In-Kind Contribution to a Bulgarian Company — Property, IP, Receivables and Securities (2026)

Who uses an in-kind contribution

Apport is a versatile instrument used in a wide range of situations. The most common scenarios we advise on are:

• Founders incorporating a new company — contributing non-cash assets as initial capital. Particularly useful when the founder already owns real estate or equipment that will be used by the company.
• Shareholders increasing share capital — contributing assets instead of cash, with new shares or units issued proportionally to the valuation.
• Holding structures — moving assets between group companies, for example consolidating real estate in a holding company that leases the properties to the operating entities.
• Start-up founders — contributing proprietary software, patents, trade marks or know-how in exchange for shares. This wraps intellectual property in a corporate vehicle, strengthens legal protection and simplifies investor due diligence.
• M&A transactions — combining businesses by contributing a whole commercial enterprise or a distinct part of it (under Art. 15 Commerce Act) to an existing or newly incorporated company.
• Debt capitalisation — a shareholder who has lent money to the company contributes the receivable in exchange for new shares, simultaneously reducing liabilities and increasing capital.

What can be contributed

Any transferable property right can be the subject of an in-kind contribution. Assets typically fall into three broad categories.

Tangible assets

• Real estate — apartments, retail units, plots, buildings, agricultural land. By volume this is the most frequent category of apport registered with the Commercial Register.
• Movable property — vehicles, production equipment, machinery, inventory.
• Securities — shares of other Bulgarian or foreign companies, bonds, government securities, investment fund units.

Intangible assets

• Intellectual property — patents, utility models, industrial designs, trade marks, copyright and related rights over software, databases and literary works.
• Know-how and trade secrets — provided they are documented and have objectively measurable economic value.
• Goodwill — reputation and customer base of a going concern; typically contributed as part of an apport of a whole enterprise under Art. 15 Commerce Act.

Property rights

• Receivables — monetary claims against the company itself (debt capitalisation) or against third parties.
• Right of use and right to build — as limited property rights.
• Licence rights — rights under a licence agreement, where the agreement permits assignment.

Prohibited objects (Art. 73(1) Commerce Act)

The Commerce Act expressly excludes from apport:

• Future work of a partner — a partner cannot "contribute" a promise to work for the company as capital.
• Future services — promises of future consulting, technical or other services.

The rationale is creditor protection: share capital serves to satisfy creditors in insolvency, and future work cannot be liquidated if the partner refuses to perform. This does not prevent the partner from entering into a parallel employment or service contract with the company — that contract is simply not an apport.

Legal framework

The apport procedure is regulated by several interconnected provisions:

Step 1: Application to appoint experts

The procedure begins with a written application to the officer of the Registry Agency filed through the electronic Commercial Register or at a counter. The application is filed by the contributor (the prospective shareholder).

Content of the application

• Identification of the applicant — the obliged person making the contribution (individual or legal entity, personal/company ID).
• Details of the company — the company being formed or the existing one (name, UIC, registered seat).
• Detailed description of the asset — with sufficient individualisation (notary deed and cadastral sketch for real estate; registration number for vehicles; trade mark/patent registration number; nominal value and number for securities).
• Evidence of ownership — notary deed, ownership certificate, vehicle title, register extract, assignment agreement.
• Proposed experts — the applicant may propose up to three persons from the Registry Agency's list; the officer may accept the proposal or appoint others.

Fee and timeline

The state fee for the application to appoint experts is EUR 15.34 (BGN 30). The officer is required to rule on the application within 14 days of submission.

Step 2: Expert valuation

Once appointed, the three experts prepare a joint valuation report. Evidence and cooperation are provided by the applicant.

Fees and timeline

Expert fees are paid by the applicant and vary with the complexity of the asset. In practice:

• Real estate — EUR 150–500 total for the three experts;
• Business or enterprise — EUR 300–1,500 and above for complex M&A valuations;
• IP and intangible assets — EUR 400–1,200 depending on portfolio scope.

The report is typically completed within 2–6 weeks.

Valuation methods

Experts apply internationally recognised valuation standards. The method depends on the nature of the asset:

• Real estate — comparative analysis of market transactions; discounted cash flow (DCF) for income-producing properties; replacement cost for specialised buildings.
• Going concern — DCF, EBITDA multiple, net asset method.
• Intellectual property — relief-from-royalty, future income method, cost approach for newly developed software.
• Receivables — nominal value if undisputed and the debtor is solvent; discounted DCF where collection is uncertain.
• Securities — stock exchange quotation for listed securities; net asset method and DCF for unlisted.

The report describes the asset, the method chosen, the sources used and the final valuation.

Step 3: Transfer and registration in the Commercial Register

Once the report is ready, the applicant files a registration application (form A4 for LLC, A5 for JSC) or for registration of the capital increase. The filing package includes:

• Minutes of the incorporation meeting or general meeting approving the in-kind contribution;
• New articles of association, founding deed or amended statute;
• Expert valuation report;
• Declaration of the contributor confirming the contribution;
• Consents where required (e.g., from a spouse for an asset held in marital community of property).

