Closing (Deregistering) a Sole Trader (ET) in Bulgaria — Procedure, Documents and Deadlines (2026)

Difference Between Termination and Deregistration

In practice, the terms “termination” and “deregistration” of a sole trader are often confused. Although closely related, they mean different things:

• Termination — this is the individual’s decision to cease their commercial activity as a sole trader. Termination is the factual moment when the trader stops conducting business.
• Deregistration — the formal deletion of the sole trader from the Commercial Register. Only after the deregistration is entered does the sole trader’s registration cease to exist from a legal standpoint.

A key characteristic of the sole trader is that it is not a separate legal entity. Unlike an OOD or EOOD, a sole trader is a natural person conducting commercial activity. This means the trader bears unlimited personal liability with all their assets for obligations arising from their business (Art. 60a of the Commerce Act).

This is precisely why the liquidation procedure, which is mandatory for limited liability companies, does not apply to sole traders — there is no need to distribute assets among partners or satisfy creditors within a liquidation proceeding.

Grounds for Deregistration

Pursuant to Art. 60a of the Commerce Act, a sole trader is deregistered from the Commercial Register on the following grounds:

1. Voluntary termination — the most common case. The natural person decides to cease their commercial activity of their own volition. No reasons need to be stated.
2. Relocation of residence abroad — if the natural person changes their permanent residence to a location outside the Republic of Bulgaria, the sole trader is subject to deregistration.
3. Death of the natural person — the heirs have the right to file an application for deregistration. If the heirs wish, they may continue the business under the same trade name with the addition of “heir” or “heirs.”
4. Placing under guardianship — upon full legal incapacitation of the natural person, the sole trader is deregistered.

In all cases, deregistration is not automatic — an application must be filed with the Commercial Register.

Step-by-Step Procedure

The deregistration procedure for a sole trader goes through several sequential stages. Below we present each step in detail:

1. Step 1: Termination of employment contracts

   If the sole trader has hired employees, all employment contracts must first be terminated. The notice periods provided for in the Labour Code must be observed and all due compensation must be paid. The grounds for termination are Art. 328(1)(1) of the Labour Code — closure of the enterprise.

2. Step 2: Submission of payroll records to the NSSI

   The sole trader is obliged to submit to the relevant territorial division of the National Social Security Institute (NSSI) all payroll records, employment contracts, supplementary agreements and other documents related to the social security of hired persons. After acceptance, the NSSI issues a certificate under Art. 5(10) of the Social Security Code. The deadline for issuing the certificate is up to 30 days.

3. Step 3: Closing bank accounts

   It is advisable to close the business bank accounts opened in the name of the sole trader. Although this is not a formal requirement for deregistration, leaving accounts open may create practical difficulties.

4. Step 4: Filing Application Form A1 with the Commercial Register

   The application may be submitted on paper at an office of the Registry Agency or electronically through the Commercial Register portal. Electronic filing requires a qualified electronic signature (QES).

5. Step 5: Decision by the registration officer

   The registration officer at the Registry Agency reviews the application and issues a decision within 3 business days. If irregularities are found, a refusal is issued, which may be appealed.

6. Step 6: VAT deregistration (if applicable)

   If the sole trader is registered under the Value Added Tax Act (VAT Act), deregistration from the Commercial Register constitutes a mandatory ground for VAT deregistration. The deadline for filing a deregistration application is 14 days from the date of deregistration from the Commercial Register.

7. Step 7: Filing the final tax return

   After deregistration, the natural person files an annual tax return under Art. 50 of the Personal Income Tax Act with Appendix 2, declaring the income from commercial activity as a sole trader.

