dissolve-bulgarian-companyThere are two main reasons why foreigners dissolve their Bulgarian limited companies:

  • They failed to re-register by end of 2012 OR
  • They want their property on their personal names
Regarding the first point, we have alarmed in the past few years that all companies in Bulgaria which haven’t been re-registered or dissolved voluntarily, will be subject to compulsory liquidation by the government. According to §5а paragraph 1 of Companies Register Act, the deadline for voluntary dissolving of the non-reregistered companies is set to 31 January 2015, which is just 6 months away. Regarding the second point, people realised the benefit of having the real estate property on their own name and decided to dissolve their holding company. In order to do this, they hired a solicitor or an accountant to conduct the liquidation procedure.

Liquidation has started but is it being done professionally?

Many Brits and Irish who own their properties through limited companies have already started their liquidations, so that they keep their properties. Even if they have not been forced to dissolve their companies, it is still better to do it because of various reasons such as lower annual expenses, better inheritance procedures and security, tax efficiency etc. In this short article I will bring your attention to just one of possible pitfall which you might face if you hire ‘just any’ accountant or solicitor in Bulgaria to dissolve your company. The trouble is that not many accountants and solicitors specialise in company dissolution and, let me tell you, it’s not a straight forward procedure as one might think.

Taxes, taxes..

The purpose of the liquidation, because of which one will bother dissolving his company, will be transfer of the existing real estate property to shareholder’s name. However, the normal goal of the company dissolution is to cash any existing assets of the company, to pay all creditors and to return whatever has been left to the company shareholders. As you can see, the liquidator needs to undertake some legal actions of dispossession. They of course lead to creating some tax obligations, both for the company being dissolved and to the shareholders who accept the ownership of the property or the cash, left after selling it to a third party. The liquidator is obliged to notify the Bulgarian National Revenue Agency and National Social Security Institute (in case the company traded and had employed people) which brings the attention of those two authorities to the company dissolution procedures and the possible taxes/fines it owes to the government or to the local town council. The way the liquidator manages and plans the property transfer process is crucial to the tax obligation which would follow after the company is dissolved.

How about HMRC/Irish Revenue and Customs?

Even if you think HMRC doesn’t talk to NRA, you might be wrong. There are many cases of cooperation between those two authorities and not only in the VAT filed. When it gets to collecting tax, HMRC knows how to chase people and check their overseas assets. Therefore it is essential to have the liquidator on your side and plan your money/property transactions carefully so that no additional tax will be paid. After all it’s your property, why you should pay income tax on it? We at MH Legal understand the importance of international tax planning that’s why we provide professional company liquidation services to our British and Irish clients.

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1 Comment

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  • bower tristram 10 November 2016 Reply

    Dear sir,
    Ref-Dissolving Bulgarian Ltd Co.
    I need your advice and assistance in helping me to dissolve my Bulgarian co, Tristram Shany ltd my company was incorporated in 2007/8 for the purpose of holding a small building plot in the village of Kamen Vruh near Elhovo east Bulgaria. the purpose of the liquidation/dissolution will be to transfer the property to my name.and free myself from company government red tape and expense. The company accounts and yearly closures have been administered by my Bulgaria accountants in Sofia.The company is dormant,has never traded ,has no income as such,no employees no tax liabilities and no known liabilities to any agency accept maybe municipal charges for services that have never been used for year 2014/15.The total value of the property assets of Tristram Shandy Ltd are £ 2000.(Two Thousand Pounds)

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