative overhead. This guide compares everything that matters, with 2026 numbers.
The Six Forms at a Glance
- EOOD / OOD — limited-liability legal entity. The standard for a business that will grow or has partners.
- VCC (Variable Capital Company, ДПК) — new form from 2023. Flexible capital, employee stock options, limited liability. Micro/small enterprises only.
- ET (Sole Trader) — individual who trades. Unlimited personal liability. A nearly vanishing form.
- Self-insured person (SOL) — an individual carrying out economic activity who isn't on the closed list of liberal professions.
- Liberal profession — specific professions under Art. 29 PITDA (lawyers, private-practice doctors, architects, etc.) with a 25% normative-expenses deduction.
1Why the Form Matters More Than It Seems
The legal form determines four things that affect your money every day:
- Tax burden — from 7.5% effective for liberal professions up to ~28% total for an EOOD paying a salary and dividend.
- Liability — as an ET you answer with your personal property (home, car). As an EOOD — only with the company's capital.
- Social rights — maternity, pension, sick leave, and unemployment depend on your insurance status.
- Administrative overhead — accounting, annual financial statements, VAT returns, annual declaration. Cost ranges from €0 to €200+ per month.
2EOOD and OOD: Limited Liability Company
EOOD (single-owner) and OOD (two or more partners) are the most common business forms in Bulgaria. You create a legal entity separate from yourself — the company signs contracts, holds a bank account, and makes or loses money on its own.
How It's Taxed
- • Corporate tax: 10% on company profit.
- • Dividend tax: 5% on what you distribute to yourself after corporate tax.
- • If you pay yourself a salary — ~33% social contributions + 10% income tax on it.
- • Effective burden: 14.5% on pure dividend, ~28% on salary only, 15-20% with a hybrid model (minimum self-insurance + dividend).
Advantages
- • Limited liability — personal assets are protected.
- • Can take on partners and investors (OOD).
- • Lowest effective tax burden when using dividends.
- • Credibility with clients, banks, and the state.
- • Transferable — the company is an asset you can sell.
Disadvantages
- • Mandatory accounting — €40-200+ / month.
- • Annual financial statements, published in the Commercial Register.
- • Dividend paid once a year (after AFS approval).
- • If you're a manager — mandatory self-insurance.
- • Registration fees: ~€55 + notary fees.
Choose it when: you expect annual revenue above €30-40,000, have a partner, work with corporate clients, or plan to hire employees.
3VCC (ДПК): Variable Capital Company (new form)
VCC (Bulgarian: ДПК — Дружество с променлив капитал) is the newest legal form in the Commercial Code, introduced through 2023 amendments (SG No. 66/2023). Registration in the Commercial Register has been available since 15 December 2024. It is designed specifically for startups and innovative companies, offering flexible capital and easy employee stock options (ESOP).
Key Features
- • Micro/small enterprises only — up to 50 employees and up to BGN 4,000,000 in turnover or assets.
- • Variable capital — increases and decreases without filing in the Commercial Register; changes are reflected once a year with the AFS.
- • Minimum share nominal value: BGN 0.01 — enables straightforward option plans and vesting for employees.
- • Different share classes — voting/non-voting, guaranteed dividend, liquidation preference.
- • Taxed like EOOD/OOD: 10% corporate tax + 5% dividend.
- • No bank account required at registration.
Advantages
- • Ideal for startups with outside investors and SAFE / convertible notes.
- • Easy ESOP and vesting plans for key employees.
- • Flexible capital increases without notary fees.
- • Same limited liability as EOOD.
- • Different share classes (privileged / common / non-voting).
Disadvantages
- • Size limit — above 50 employees or BGN 4M requires conversion to OOD/AD.
- • New form — court and banking practice is still developing.
- • Mandatory accounting and AFS publication.
- • Less recognized by banks and large counterparties than EOOD.
Choose it when:you're building a startup with investors, want to offer shares to key employees, or plan to use convertible instruments (SAFE, convertible notes).
4ET: Sole Trader
ET is the oldest form for small business in Bulgaria, but fewer people pick it today. The reason: you answer with your entire personal estate — home, car, bank accounts. If the business goes into debt, creditors can reach your personal assets.
How It's Taxed
- • 15% tax on taxable income (higher than the standard 10% corporate rate).
- • Alternative — patent tax, if your activity is on the Art. 61з LLTF list (taxi, hairdressing, tailoring, etc.). A fixed municipal fee.
- • Mandatory self-insurance on insurance base (minimum €551/month for 2026).
- • No dividend tax — all profit is treated as personal income.
Advantages
- • Simple registration in the Commercial Register.
- • No mandatory founding capital.
- • Very low taxes under patent-tax activities.
- • Full freedom in how you use the money.
Disadvantages
- • Unlimited liability — you risk everything.
- • Higher tax than EOOD (15% vs 10% + 5%).
- • Cannot have partners.
- • Accounting still mandatory.
