Whether you are looking for the next big thing in the global economy, or are keen to expand into a foreign market, you would be wise to consider Bulgaria as a potential business destination.
Indeed, when you are thinking about broadening your horizons beyond the borders of your own nation, you need to take into account a wide variety of factors, such as tax rates, regulatory burdens, and levels of government support. Although many investors might not be aware of it, Bulgaria operates numerous business-friendly policies, ensuring that it attracts foreign capital and keeps its own crop of businesses, investors, and top talent within the country.
So, what exactly does this historic Balkan powerhouse have to offer entrepreneurs?
Investing in Bulgaria
To answer this question, here are 11 reasons that illustrate why investing in Bulgaria could be the smartest business decision you've ever made:
1. An Enviable Tax Structure
Straight away, it's worth noting that, at 10%, the country's corporate tax rate is the second lowest in the European Union (after Hungary). Indeed, Bulgaria possesses one of the most competitive tax systems on the continent, with many of its rates comparable or lower than its neighbours in central and eastern Europe.
Here is what consumers, businesses, and investors can expect to pay:
- 0% tax rate for regions with high unemployment.
- Dividend taxation rate of 5%.
- Corporate tax rate of 10%.
- Valued-added tax (VAT) rate of 20%.
- Property tax rates average of 2.5%.
- Income tax rate of 10%.
Moreover, Bulgaria has signed bilateral double tax treaties with over 45 countries, preventing you from being penalised twice.
2. A Strong Credit Rating
Since 2011, Bulgaria has maintained a commendable credit rating from many of the major agencies; these institutions have also reported either stable or positive outlooks for the country moving forward. For example, here are three of the most recent ratings:
- Standard & Poor's: BBB rating with a stable outlook (May 2020).
- Fitch: BBB rating with a stable outlook (April 2020).
- Moody's: Baa2 with a positive outlook (August 2019).
These ratings mean that interest rates in Bulgaria are typically lower, meaning that borrowing is cheaper. This is generally a good thing for consumers and businesses alike.
3. A Stable Currency
Although Bulgaria belongs to the European Union, it does not use the euro as its official currency. Instead, the nation relies on the lev, which has proven one of the bloc's more reliable currencies in recent times.
Indeed, if you look at the lev's performance over the last five years against the US dollar, it has held steady in the range of 1.6000 to 1.8500. With such minimal volatility, investors do not need to be too concerned about massive swings on a daily or even annual basis.
4. Membership of Key Organisations
Bulgaria maintains involvement in three major institutions: the EU, NATO, and the World Trade Organization (WTO). At a time of much economic uncertainty and geopolitical tension, this is a positive scenario for Bulgaria, as well as a strong vote of confidence in the country's own competency on the global stage.
5. Affordable Commercial Space
If you are looking to shift operations to another jurisdiction as your current costs are way too high, then Bulgaria is certainly worth considering as an alternative.
It offers high-quality real estate at some of the lowest prices in Europe; for instance, Sofia, the nation's capital, offers smaller comparable commercial rents than similar European cities, such as Budapest, Prague, Warsaw, and Athens.
6. Lower Energy Costs
In a similar vein, utilities are typically some of the most expensive overhead costs for businesses. If you are operating out of Bulgaria, however, then you will experience significant savings on your energy bills, since the cost of electricity is about two-thirds cheaper than the European average.
7. Support for Certified Investors
As part of the EU's multi-billion-euro scheme to fund development in several key industries, the Bulgarian government provides funding support for certain sectors. The Investment Promotion Act (IPA) invests in research and development, high-tech services, warehousing and logistics, and manufacturing, as well as other crucial industries.
In addition, certified investors also receive a wide variety of benefits, including participation in a priority investing scheme.
Here are just some of the advantages of these schemes:
- Shortened administrative procedures.
- Financial support for education and professional training.
- Infrastructure subsidies.
- Priority purchasing of state or municipal land.
If you are operating in one of these key sectors, then as you soon as you open your business in Bulgaria, or you invest in a project, you are provided with a significant advantage over what you might receive in other markets.
8. A Strategic Geographical Location
On geography alone, Bulgaria has a huge natural advantage, both economically and geopolitically; just ask Cyprus how important this is to its growth.
Not only does Bulgaria maintain direct access to some of the fastest and biggest markets in Europe (including, obviously, the single market), its geographical location allows it to serve Europe, Russia, North Africa and the Middle East – key emerging markets in the years to come. You can also travel to all the major business destinations of Europe and the eastern Mediterranean in fewer than three hours.
9. An Advanced Transport Infrastructure
Covering a sizeable landscape, Bulgaria's geography is further improved thanks to its vast and modern transportation infrastructure. Because of its investment in transportation, the country enjoys one of the most advanced systems in the region, including:
- Five international airports.
- 230 railway stations.
- Seven major river ports and six major seaports.
- Dozens of industrial zones and logistic centres.
- Nearly a dozen motorways.
The consensus is that Bulgaria's logistics are more developed than nearly all of its neighbouring countries.
10. A Qualified Workforce
Bulgaria is one of Europe's best-kept secrets for talent in a diverse array of industries. For any company looking to change the complexion of their workforce, Bulgaria might be an important destination to focus on; the country's young graduates are qualified in many in-demand fields, such as business, engineering, and sciences.
One of the more compelling statistics about the state of Bulgaria's education is that more than two-thirds of students study English. Moreover, the curricula at more than 100 high schools are taught in a foreign language.
Increasingly, given the lower costs of study and living, Bulgaria is also attracting a lot of international students, with more than 10,000 non-native students enrolled in domestic universities or colleges.
To put it simply, there is a vast and highly skilled labour pool in the country that can serve a variety of industries.
11. It Attracts Foreign Investment
After reading this list, you might not be surprised to learn that Bulgaria has attracted a lot of foreign investment in recent years. This, in itself, is a huge selling point, since it provides reassurance that many others think highly of Bulgaria.
Indeed, according to the United Nations Conference on Trade and Development (UNCTAD), foreign direct investment (FDI) inflows in Bulgaria have remained at a consistent level of more than $1bn per year, which is no small feat considering the size of its economy. Although the post-COVID-19 world might provide a bump in the road for Sofia, the long-term trends and outlooks have been hugely positive for the country.
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As you can see from these points, the idea of investing in Bulgaria is a hugely appetising one; the country's performance and output are only improving, and multiple industries are booming. The country may be going through contemporary political upheaval right now as officials consider the potential adoption of the euro, but these are short-term events that will eventually pass as economics dominate Bulgaria's future.
If you are seriously considering investing in Bulgaria, then why not arrange an initial consultation with one of Starting Business' experienced and knowledgeable professionals? We offer a limited liability company formation service in Bulgaria, and can assist you in establishing your venture there.
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