Specifics by asset type

• Real estate — transfer requires a notary deed under Art. 18 of the Obligations and Contracts Act and registration in the Property Register at the local Registry office. Without a notary deed the Commercial Register entry alone does not transfer ownership.
• Vehicles — agreement with notarised signatures and re-registration with the Traffic Police (KAT).
• Trade marks and patents — transfer must be filed with the Patent Office, EUIPO (for EU trade marks) or WIPO (for international registrations) to be enforceable against third parties.
• Shares — transfer is reflected with the Central Depository for registered dematerialised shares; for restricted shares the articles of association procedure applies.
• Receivables — written assignment agreement and notice to the debtor under Art. 99 of the Obligations and Contracts Act.

Valuation vs. capital ratio

Art. 72(3) Commerce Act is categorical: the nominal value of shares or units received cannot exceed the expert valuation. However, it may:

• match the valuation — the full value enters capital;
• be lower than the valuation — the excess is booked to reserves (share premium) and is not part of registered capital but remains equity.

Tax implications

VAT

Under Art. 10(1)(1) VAT Act, the transfer of property as an in-kind contribution to a commercial company is not a supply of goods or services. Apport is therefore not subject to VAT and no tax invoice is issued. The receiving company steps into the rights of the contributor in respect of the asset.

Where the contributor claimed input VAT credit on the asset (typically real estate), careful review is needed to determine whether an adjustment under Art. 79 or 79a VAT Act is triggered by subsequent use of the asset for VAT-exempt supplies.

Personal Income Tax — for individuals (local persons)

For a local person under Art. 4 of the Personal Income Tax Act, the apport itself is not a taxable event by virtue of Art. 13(4) of that Act. Taxation arises only upon a subsequent realisation, namely:

• sale of the shares/units received in exchange for the contribution;
• payment of a liquidation quota or dividend;
• redemption of the units.

Under Art. 33(6) of the Personal Income Tax Act, the acquisition cost of the shares/units for the obliged person equals the documented acquisition cost of the contributed asset — i.e. the price originally paid for the asset, not the market valuation by the experts. This is a critical long-term tax feature: the expert report does not create a fresh, stepped-up tax basis for a future sale.

Corporate income tax — for legal entity contributors

An apport from a legal entity is recognised at fair value, while the receiving company continues the depreciation regime under the rules on in-kind contributions of the Corporate Income Tax Act. Tax neutrality is available provided the continuity requirements are met.

Local transfer tax

Art. 46(2)(2) of the Local Taxes and Fees Act expressly exempts an apport of real estate from the local tax on acquisition of property for consideration. Notary fees and Property Register fees remain payable.

Case studies

Case 1: Contributing an office to a single-shareholder LLC

The sole owner of an EOOD owns a 100 sq.m. office unit personally. The market valuation is EUR 200,000. The owner contributes the office to the EOOD and increases capital from EUR 2 to EUR 200,002.

Effects: ownership of the property moves to the company; the EOOD can depreciate the asset and book maintenance expenses; the owner's personal estate is more insulated; a future sale by the company will be subject to corporate income tax.

Taxes: no VAT (Art. 10 VAT Act); no local transfer tax (Art. 46(2) LTFA); no personal income tax at the moment of contribution. Costs include notary fees, Property Register fees and the Registry Agency application fee.

Case 2: Contributing software to a start-up

A developer has built a SaaS platform. A new OOD is formed with two investors. Instead of selling the code for cash, the developer contributes the copyright in the software in exchange for units. The experts' valuation under the future-income method is EUR 50,000. The developer receives 50,000 units at EUR 1 nominal value (or 100,000 at EUR 0.50).

Effects: the IP is legally protected within the corporate wrapper; the developer's alignment with the project is reinforced via vesting provisions in the articles of association; investors have clarity over who owns the key asset.

Taxes: no taxable event for the developer under Art. 13(4) Personal Income Tax Act; no VAT.

Case 3: Debt capitalisation via contribution of a receivable

A shareholder has extended loans to an EOOD totalling EUR 30,000 over several years, sitting as a liability on the balance sheet. Rather than demanding repayment (which would drain the company's liquidity), the shareholder contributes the receivable in exchange for new units.

Effects: the EOOD's liabilities decrease by EUR 30,000; capital increases by the same amount; the equity-to-debt ratio improves; future bank financing becomes easier to obtain.

Taxes: the operation is tax-neutral; no income from forgiven debt arises under the Corporate Income Tax Act because this is not a debt forgiveness but a swap of debt for equity.

Common mistakes

• Insufficient proof of ownership — the officer refuses to appoint experts unless it is clear that the applicant actually owns the asset.
• Skipping separate registration in the Property Register — the Commercial Register entry does not replace registration in the Property Register at the location of the real estate. Without it ownership is not enforceable against third parties.
• Private valuation instead of the Registry Agency procedure — a report prepared by a freely chosen valuer without appointment by the officer has no legal effect for apport purposes.
• Attempting to contribute future work — prohibited by Art. 73 Commerce Act. Instead, the partner should sign an employment or service agreement.
• Overstating nominal value — nominal value of shares/units cannot exceed the valuation (Art. 72(3)); excess makes the registration vulnerable to challenge.
• Ignoring downstream tax consequences — the acquisition cost of the shares/units is the historic cost of the contributed asset, not the expert valuation. This matters for personal income tax on a future sale.
• Missing spouse consent — where the asset is held in marital community of property, explicit notarised consent of the spouse is required.

Frequently asked questions