Moving a Bulgarian EOOD's Registered Seat to Another EU Member State (2026)

When moving the seat beats liquidating

Liquidating a Bulgarian company is slow: the assets may only be distributed once six months have passed since the invitation to creditors was announced in the Commercial Register (Art. 272(1) of the Commercial Act; the invitation itself is governed by Art. 267). Liquidation extinguishes the legal entity and distributes what is left to the members. Company liquidation in Bulgaria and a cross-border conversion therefore produce fundamentally different outcomes: under Section VI the legal entity survives and continues as a company governed by the law of the destination state (Art. 265sht(6) of the Commercial Act).

Moving the seat tends to be the better route where:

• the company holds live contracts, licences or intellectual property whose transfer would trigger additional cost and counterparty consents;
• the company's banking and trading history carries value — for example in financing applications or with counterparties for whom incorporation date is a criterion;
• operations will continue in the new state without interruption or re-opening of administrative procedures;
• the members wish to avoid the tax treatment of a liquidation quota, which is taxed as income.

Caution: where the move is motivated solely by tax optimisation, without genuine economic activity in the destination state, the anti-abuse rules under Directive (EU) 2016/1164 (ATAD) may apply. We recommend a substance analysis before any decision is taken.

Is your situation specific? Get in touch for a preliminary assessment of conversion versus liquidation in light of your assets and tax history.

Legal framework: Section VI of the Commercial Act (Art. 265t – 265ya)

Directive (EU) 2019/2121, amending Directive (EU) 2017/1132, required Member States to introduce harmonised rules on cross-border conversions, mergers and divisions. The transposition deadline was 31 January 2023 and Bulgaria missed it — in November 2023 the European Commission issued a reasoned opinion for failure to transpose. The rules entered Bulgarian law only with the Act amending the Commercial Act, promulgated in State Gazette issue 82 of 2024, which created a new Section VI “Conversion into a company of another Member State” (Art. 265t – 265ya) within Chapter Sixteen.

Two regimes now sit in the same chapter and are easily confused:

• Section V (Art. 265g – 265s) — cross-border mergers, in force since State Gazette issue 104 of 2007;
• Section VI (Art. 265t – 265ya) — transfer of the registered seat with a change of legal form, new as of State Gazette issue 82 of 2024. This is the regime relevant to an EOOD owner.

The scope is set by Art. 265t(1): a Bulgarian capital company transfers its seat and takes the legal form of a company incorporated under the law of another Member State, of a type listed in Annex II to Directive (EU) 2017/1132. An EOOD is a capital company and falls within scope. The result is a company governed by the destination state's law — a Cypriot private company limited by shares, or a German Gesellschaft mit beschränkter Haftung (GmbH), for example. Under Art. 265sht(6) the rights and obligations of the converting company become those of the converted company.

When conversion is not available (Art. 265t(3)): where a participating company has its seat outside the EU or EEA; where the law of the relevant Member State does not permit such a conversion; where an open-ended investment company is involved; or where the converting company is subject to resolution measures under Directive 2014/59/EU.

The minimum share capital of a Bulgarian limited liability company may not be less than EUR 1 (Art. 117(1) of the Commercial Act, as amended by State Gazette issue 70 of 2024, in force from 1 January 2026). Where the destination state requires more, the difference must be in place before registration there — for a German GmbH the minimum is EUR 25,000.

Step by step: plan, report, certificate, registration

The steps below are set out from the perspective of the manager of a Bulgarian EOOD moving its seat to another Member State, and follow the order of Art. 265u – 265sht of the Commercial Act.

Step 1 — Conversion plan (Art. 265u)

The converting company draws up a written conversion plan with eleven mandatory items. Beyond the obvious ones (legal form, name and seat before and after, the draft constitutive document of the new company, a timetable), the Act requires several that are routinely overlooked: securities and other measures for the protection of creditors; detailed information on state aid, tax reliefs and other forms of financial support received in Bulgaria over the preceding 5 years; details of the cash compensation offered to members entitled to exit, together with the payment deadline; and the impact of the conversion on employment.

Step 2 — Management report (Art. 265f)

The management body prepares a written report with a legal and economic rationale, containing a separate section for members and a separate section for employees. The Act provides a material simplification for an EOOD: where the converting company is single-member, the members' section may be omitted, and where there are no employees either, no report need be drawn up at all (Art. 265f(4)). Where staff are employed, the plan and report are provided for opinion to the employees' representatives under Art. 7a of the Labour Code six weeks before the date of the general meeting; any opinions received are annexed to the report.