- • Less trust from corporate clients.
Choose it when:practically never, unless you're on a patent-tax activity (taxi driver, hairdresser, mechanic) with low profit and almost no expenses.
5Self-Insured Person (SOL)
SOL means you work as an individual but carry out economic activity — freelance developer, online seller, consultant. You register with the NRA (not the Commercial Register) as self-insured, pay taxes on your income, and contribute social insurance on a chosen insurance base.
How It's Taxed
- • Income tax: 10% on net income (revenue minus recognized expenses).
- • Recognized expenses: anything documented and related to the activity — computer, rent, fees, internet, training.
- • Social contributions: ~27.8% on a chosen insurance base (between €551 and €2,300 for 2026).
- • Annual equalization — if real income exceeds the insurance base, extra contributions are paid with the annual declaration.
Advantages
- • Zero registration costs (just NRA filing).
- • No mandatory accountant — you can do it yourself.
- • Flexibility in choosing the insurance base.
- • Suitable for income under €30,000/year.
- • Full social rights (pension, sick leave, maternity).
Disadvantages
- • Answer with your personal assets.
- • Higher contributions than EOOD+dividend.
- • Cannot easily hire employees.
- • Lower credibility with large corporate clients.
- • Mandatory VAT registration above ~€51,000 revenue / 12 months.
Choose it when:you're just starting, income is unstable or under €25,000/year, and you don't want the admin burden of an EOOD.
6Liberal Profession (Art. 29 PITDA)
Liberal professions are a special kind of self-insured person with a 25% normative-expenses deduction (40% for lawyers from 1 January 2023). Per §1, item 29 of the additional provisions of the PITDA, the list includes: certified expert accountants, registered auditors, consultants, lawyers, notaries, private enforcement agents, court assessors, experts to the court and prosecution, licensed appraisers, industrial-property representatives, medical specialists, translators, architects, engineers, technical managers, figures in culture, education, art and science, insurance agents, and other persons exercising a profession on their own account.
How It's Taxed
- • 25% automatic recognized expenses — whether or not you have real expenses.
- • 10% tax on the remaining 75% of income.
- • Effective rate: 7.5% — the lowest legal tax burden in Bulgaria for labor income.
- • Social contributions as a SOL on a chosen base.
Important
If you're not on the closed list (e.g. IT consultant, marketer, online merchant), you cannot be taxed as a liberal profession. The NRA checks this during audits and may recalculate your tax with 15-20% interest on past years. A software developer, for example, is a SOL, not a liberal profession.
7Comparison Table
Scenario: €25,000 annual gross income. See how much stays with you under each form.
| Attribute | EOOD / OOD | VCC (ДПК) | ET | SOL | Liberal Profession |
|---|---|---|---|---|---|
| Tax on profit | 10% + 5% dividend | 10% + 5% dividend | 15% | 10% | 7.5% effective |
| Effective burden* | ~15-28% | ~15-28% | ~30% | ~27-32% | ~25-28% |
| Liability | Limited | Limited | Unlimited | Unlimited | Unlimited |
| Registration | Commercial Register | Commercial Register | Commercial Register | NRA (free) | NRA + chamber |
| Accounting | Mandatory | Mandatory | Mandatory | Not required | Not required |
| Startup costs | ~€55-100 | ~€50-100 | ~€35 | €0 | ~€50-200 |
| Social rights | Full (with salary) | Full (with salary) | Full | Full | Full |
| Partners | Yes (OOD) | Yes | No | No | No |
| Approximate net** | ~€20,500 | ~€20,500 | ~€17,500 | ~€17,800 | ~€18,700 |
| * With minimum contributions and a hybrid model where applicable. ** Scenario: €25,000 gross income, no additional expenses. | |||||
8How to Decide: Selection Matrix
If you're on the Art. 29 PITDA list (lawyer, doctor, architect, translator…)
→ Liberal profession. Lowest effective tax (7.5%), minimal bureaucracy.
If your income is unstable and under €25,000/year
→ SOL. No registration costs, no accountant, full social rights.
If your income is above €30,000 or you have partners
→ EOOD / OOD. Limited liability, lowest tax burden under a hybrid model (minimum self-insurance + dividend).
If you're a taxi driver, hairdresser, or tradesman
→ ET under patent tax. Fixed tax, minimum paperwork. Otherwise SOL or EOOD.
If you work with international clients or want to sell your business
→ EOOD. Easier international banking, investor-ready, Stripe/Wise Business, future exit.
If you're building a startup with investors or want employee share options
→ VCC (ДПК). Flexible capital, ESOP/vesting plans, multiple share classes, limited liability. Caveat — under 50 employees and BGN 4M.
Note
You can switch from one form to another. A typical path: SOL → EOOD, once income exceeds €30,000 or you need limited liability. Going back is also possible but requires liquidation or deregistration.
Calculate for Your Situation
Use our calculators to see the exact net income and tax burden for each form.