EOOD vs OOD vs DPK — Which Company Type to Choose in Bulgaria (2026)

What You Will Learn from This Article

• The core characteristics of EOOD, OOD, and DPK.
• A full comparison table across 15 criteria.
• Which business scenarios each form is suited for.
• Registration and annual maintenance costs in EUR.
• Why the tax treatment is identical for all three.
• How to convert from one form to another.
• Four practical examples for different situations.

The Three Forms at a Glance

EOOD (Single-Member Limited Liability Company)

EOOD is the most popular legal form in Bulgaria. It is governed by Art. 113-157 of the Commerce Act (CA). The share capital is divided into shares owned by a single person. The owner’s liability is limited to the amount of their capital contribution, not their personal assets. An EOOD is managed by a manager (managing director), who may also be the owner.

OOD (Limited Liability Company)

OOD is identical to EOOD in its legal framework (Art. 113-157 of the CA) but has two or more partners. The capital is divided into shares held by the partners. Decisions are made by the General Meeting of Partners, with different majority requirements for different types of decisions.

DPK (Variable Capital Company)

DPK is a new legal form introduced through amendments to the Commerce Act (Art. 260a-260sh). It was created specifically for startups and innovative companies. Its principal feature is flexible capital that changes automatically when shares are issued or cancelled, without registration of the change in the Commercial Register. DPK allows different classes of shares, shareholders’ agreements with direct corporate effect, and statutory vesting mechanisms.

Full Comparison Table

When to Choose EOOD

EOOD is the right choice when the business has a single owner and there are no plans to bring in partners or investors in the near future.

Typical use cases

• Freelancers (developers, designers, consultants) who want limited liability.
• Sole businesses (online store, agency, consultancy).
• Individuals transitioning from a freelance profession to a company structure for tax or social security advantages.
• Property owners managing a portfolio through a company.

Advantages

• Full control. The owner makes all decisions without consulting partners.
• Speed. Changes to management and operations are made by a sole owner resolution.
• Simplicity. No General Meeting, no minutes of partner meetings.
• Limited liability. Personal assets are protected (except in cases of “piercing the corporate veil” under Art. 20a of the CA).

Disadvantages

• Limited access to financing. Banks and investors tend to prefer companies with more than one owner.
• Lack of flexibility when bringing in partners. Transferring shares requires notarisation and registration in the Commercial Register.
• In the event of the owner’s death, complex inheritance issues may arise.

When to Choose OOD

OOD is suitable when two or more individuals decide to run a business together, with a clear division of responsibilities and capital.

Typical use cases

• Business partnerships (two partners with equal or different share splits).
• Family businesses (spouses, parents and children).
• Traditional businesses (restaurants, shops, manufacturing) not planning to raise venture capital.
• Businesses with foreign partners under a standard structure.

Advantages

• Shared capital and risk among partners.
• Ability to combine different competencies (one partner brings technical expertise, another manages operations).
• Limited liability for all partners.
• Well-known, established form with extensive case law.

Disadvantages

• Slower decision-making. Certain decisions require a 3/4 supermajority of the capital (Art. 137(3) of the CA): amendments to the partnership agreement, admission and expulsion of partners, increases and decreases of capital.
• Potential for partner conflicts. A 50/50 split can lead to deadlock.
• Cumbersome share transfer procedure: notarisation of signatures and content, consent of the General Meeting, registration in the Commercial Register.
• Shareholders’ agreements have no direct corporate effect. A breach gives rise only to contractual liability, not corporate consequences.

When to Choose DPK

DPK is designed for startups and fast-growing companies that plan to raise investment and anticipate dynamic changes in ownership.

Typical use cases

• Tech startups planning to raise venture capital (seed, Series A, etc.).
• Companies that want to grant shares to employees (employee stock option plans / ESOP).
• Businesses with multiple investors and different classes of shares (ordinary, preferred, with or without voting rights).
• Projects where partners join gradually (vesting) and exit under defined conditions.