Step 3 — Announcement in the Commercial Register (Art. 265h)

The plan and the report are filed for announcement in the Commercial Register no later than one month before the date of the general meeting. A notice is announced together with the plan stating that members, creditors and employees may submit proposals and objections no later than 5 working days before the general meeting.

Step 4 — Independent examiner (Art. 265ts)

The plan is examined by an examiner appointed by the management body, who opines on whether the cash compensation offered on exit is adequate and reasonable. The examiner's report is made available at the company's seat one month before the general meeting. No examination is carried out if all members agree to this in writing (Art. 265ts(5)) — for an EOOD that is a decision of the sole owner of the capital.

Step 5 — Resolution and pre-conversion certificate (Art. 265ch and 265sh)

The general meeting resolves on the conversion under Art. 262p(2)–(4), approving the plan and adopting the constitutive document of the new company. The management body then applies to the Commercial Register for a certificate of the lawfulness of the conversion. The application is accompanied by the plan, the reports, any objections received, the resolution, a certificate under Art. 77(3) of the Tax and Social Insurance Procedure Code, and evidence of compliance with other statutory requirements.

The certificate is issued within three months, but not earlier than 14 days from the application; where another authority's opinion is required by law, that period may be extended by a further three months. No certificate is issued if the beneficial ownership data under Art. 61(1) of the Anti-Money Laundering Measures Act is not recorded in the Commercial Register, or if an authority's opinion establishes that the conversion pursues objectives prohibited under Bulgarian or EU law (Art. 265sh(4)).

Step 6 — Registration abroad and deletion in Bulgaria (Art. 265sht)

The Bulgarian company is deleted from the Commercial Register on the basis of a notification from the register of the Member State in which the converted company is registered, received through the system of interconnection of registers. The conversion takes effect from the date of conversion determined under the law of the destination state. One important safeguard for legal certainty: under Art. 265ya(4) a conversion under this Section cannot be declared void.

Questions about the documents and the exchange with the Registry Agency? Contact the Innovires Legal corporate team for a detailed action plan.

Tax consequences: exit taxation and the 5% dividend rate

Transferring the seat is not a sale of the company, but the Corporate Income Tax Act (CITA) treats it as a taxable event. The rules implement Directive (EU) 2016/1164 (ATAD) and sit in three separate provisions that are frequently conflated:

• Art. 155(1)(3) CITA — the trigger. The rules apply on a transfer of assets or activity upon a change of the jurisdiction in which the company is resident for tax purposes, from Bulgaria to another jurisdiction;
• Art. 155a CITA — the measurement: the accounting financial result is increased by the positive difference between the market price and the tax value of the transferred asset at the time of transfer;
• Art. 155g CITA — deferral of the tax due.

A material carve-out that is easy to miss: by the express wording of Art. 155(1)(3), the provision does not apply to assets that remain effectively connected with a permanent establishment in Bulgaria. If the company retains a permanent establishment in Bulgaria, the assets that stay effectively connected with it fall outside exit taxation. This is the first thing we check when structuring a move.

How the exit tax is computed

The base is the positive difference between the market price and the tax value of the transferred assets at the time of transfer (Art. 155a(1)(1)). The rate is the 10% corporate income tax under Art. 20 CITA — the same rate that applies to ordinary corporate profit.

Deferral is governed by Art. 155g and carries three conditions worth watching:

• it applies only to a transfer of an incidental or irregular nature, and not beyond the corporate income tax due for the period (para. 1);
• the destination must be an EU Member State or a party to the EEA Agreement; for EEA states an effective mutual assistance agreement on recovery of tax claims equivalent to Directive 2010/24/EU is also required (para. 2);
• the right is exercised in the annual tax return for the year in which the circumstance arises (para. 6).

The deferred amount is paid in five equal annual instalments — the first within the deadline for the corporate income tax for the year of transfer, the remaining four over the following years. Interest is payable on those instalments under the Act on Interest on Taxes, Fees and Other Similar State Receivables (Art. 155g(5)). Deferral postpones payment; it does not make it free.

Worked example: an EOOD with assets at a market price of EUR 200,000 and a tax value of EUR 50,000 has a base of EUR 150,000. At 10% the tax is EUR 15,000. Deferred within the EU, that is five instalments of EUR 3,000, plus the interest due on each deferred instalment. The figures are illustrative — the actual amount depends on the asset structure and on which assets remain connected with a Bulgarian permanent establishment.

