Guidance

Doing business in Bulgaria: Bulgaria trade and export guide

Updated 15 September 2015

This guidance was withdrawn on 6 November 2019

Department for International Trade withdrew this publication because it was out of date.

See current information to:

• explore opportunities for exporting to Bulgaria in our country guide on great.gov.uk
• learn about changes for UK exporters to Bulgaria if the UK leaves the EU without a deal
• find out how UK organisations can manage risk when doing business in Bulgaria

Brexit

Learn about changes for UK exporters to Bulgaria if the UK leaves the EU without a deal.

Managing risk

Find out how UK companies can control risks when doing business in Bulgaria.

Export opportunities and advice

Find more export advice and explore opportunities overseas on great.gov.uk.

1. Bulgaria export overview

Bloomberg has ranked Bulgaria as the sixth best country for doing business in eastern Europe and central Asia. The World Bank rates Bulgaria 38th for ease of doing business. A T Kearney ranks Bulgaria as number one in Europe and ninth globally as an outsourcing destination.

Contact a Department for International Trade (DIT) Bulgaria export adviser for a free consultation if you’re interested in exporting to Bulgaria.

Contact UK Export Finance (UKEF) about trade finance and insurance cover for UK companies. You can also check the current UKEF cover position for Bulgaria.

Over the past 10 years the UK has been the fifth largest investor in Bulgaria.

Large British companies operating in Bulgaria, including Shell, GlaxoSmithKline, AstraZeneca, Petroceltic, Nuvia, JCB, White Young Green, Mott McDonald, IPF Provident, Dyson and William Hughes. Small and medium sized companies also successfully enter and operate in various export sectors and in offshoring/outsourcing.

Benefits for UK businesses exporting to Bulgaria include:

• more than EUR 9 billion European Union (EU) funds up to 2020
• English is widely spoken
• good air links to the UK
• gateway to the markets of Commonwealth of Independent States (CIS)
• lowest corporate and income tax in the EU (10%)
• tax incentives for some investment projects

Strengths of the Bulgarian market include:

• signs of sustained economic recovery
• skilled, multilingual labour force
• low operating costs
• strong potential for growth as Gross Domestic Product (GDP) per capita lower than EU average
• political stability, with public consensus on social and economic priorities
• occupies a strategic location in the Black Sea region

Read the EU’s practical guide to doing business in Europe.

2. Challenges

The business climate in Bulgaria is generally positive, but there are challenges to trade and investment. Challenges to doing business in Bulgaria include:

• high levels of bureaucracy which impact ease of doing business
• tendering processes complicated and often not transparent
• slow (but generally reliable) judicial processes
• unpredictable legislative environment
• Intellectual Property Rights (IPR) violations
• one of the EU’s poorest countries, with limited disposable income

The Bulgarian government is committed to tackling malpractice, corruption and administrative inefficiencies. It aims to ensure a transparent environment and a level-playing field for foreign companies working in Bulgaria. A new public procurement act to be adopted by January 2016 at the latest will:

• make changes on implementation of EU directives
• adopt bond insurance
• implement an e-procurement platform
• put into place measures against corruption

Bulgaria is 69th in Transparency International’s Corruption Perceptions Index sharing the bottom of the EU rankings with Greece, Italy and Romania.

You should ensure you take the necessary steps to comply with the requirements of the UK Bribery Act.

3. Growth potential

3.1 Economic growth

The Bulgarian economy was hit hard by the 2009 global economic and financial crisis. There are now signs of a sustained economic recovery with Gross Domestic Product (GDP) growth reaching 1.7% in 2014. Bulgaria’s economy has proved relatively resilient due to growth in services, industry and tourism despite low domestic consumption.

Real GDP growth is expected to moderate to 1.2 % in 2015, before slightly picking up to 1.5 % in 2016.

Growth in the next few years is expected to come from:

• private consumption
• fixed investment
• exports
• EU structural funds absorption

GDP is made up of:

• services sector (64%)
• industrial sector (31%)
• agricultural sector (5%)

The Bulgarian currency lev (BGL) is linked to the euro giving a stable monetary system.

Bulgarian membership of the EU has refocused economic activity from the former partners of the Soviet Union bloc to the EU member states.

Bulgaria’s standard of living is well below other western European countries. Income levels vary considerably between towns, cities and rural areas. As Bulgaria ‘catches up’ with EU norms growth is anticipated.

