Doing business in Bulgaria

1. Doing business in Bulgaria Why do business in Bulgaria? Comparison of the ease of doing business in Ireland and Bulgaria The tax and regulatory environment Business etiquette Other Practical Tips

2. 1. Why do business in Bulgaria? • Bulgaria is a EU member and is fully integrated in its structures. • Bulgaria has a currency board and investors are less exposed to currency risk. • Bulgaria is eligible to benefit in the next years from substantial structural and cohesion funding, which will boost the country’s growth. • Labour and administrative costs are comparatively low; workers are well qualified; the volume of on-line public services is increasing and the administrative and regulatory burden has been reduced of late.

3. 2. Ease of doing business in Ireland and Bulgaria • World Bank ‘Doing Business 2010 report’ranks 183 countries on various aspects of doing business. • Bulgaria ranks 44th. This compares favourably with Spain (62), Turkey (73) and Poland (72). Conclusion: Doing business in Bulgaria is easier than in many neighbouring countries and generally improving.

4. 2. Ease of doing business in Ireland and Bulgaria • However, on the other side: World Bank ‘Doing Business 2010 report’ ranks 183 countries on the tax administration burden. Conclusion: Taxes are low, but the cost of compliance is high.

5. 3. The Tax and Regulatory Environment The main taxes in Bulgaria are: • Corporate income tax (10% ) • Standard VAT rate (20%) • Personal income tax (10%) • Excise duty (alcohol, cigs and petrol) • No separate capital gains tax (gains on disposals are added to mainstream income for CIT calculation) • Dividends distributed by local entities to Bulgarian & EU resident companies (0%) • Treaties for avoidance of double taxation with more than 60 countries

6. 3. The Tax and Regulatory Environment • Companies prepare and present their annual financial statements on the basis of International Accounting Standards. • However, companies who meet 2 of the following criteria: • sales less than BGN 15M • assets less than BGN 8M • employees less than 250 may apply the reduced National Financial Reporting Standards for SMEs. Conclusion: Tell your accountants that they don’t need to change their policies to invest in Bulgaria!

7. 4. Business etiquette • Bulgarians nod for “no” and shake their heads for “yes”. They are rather formal in their business communication and dress. • At first, Bulgarians appear quite serious. The first answer is usually “No”, often the second and third as well...be persistent! This stern demeanour quickly breaks down once real friendships are formed. • Things happen more slowly. More consensus is required and more discussion necessary, for any given task. • Bulgarian have good language skills. However, Irish people often speak English quickly...it’s useful to talk slowly to be clearly understood.

8. Other Practical Tips • Don’t go it alone! Get yourself: • A good local representative • Good advisors (lawyers, accountants, bankers etc.) • Be patient! Bulgaria is not the country of quick returns it once was. However you can still be successful if you • follow the rules • behave ethically • build sustainable business relationships ‘If I had six hours to chop down a tree, I’d spend the first hour sharpening the axe’ Abraham Lincoln

9. Irish Bulgarian Business Network Good luck in your business! You are welcome to send all your queries to the IBBN committee through the online form on our website at: http://ibbn.starfish.ie/contact Come and join us on the last Thursday of every month. Time and venue are announced on our website at: http://ibbn.starfish.ie/meetings Trinity Corporate Services EOOD, 2009