A foreign entity registered with a right to engage in commercial activity in accordance with its national laws may register a branch in the Bulgarian Registry Agency's Commercial Register (Art. 17a, para. 1 of the Commercial Code and Art. 25 of the Investment Promotion Act). The branch in Bulgaria is not a separate legal entity, but may enter into transactions, in which all rights and obligations the branch assumes do not arise for the branch itself, but for the foreign entity. The fact that the branch is not a separate legal entity is also confirmed by the option to bring actions against the foreign trader where the seat of the branch is located as well (Art. 20 of the Commercial Act ).
The branch in Bulgaria has its own registered seat and address, manager and business activity, which may differ from that of the foreign trader. These circumstances are registered in the Commercial Register.
The branch is a form of permanent establishment for tax law purposes (§ 1, item 5, letter ‘a’ of the Tax and Social Security Procedure Code ). Moreover, the branch of a foreign trader must keep commercial records as an independent trader and prepare a balance sheet.
Circumstances to be entered in the Commercial Register
The Bulgarian Commercial register must contain data on the foreign entity (the legal form and the firm or the trade name of the foreign person, as well as the trade name or the branch if it is different than this of the foreign person; the register and entry number, under which the foreign entity is registered, if the applicable law provides so, if different from the law of an EU Member State; the persons representing the foreign entity according to the register, in which these are entered , if such a register exists, the manner of representation, as well as the liquidators and insolvency trustees and their powers), as well as any changes there of. According to the Commercial Act , the following circumstances must also be entered in to the Commercial Register: closing of the branch, termination of the foreign entity, initiation of liquidation proceedings , continuing activity , termination and finalization of the liquidation of the foreign entity; all acts of the bankruptcy court, which are recorded in the register, where the foreign entity is registered.
A copy of the articles of association or statute of the foreign company must be submitted to the register, together with any amendments thereto, including after the registration of the foreign entity in the local commercial register and each annual financial report of the foreign person, after being registered or filed according to the national legislation of its registration.
Closing of the branch
The advantage of a branch is that its termination is carried out not through liquidation proceedings , but only by submitting an application to the Commercial Register, after which the branch is closed. In this regard, the branch is a good alternative to the subsidiary.