The economy has benefitted from increased services off-shoring and manufacturing outsourcing.

3.2 EU funds

Bulgaria was allocated almost EUR 9 billion for the 2007 to 2013 programming period and expects to receive a similar level of funding for the programming period 2014 to 2020. Increasing emphasis will be placed on:

• infrastructure
• science
• education
• innovation
• development of the knowledge economy

Absorption of EU funds in these strategic sectors will result in attractive opportunities for UK companies during the 2014 to 2020 period.

3.3 Emerging Europe

The Central and Eastern European (CEE) region offers considerable potential for British businesses. UK exports are worth over £16 billion, with goods exports doubling over the past decade, and services exports - over £4 billion - trebling.

GDP growth is expected to reach 4% to 5% per annum over the next 20 years. Bulgaria can act as a gateway into the other CEE markets.

The CEE region:

• is easily accessible from the UK
• offers a market of over 100 million consumers
• has widespread use of English as the business language
• is making major investments in energy, transport and other infrastructure as a result of billions in EU funding

High Growth Europe: Grow your business close to home

Watch our other videos on growing your business in CEE markets.

3.4 Trade agreements

Bulgaria is a member of the EU, the World Trade Organization (WTO) and other international bodies. Goods manufactured in the UK are exempt from import duties.

Contact the SOLVIT team if you have market access issues relating to the operation of the Single Market.

Bulgaria also has free trade agreements with several markets including:

• Croatia
• Turkey
• Macedonia
• Albania
• Serbia
• Montenegro
• Bosnia and Herzegovina

4. UK and Bulgaria trade

UK-Bulgaria bilateral trade has doubled in the past 10 years and increased by about 10% in 2014.

UK exports to Bulgaria reached EUR 444.2 million in 2014. The UK was the fifth largest investor into Bulgaria in 2014 with about EUR 180.1 million indirect investment.

Top 10 UK exports to Bulgaria (2014):

• telecommunications equipment
• iron and steel
• specialised machinery
• medicines and pharmaceuticals
• road vehicles
• beverages
• miscellaneous manufactured articles
• textile and fabrics
• electrical machinery and appliances
• general industrial machinery

5. Opportunities for UK businesses in Bulgaria

DIT provides free international export sales leads from its worldwide network. Search for export opportunities.

Access high value public procurement notices via Tenders Electronic Daily (TED). TED contains all procurement notices above a certain threshold from the EU and European Economic Area (EEA).

Read our publication ‘Emerging Europe - Central and Eastern Europe 2015/2016: The top 50 commercial opportunities’.

5.1 Energy

There will be EUR 950 million investment to 2020 for power plant upgrades and environmental projects to help with growing electricity demand.

Nuclear

Discussions are ongoing for building of new AP-1000 reactors at Kozloduy nuclear plant unit 7, costing around £3.75 billion. AP-1000s are also planned for the UK so there will be supply chain opportunities for:

• private financing
• fuel
• training preparation as local experience is with Russian VVER reactors

Funding from the EU via the European Bank for Reconstruction and Development (EBRD) will support decommissioning work up to 2020.

Decommissioning and waste management projects include:

• decommissioning for 4 VVER reactors at Kozloduy site
• early stage planning for deep geological storage facility
• construction of Radiana waste disposal facility expected in 2015

Opportunities include:

• supply of equipment for ion exchange resin analysis
• dealing with contaminated soil
• design dismantling
• Engineering, Procuring and Construction (EPC) at Radiana Phase 1
• supervision at Radiana EPC Phase 1

Oil and gas

Bulgaria’s strategic location is important for the development of 2 major gas pipelines. The Trans-Adriatic Pipeline (TAP) and South Stream project are currently in the planning stage.

Opportunities for UK companies resulting from these transnational projects include:

• new interconnection projects with Greece, Serbia and Turkey
• construction of an import pipeline connecting Bulgaria and Romania
• extension of the storage capacity of Galata gas deposit
• EUR 200 million capacity upgrade of Chiren gas repository
• research on the potential oil and gas reserves in Bulgaria’s area of exclusive economic control in the Black Sea

Renewables and energy efficiency

Energy usage (or wastage) in Bulgaria is 5 times the EU average. Affordability is an important social and political issue. The market is undeveloped and there could be opportunities for UK investors.