Advantages

• Flexible capital. The capital is variable and changes automatically when shares are issued or cancelled. No registration of the change in the Commercial Register is required.
• Multiple share classes. You can issue ordinary shares for founders, preferred shares for investors (with liquidation preference, anti-dilution protection, etc.), and non-voting shares for passive investors.
• Vesting. The law expressly regulates share vesting, where a partner receives shares gradually (for example, 25% per year over 4 years).
• Easy share transfers. Transfers are made in written form, without notarisation and without registration in the Commercial Register. This reduces costs and turnaround time.
• Shareholders’ agreements with corporate effect. Unlike in an OOD, shareholders’ agreements in a DPK have direct corporate effect. A breach can render corporate resolutions invalid.

Disadvantages

• New and unfamiliar form. Case law is limited, which may create uncertainty in disputes.
• More complex founding act. Detailed provisions are needed for share classes, partner rights, vesting mechanisms, etc.
• Not suitable for traditional businesses. The flexibility of DPK is unnecessary for a restaurant or a shop.
• Accounting for variable capital may require additional expertise from the accountant.

Registration and Maintenance Costs

Registration Costs

Annual Maintenance Costs

Note: Annual maintenance costs are essentially the same for all three forms. Accounting complexity depends on the volume of activity, not the legal form.

Tax Treatment — Is There a Difference?

Short answer: no. All three company types (EOOD, OOD, DPK) are taxed in the same way under the Corporate Income Tax Act (CITA) and the Income Tax for Natural Persons Act (ITNPA).

Corporate tax (CITA): 10% on taxable profit. This applies to all commercial companies regardless of legal form.

Dividend tax (ITNPA, Art. 38(1)): 5% final withholding tax on dividends distributed to natural persons.

Effective tax rate: On a profit of BGN 10,000 (EUR 5,113):

• Corporate tax: BGN 1,000 (EUR 511).
• Net profit available for distribution: BGN 9,000 (EUR 4,602).
• Dividend tax (5%): BGN 450 (EUR 230).
• Total taxes: BGN 1,450 (EUR 741).
• Effective rate: 14.5%.

This rate is the same for EOOD, OOD, and DPK. The choice of legal form does not affect the tax burden.

VAT: The obligation to register for VAT (when turnover exceeds BGN 100,000 / EUR 51,130 in the last 12 months) is the same for all three forms.

Withholding tax: For payments to foreign persons (dividends, interest, service fees), the withholding tax is identical regardless of the company form.

Converting Between Forms

The Commerce Act provides for the conversion of companies by change of legal form (Art. 264 et seq. of the CA). This means there is no need to liquidate the existing company and incorporate a new one.

EOOD to OOD

The simplest change. It is sufficient to admit a new partner through:

1. Resolution of the sole owner to admit a partner and increase the capital.
2. Execution of a partnership agreement (replacing the founding act).
3. Registration of the change in the Commercial Register.
4. Fee: BGN 15 (EUR 8) for electronic filing.

OOD to EOOD

The reverse process: when all shares pass to one person (through transfer or expulsion of partners). The partnership agreement is replaced by a founding act. Registration in the Commercial Register.

EOOD/OOD to DPK

Conversion by change of legal form under Art. 264 of the CA:

1. Resolution of the General Meeting (or sole owner) with a 3/4 supermajority of the capital.
2. Preparation of a conversion plan.
3. Adoption of a new DPK founding act.
4. Registration in the Commercial Register.
5. The company retains its Unified Identification Code (UIC), tax history, and all contractual relationships.

DPK to EOOD/OOD

An analogous procedure in reverse. Resolution of the General Meeting, conversion plan, new partnership agreement/founding act, registration.

Tax consequences of conversion: Under Art. 115-120 of CITA, conversion by change of legal form is tax-neutral. No tax is due on the conversion itself. The successor company inherits the tax liabilities and assets of the converting company.

