It seems Bulgaria is a good place to do business – A T Kearny, the global management consultant firm, ranks ninth in the world and number one in Europe as an outsourcing destination, the World Bank put it a 38 for ease of doing business, while Bloomberg places it as the sixth best country for doing business.
If your looking to extend your operation across Europe, Bulgaria could be the ideal destination, so here’s all you need to know about exporting to Bulgaria.
The latest figures show the UK was the fifth largest investor in Bulgaria in 2014, with export values totalling more than GBP 376 million and about GBP 95.5 million in indirect investment.
If you’re thinking of exporting to Bulgaria, the top 10 UK exports are:
- Telecommunications equipment
- Iron and steel
- Specialised machinery
- Medicines and pharmaceuticals
- Road vehicles
- Miscellaneous manufactured articles
- Textile and fabrics
- Electrical machinery and appliances
- General industrial machinery.
The pros and cons of exporting to Bulgaria
A number of large UK companies, such as Shell, GlaxoSmithKline, and AstraZeneca all successfully operate in Bulgaria, and the strengths of the market there are predominantly:
- Signs of sustained economic recovery
- Skilled, multilingual labour force
- Low operating costs
- Strong potential for growth as Gross Domestic Product (GDP) per capita lower thanEU average
- Political stability, with public consensus on social and economic priorities
- Occupies a strategic location in the Black Sea region
And if you’re thinking of exporting there, the advantages for UK business, are:
- 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.
Exporting to Bulgaria is not without its challenges though, such as:
- 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.
A public procurement act was adopted in January 2016 in order to ensure transparency and fairness for foreign companies doing business in Bulgaria, while tackling the problems of malpractice and corruption, by implementing the following:
- Changes on implementation of EU directives
- Bond insurance
- An e-procurement platform
- Anti-corruption measures.
If you’re doing business in Bulgaria, you’ll need a reliable and cost-effective conference call provider to help keep in touch when travelling isn’t an option. Here’s How to set up a conference call between the UK and Bulgaria.
And remember, you can now screen share and video conference, using Crankwheel.
Tax and customs in Bulgaria
The Ministry of Finance is responsible for tax in Bulgaria, where the standard rate for VAT rate is 20%, with a reduced rate of 9% for hotel services. Income tax and corporate income tax are set at a rate of 10%, and certain company expenses are taxed at at 10%.
The UK has signed a double taxation agreement with Bulgaria, so tax isn’t paid twice – once in each country – on exported goods and services.
The internal market of the EU is a single market which allows the free movement of goods and services. As Bulgaria is part of the EU, no import duties apply and most goods can be imported into Bulgaria without restriction, but you will need a permit from the Ministry of Economy to import the following:
- Agricultural products
- Precious metals
- Military goods
Image from Pablo by Buffer.