Carbon trading potential in the renewable energy sector amounts to EUR 250 million.

Contact the Deputy Head of DIT Bulgaria Sashka.Evtimova@fco.gov.uk for more information on energy opportunities.

5.2 Transport

The estimated funding in the Bulgarian transport sector for 2014 to 2020 is EUR 2.5 billion.

The main projects to be financed under the ‘Transport and Transport Infrastructure 2014 to 2020’ operational programme are:

• completion of the rehabilitation and upgrade of the Sofia – Bourgas rail line (EUR 500 million)
• construction of Sofia Underground’s third line (EUR 400 million)
• completion of Struma Highway Lot 3, stage 1 of Hemus highway extension project, and Shipka Pass tunnel (EUR 600 million total budget)

Other transport projects include:

• development of railway and road infrastructure such as a Public Private Partnership (PPP) scheme to build a new highway connecting Rousse (on the Danube river) with Turkey
• improvement of connections for passengers and freight
• improvement of maritime and inland waterway navigation
• investment in the Bulgarian ports on the Black Sea and the Danube River, such as new recreation zones
• organising concessions at ports like Varna and Vidin and airports at Sofia and Plovdiv

Contact the Senior Trade Adviser Martha.Rasheeva@fco.go.uk for more information on transport opportunities.

5.3 Water

The national water strategy forecasts that the water and wastewater sector will need EUR 6 billion funding until 2025. Less than one third will come from EU funding. The water services sector will be opened for concessions and private management contracts.

EUR 1.2 billion has been allocated for water projects. External funding will be provided mainly under ‘Operational Programme Environment 2014 to 2020’. It will be used for:

• construction of water supply and sewerage infrastructure
• facilities for sludge treatment
• flood prevention and protection measures
• improvement of drinking water quality
• rehabilitation of existing and construction of new dams

Contact the Senior Trade Adviser Martha.Rasheeva@fco.go.uk for more information on opportunities in the water sector.

5.4 Waste management

The waste management sector will be opened up for concessions and private management contracts.

EUR 290 million of EU funding has been allocated for household waste management projects. Another EUR 60 million is aimed at improving ambient air quality.

Opportunities in the waste management sector include:

• construction of regional landfills
• recycling
• hazardous waste management

Contact the Senior Trade Adviser Martha.Rasheeva@fco.go.uk for more information on opportunities in waste management.

5.5 Advanced manufacturing

Bulgaria’s market for advanced manufacturing is expected to grow, especially with regard to the automotive parts and electronics sectors.

The main opportunities for UK companies include:

• supply chain for hydraulic parts, cable equipment, sensors, metal, rubber and plastic modules, design and testing services, etc
• collaborative R&D and technology transfer under EU funding programmes Horizon2020 and OP “Competitiveness”
• low cost sub-assemblies and components
• spare parts for the aftermarket

Contact Senior Trade Adviser Rozalina.Ayrakova@fco.gov.uk for more information on opportunities in advanced manufacturing.

5.6 Agriculture

Agriculture is one of the core sectors of the Bulgarian economy. Around 50% of the territory of Bulgaria is utilised agricultural land (2014).

EUR 2.9 billion of EU funds are available to Bulgaria under the OP Rural Development Programme. This support is available for supporting small farms, boosting competitiveness and addressing environmental concerns by supporting organic production.

Opportunities for UK companies include:

• agricultural machinery and equipment
• knowledge and know-how transfer
• bio-agriculture
• innovative technologies for sustainable development in agriculture and forestry
• agri-tourism
• stock breeding
• market gardening and organic products

Contact the Trade Adviser Veselina.Asparuhova@fco.gov.uk for more information on opportunities in agriculture.

5.7 Education

Bulgaria will receive EUR 700 million for the 2014 to 2020 period under the EU operational programme ‘Science and Education for Smart Growth’. It will also receive around EUR 1 billion under the ‘Human Resource Development’ operational programme. The focus of these funds will be on:

• innovative teaching methods
• boosting quality of vocational and lifelong learning programme
• programmes for educational environment and social inclusion of disadvantaged people and refugees

The number of Bulgarians seeking alternatives to the state education system is increasing, both in secondary and tertiary education.

There are opportunities for UK companies to supply:

• education and training software
• corporate training
• professional qualifications
• language training, in particular use of English technical and legal language for business and finance
• lifelong learning and vocational training
• special needs education products and services
• teacher training and train the trainer programmes

Contact the Senior Trade Adviser Rozalina.Ayrakova@fco.gov.uk for more information on opportunities in education and training.