Practical Examples

Example 1: Freelance Software Developer

Situation: Nikolay is a software developer working as a freelancer for foreign clients. His monthly income is approximately BGN 8,000 (EUR 4,090). He works alone and does not plan to take on partners.

Recommended form: EOOD

• Full control over the business.
• Limited liability (personal asset protection).
• Tax-efficient: 10% corporate tax + 5% dividend = 14.5% effective rate. On annual income of BGN 96,000 (EUR 49,085), taxes are approximately BGN 13,920 (EUR 7,117), compared to approximately BGN 18,000-20,000 (EUR 9,203-10,226) in tax + social security as a freelance professional.
• Registration cost: approximately BGN 300 (EUR 153).

Example 2: Restaurant with Two Partners

Situation: Maria and Ivan decide to open a restaurant in Plovdiv. Maria invests BGN 60,000 (EUR 30,678) and will manage finances. Ivan invests BGN 40,000 (EUR 20,452) and will be the head chef. They do not plan to attract investors.

Recommended form: OOD (60/40)

• Two partners with different contributions (capital and labour).
• The restaurant business is traditional and does not require the flexibility of a DPK.
• Share allocation of 60/40 reflects the capital contributions.
• The partnership agreement can regulate rights and obligations: Maria manages finances, Ivan manages the kitchen.
• Registration cost: approximately BGN 400 (EUR 205).

Important: We recommend including clauses in the partnership agreement for dispute resolution (mediation, arbitration) and partner exit mechanisms to prevent future conflicts.

Example 3: Tech Startup

Situation: Three founders (Petar, Anna, and Georgi) are developing a SaaS platform. They plan to raise a seed investment of EUR 200,000 within 12 months. They want to implement 4-year founder vesting and reserve a 10% option pool for future employees.

Recommended form: DPK

• Founder vesting is expressly regulated by law. Each founder receives shares gradually (25% per year over 4 years), with a 1-year cliff. If a founder leaves in the first year, they receive nothing. If they leave after 2 years, they keep 50% of their shares.
• Multiple share classes: ordinary shares for founders and preferred shares for investors (with 1x liquidation preference, anti-dilution protection).
• Option pool: 10% of shares reserved for future employees. Issuing new shares is straightforward and requires no notary or Commercial Register filing.
• Shareholders’ agreement with corporate effect: tag-along, drag-along, right of first refusal, and other standard investment clauses.
• Share transfers in written form, without notary. This is critical for future investment rounds.
• Registration cost: approximately BGN 350 (EUR 179), but with higher legal fees for drafting a detailed founding act and shareholders’ agreement (BGN 1,000-3,000 / EUR 511-1,534).

Example 4: Consulting Partnership

Situation: Two lawyers, Stoyan and Desislava, decide to set up a joint practice. Both will work actively and bring in clients. Profit distribution should reflect each person’s contribution to revenues, not just capital contributions.

Recommended form: OOD with a detailed partnership agreement

• Partnership business with two equal partners.
• DPK is unnecessary since no investments, vesting, or complex capital structures are planned.
• The partnership agreement can provide for profit distribution by formula, different from the capital shares (for example, 50/50 for fixed costs and proportional to revenues for the remainder).
• Registration cost: approximately BGN 400 (EUR 205).

Alternative: If the two lawyers plan to bring in junior partners in the future and offer shares for retention of key staff, DPK may be more appropriate from the outset to avoid a future conversion.

Frequently Asked Questions

Conclusion

The choice between EOOD, OOD, and DPK depends on your specific situation: the number of participants, planned investment, the need for flexibility in the capital structure, and long-term business plans.

The quick-reference rule is straightforward:

• Working alone with no plans for partners: EOOD.
• Have partners and a traditional business: OOD.
• Building a startup with investors and vesting: DPK.

Tax treatment is identical for all three forms, so the decision should be based on corporate governance considerations, not tax.

This article is provided for informational purposes only and does not constitute legal advice. Legislation is subject to change and each individual case may have specific circumstances requiring professional assessment. For questions relating to your particular situation, we recommend consulting a qualified lawyer.