Company Deregistration in Bulgaria: Steps and Requirements

Deregistration of a Company – When and How Does It Happen?

Deregistering a company in Bulgaria is a process that involves several legal and administrative steps. It can be initiated voluntarily by the owners or be required by law under certain circumstances. Understanding when and how to close a business can help avoid legal complications and financial liabilities.

When is Company Closure Necessary?

The decision to close a company can arise for various reasons, including:

• Lack of business activity – If the company no longer conducts business and has no future plans for operations, deregistration may be the best option.
• Financial difficulties – If a company is in severe debt or unable to meet its obligations, liquidation may be the only way to settle affairs properly.
• Owner’s decision – The shareholders or sole owner may decide to close the company due to strategic changes, retirement, or personal reasons.
• Merger or acquisition – If a company is merging with another entity, the old one may need to be deregistered.
• Involuntary closure – The National Revenue Agency (NRA) or the court may order deregistration if the company fails to meet regulatory or tax obligations.

Procedure for Voluntary Liquidation

Voluntary liquidation is the most common way to close a business. The process follows these key steps:

1. Decision to Liquidate – A general meeting of shareholders (or the sole owner) must adopt a resolution to dissolve the company. This decision must be notarized and registered in the Commercial Register.
2. Appointment of a Liquidator – The company must appoint a liquidator (who can be one of the owners or an external person) to manage the liquidation process.
3. Notification of Creditors – The liquidator must publish an official notice inviting all creditors to submit claims within a legally prescribed period (usually six months).
4. Settlement of Liabilities – All outstanding debts, including tax obligations and employee payments, must be cleared before proceeding with deregistration.
5. Distribution of Remaining Assets – If any assets remain after liabilities are settled, they are distributed among shareholders according to their ownership shares.
6. Submission of Final Documents – The liquidator prepares a final balance sheet, financial statements, and a liquidation report, which are submitted to the Commercial Register.
7. Company Deregistration – After all formalities are completed, the company is officially removed from the Commercial Register.

Obligations to the NRA and Other Institutions Before Deregistration

Before a company can be deregistered, it must meet several requirements imposed by regulatory authorities:

Tax clearance from the NRA

The company must ensure that all taxes, VAT obligations, and social security contributions are settled. This includes filing any outstanding tax returns and paying any overdue amounts. The National Revenue Agency (NRA) will issue a tax clearance certificate once the company has fulfilled all its obligations. It’s important to check for any penalties or interest charges due to delayed payments, as these could affect the clearance process. In some cases, the company may need to undergo an audit to confirm that all obligations are settled before the clearance is granted.

Accounting and financial statements

Final financial reports must be prepared and submitted to the NRA and the National Statistical Institute (NSI). These reports include the balance sheet, income statement, cash flow statement, and any other required financial documentation. It is crucial to ensure that all accounting records are accurate, as discrepancies may delay the closure process. Furthermore, if the company has undergone any mergers, acquisitions, or restructurings during the fiscal year, these changes must be reflected in the final statements. Auditors may be required to verify the accuracy of the financial statements, especially if the company was subject to audits during its operation.

Employment contracts

If there are employees, their contracts must be legally terminated, and all due salaries and compensations must be paid. This includes severance pay, unused vacation days, and any other contractual obligations. It is essential to notify employees about the termination in accordance with the Labor Code. Additionally, all outstanding issues, such as social security and health insurance contributions, must be fully resolved. The company should issue official termination letters and provide the necessary documentation for the employees to file for unemployment benefits, if applicable.

Closure of bank accounts

Any company bank accounts should be closed, and final transactions documented. The company must ensure that all financial obligations are cleared, including any loans, overdrafts, or pending transactions. You need to inform the bank of the company’s intention to close the accounts. Make sure to complete all necessary paperwork, including the closure request and account statements. Additionally, any credit lines or company credit cards should be closed, and any outstanding debts settled. All records of final transactions must be kept for future reference, as they may be required for tax or legal purposes.

Termination of business licenses

If the company holds specific licenses or permits, these must be canceled with the relevant authorities. This includes trade licenses, environmental permits, or any other regulatory approvals the company may have obtained during its operations. You must notify the respective regulatory bodies, submit the required forms, and officially revoke the licenses. In some cases, the company must provide proof of tax clearance or complete final audits before terminating certain licenses. Additionally, if the company owns intellectual property rights, it should properly transfer or abandon them, depending on the situation.

How Long Does the Liquidation Process Take and What Are the Costs?

The duration and cost of company deregistration depend on multiple factors:

• Timeframe – On average, voluntary liquidation takes between 6 and 12 months due to the mandatory creditor notification period and regulatory procedures.
• State fees – The registration of liquidation costs around 30-50 BGN, and the final deregistration fee is about 50-100 BGN.
• Legal and accounting services – If a lawyer or accountant is involved, additional fees may apply, ranging from 500 to 2,000 BGN, depending on the complexity of the case.

Conclusion

Deregistering a company in Bulgaria is a structured process that requires careful planning and execution. Business owners should ensure that all tax, financial, and administrative obligations are met before initiating deregistration to avoid legal risks. Proper preparation and professional assistance can help make the process smoother and more efficient.

Before deregistering, ensure all changes are made. For example, learn how to Change Your Company’s Address in Bulgaria.