Required Documents

The following documents are required to file an application for deregistration of a sole trader with the Commercial Register:

• Application Form A1 — the main form for entering circumstances concerning a sole trader.
• Certificate under Art. 5(10) of the Social Security Code — issued by the NSSI, certifying that all payroll records and social security documents have been duly submitted.
• Declaration under Art. 13(4) of the Commercial Register and Register of NPLE Act — a declaration of the truthfulness of the stated circumstances.
• Declaration under Art. 13(5) of the Commercial Register and Register of NPLE Act — a declaration of acceptance of the actions performed by the applicant.
• Power of attorney — required when the application is filed by an authorised representative (lawyer or other person). When the application is filed by a lawyer, a notarised power of attorney is not required.
• Proof of payment of the state fee — except for electronic filing, where the fee is paid online.

If the deregistration is due to the death of the trader, the heirs must also attach a certificate of inheritance.

Fees

The state fees for deregistration of a sole trader from the Commercial Register are set out in the Tariff for State Fees Collected by the Registry Agency. As of 01.01.2026, fees are denominated in EUR.

The electronic filing fee is half the paper fee — providing an additional incentive to use the Commercial Register’s online portal. You should also factor in potential legal fees if you choose to engage a lawyer.

VAT Deregistration

Pursuant to Art. 107(3) and Art. 109 of the Value Added Tax Act (VAT Act), deregistration of a sole trader from the Commercial Register constitutes a mandatory ground for VAT deregistration.

Key aspects of the procedure:

• Deadline: The deregistration application must be filed with the competent territorial directorate of the NRA within 14 days of the date of deregistration from the Commercial Register.
• Inventory of available assets: As of the deregistration date, an inventory is conducted of all available goods and assets for which a tax credit was used. VAT is charged on these assets.
• Final VAT return: A VAT return is filed for the last tax period, reflecting the results of the inventory.
• Penalty for non-filing: Failure to file a deregistration application within the deadline is subject to a property sanction of EUR 256 to EUR 2,556.

It is important to note that after deregistration, the natural person may subsequently register for VAT as an individual if they carry on an independent economic activity and reach the threshold for mandatory registration.

Tax Obligations After Closure

Deregistration of a sole trader from the Commercial Register does not put an end to the natural person’s tax obligations in relation to the activity conducted as a sole trader.

Annual tax return under Art. 50 of the Personal Income Tax Act

The natural person is obliged to file an annual tax return under Art. 50 of the Personal Income Tax Act with Appendix 2, in which the income from commercial activity as a sole trader for the period up to deregistration is declared.

• Filing deadline: from 1 March to 30 June of the year following the year of deregistration.
• Tax rate: income from sole trader activity is taxed at 15% on the annual tax base.
• Advance payments: if advance tax payments are due for the period before deregistration, they must be paid within the relevant deadlines.

Penalties for late filing

Failure to file a tax return on time is subject to a fine:

• Up to EUR 256 — for a first offence.
• Up to EUR 511 — for a repeat offence.

Liabilities and Personal Liability

One of the most important things to be aware of when closing a sole trader relates to the trader’s personal liability for obligations accumulated in the course of business.

Key rules:

• A sole trader is not a separate legal entity — the assets of the sole trader and the natural person are one and the same. There is no separation between “business” and “personal” assets.
• Unlimited personal liability — the natural person is liable with all their assets for obligations arising from the sole trader activity, including personal residence, vehicles and other assets (subject to the limitations on non-seizable property under the Civil Procedure Code).
• Closure with debts is possible — you can deregister the sole trader from the Commercial Register even where there are unpaid obligations. However, the obligations do not lapse — they remain obligations of the natural person.
• Creditors retain their rights — creditors may bring claims against the natural person even after the deregistration of the sole trader. Limitation periods continue to run under the general rules.
• In case of insolvency — if the debts are unmanageable, the natural person may be declared insolvent under Part IV of the Commerce Act.
• In case of death — the heirs inherit the sole trader’s obligations as well, up to the value of the accepted inheritance. If the inheritance is accepted by inventory, the heirs are liable only up to the value of the inherited property. Heirs may also renounce the inheritance.

Frequently Asked Questions