Bulgaria's combined tax burden

Bulgaria's combined burden remains 15% after 2026 — among the lowest in the EU:

Note: after the conversion, dividends are distributed under the law of the destination state, whose rate may be higher or lower than 5% — see our note on dividend and liquidation quota taxation. For the period up to deletion from the Bulgarian Commercial Register, a double tax treaty between Bulgaria and the destination state may also be relevant, as may the company's tax residence position. We recommend a tax analysis before the conversion plan is signed.

Protection of creditors, members and employees

Section VI deals with stakeholder protection in three separate provisions — Art. 265ya for members, Art. 265yu for creditors and Art. 265ya for employees. Each has its own deadlines.

Creditors (Art. 265yu)

A creditor whose claim has arisen but is not yet due at the date the plan is drawn up, and who is not satisfied with the securities offered in the plan, may within three months of announcement of the plan demand performance or security. If the demand is not met, the creditor has a right of preferential satisfaction and may ask the court for security by way of attachment or injunction; the court grants it if the creditor produces convincing evidence of risk. Separately, a creditor whose claim arose before publication of the plan may bring an action against the converted company within two years of the conversion before the district court at the seat of the converting company in Bulgaria.

Separately, and in practice the heaviest item: for unpaid public liabilities, and for liabilities in an estimated amount subject to precautionary measures under Art. 121 of the Tax and Social Insurance Procedure Code in a pending audit, the company must provide a cash guarantee to the National Revenue Agency's account, or an unconditional and irrevocable bank guarantee in favour of the NRA with a term of not less than one year (Art. 265yu(2)). The guarantee must cover the principal together with interest due and remains effective after the date of conversion. If the company is under audit, this — not the register procedure — is usually what governs the timetable.

Members (Art. 265ya)

A member who voted against the conversion resolution has the right to exit against cash compensation. Participation is terminated by notarised notice to the company, given no later than one month after the general meeting; the notice may also be sent by e-mail. Compensation is paid within the period set in the plan, but no later than two months from the date of conversion. If the compensation offered is not adequate and reasonable, the exiting member may claim additional compensation by action brought within three months of the date of conversion. For an EOOD with a sole owner this mechanism does not engage in practice — but it becomes live as soon as there is more than one member.

An important limitation on challenges: a conversion under this Section cannot be declared void, and inadequate cash compensation is not a ground for an action challenging the conversion itself (Art. 265ya(4) and (5)).

Employees (Art. 265ya)

Where the converting or the converted company has its seat in Bulgaria, employee participation is governed by the corresponding provisions of the Act on Informing and Consulting with Employees in Multinational Undertakings, Groups of Undertakings and European Companies, the converted company being treated as a European company. Separately, the plan and report are provided for opinion to the employees' representatives under Art. 7a of the Labour Code six weeks before the general meeting (Art. 265f(5)).

Do you have employees or creditors whose position needs structuring before the procedure starts? Talk to us about end-to-end support.

Sources and legal basis

This article reflects Bulgarian and EU law in force as at 27 July 2026. The principal instruments and official sources relied on:

• Directive (EU) 2019/2121 of the European Parliament and of the Council of 27 November 2019 amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions — EUR-Lex.
• Directive (EU) 2016/1164 (ATAD) laying down rules against tax avoidance practices, including exit taxation — EUR-Lex.
• Commercial Act (Търговски закон), Chapter Sixteen, Section VI “Conversion into a company of another Member State”, Art. 265t – 265ya (new — State Gazette issue 82 of 2024) — Lex.bg. This Section is distinct from Section V (Art. 265g – 265s, State Gazette issue 104 of 2007), which governs cross-border mergers.
• Commercial Act, Art. 117(1) (minimum capital of EUR 1, as amended by State Gazette issue 70 of 2024, in force from 1 January 2026) and Art. 272(1) (six-month period in liquidation).
• Corporate Income Tax Act (CITA), Art. 20 (10% corporate income tax), Art. 155(1)(3) (basis for exit taxation on a change of tax jurisdiction), Art. 155a (measurement) and Art. 155g (deferral over five annual instalments, with interest).
• Personal Income Taxes Act (PITA), Art. 46(3) in conjunction with Art. 38(1) — 5% rate on dividend income.
• Tax and Social Insurance Procedure Code, Art. 77(3) (certificate accompanying the application) and Art. 121 (precautionary measures).
• Registry Agency — Commercial Register and Register of Non-Profit Legal Entities — registryagency.bg.
• National Revenue Agency — nra.bg.

Note: this article is general information and does not constitute legal advice on any particular matter. For advice on your situation, please consult a lawyer.

Frequently asked questions