5.8 Information and Communications Technology (ICT)

Upgrade and extensions of information and communication networks are expected in the period 2014 to 2020.

Opportunities in the ICT sector include:

• supply of computers, peripherals, servers and hardware technologies under government-led procurement
• hardware technologies and telecommunications equipment
• broadband internet access technologies
• cyber security and e-health
• smart grid technologies

Contact the Senior Trade Adviser Martha.Rasheeva@fco.go.uk for more information on ICT opportunities.

5.9 Healthcare

The annual public budget for healthcare is EUR 1.7 billion. Around EUR 1.2 billion is expected in EU funding.

The private sector is growing fast with new hospitals and clinics springing up in the major cities and holding 31% of the market share. Private hospitals tend to change/renew equipment every 3 to 5 years.

Bulgaria offers significant opportunities for upgrading hospital equipment in both public and private hospitals.

The medical device market was estimated at EUR 164 million in 2013.

Contact theTrade Adviser Anatoliy.Krasnocharov@fco.gov.uk for more information on healthcare opportunities.

6. Start-up considerations

Setting up a local office or finding a reliable local partner is critical for doing business in Bulgaria. Business may be carried out:

• directly from the UK
• by the appointment of agents/distributors
• through licensing and franchising
• partnering with a local company with complementary skill set
• through a local business or branch

A local business can be established by:

• registration of a representative office or branch office
• incorporation of a new legal entity

A large number of company forms are available. Foreign investors are allowed to hold up to 100% of the registered capital of a company. New companies can now be incorporated on the new national electronic commercial register.

Partnering with a local company with complementary skills is recommended if you wish to provide consultancy services in Bulgaria. DIT Bulgaria can help you find a reputable partner.

7. Legal considerations

Legislation in Bulgaria has been aligned with EU legislation to ensure the free movement of people, goods, services and capital.

Contact the DIT team in Bulgaria to help find tax and legal advisers before entering into agreements.

7.1 Standards and technical regulations

Products and packaging should meet EU standards.

Bulgaria is a member of the:

• International Organisation for Standardization (ISO)
• International Electrotechnical Commission (IEC)
• International Technical Union (ITU)

The Bulgarian Institute for Standardisation (BDS) is responsible for standards.

Bulgaria has standardisation and product certification bodies. Bulgarian ministries or agencies issue specific standards and certificates for various sectors.

Labelling must be in Bulgarian. Contact DIT Bulgaria for further information.

7.2 Intellectual Property (IP)

Trademarks, designs, patents and copyright are the principal forms of IP protection available to companies and individuals.

IP law, especially for patent protection, is not totally harmonised within the EU.

Bulgaria is a member of the main international conventions protecting intellectual property. However enforcement of IP rights can be challenging.

The Bulgarian Patent Office is responsible for implementing legislation on IPR.

8. Tax and customs considerations

The UK has signed a double taxation convention with Bulgaria.

The Ministry of Finance has responsibility for tax in Bulgaria.

8.1 Value Added Tax (VAT)

The standard VAT rate is 20%. There are reduced VAT rates to 9% for hotel services.

Check with HM Revenue and Customs (HMRC) regarding VAT refund of business expenses incurred in Bulgaria.

8.2 Company tax

Corporate income tax is 10%.

Certain company expenses are taxed at 10%.

8.3 Income tax

Income tax is set at a flat rate of 10 %.

8.4 Customs

The internal market of the EU is a single market which allows the free movement of goods and services. Therefore, no import duties apply.

Most goods can be imported into Bulgaria without restriction. However, permits from the Ministry of Economy will be required for:

• agricultural products
• precious metals
• military goods
• drugs

9. Entry requirements

You don’t require a visa to enter Bulgaria. If you intend to stay longer than 6 months you must apply for a continuous residence certificate with the Migration Directorate of the Bulgarian Ministry of Interior. If you staying as the result of an employment contract you must acquire a work permit from the local labour office.

9.1 Travel advice

If you are travelling to Bulgaria for business, check the Foreign and Commonwealth Office (FCO) travel advice beforehand.

10. Contacts

Contact the DIT team in Bulgaria for more information and advice on opportunities for doing business in Bulgaria.