Accounting for freelancers and companies in Bulgaria

Main takeaways

What the DPK actually is

The core idea is in the name: variable capital. In an EOOD, your share capital is a fixed number recorded in the Trade Register, and changing it means a formal procedure — a decision, amended articles, and a new filing. In a DPK, the capital is not registered as a fixed figure at all. It's determined by the shares (дялове) actually issued, and its amount is simply established each year in the annual financial statements.

Legally the DPK sits between an OOD/EOOD and an AD, borrowing from both. Bulgarian commentators consistently describe it as a hybrid, and it's explicitly modelled on what startups need: issue equity to a new hire, take an investor in a few months later, and do it without a Trade Register filing for every move.

Eligibility — it's a small-business-only form

This is the constraint that decides the question for a lot of people, so it's worth stating up front. The DPK/EDPK is reserved for small enterprises. To keep the status, the company must have:

• Fewer than 50 employees, and
• Annual turnover and/or asset value not exceeding 4,000,000 BGN (roughly 2.05 million EUR)

Whether you still qualify is established at the annual general meeting that approves the financial statements. If you've crossed the thresholds, you must transform into another capital company type — typically an OOD/EOOD or an AD — by the end of the following financial year. Miss that deadline and the consequence is not a fine: the prosecutor can bring a claim and the district court dissolves the company, after which it's struck from the register.

One terminology note: the 4M BGN threshold here is specific to the DPK chapter of the Commercial Act and is stricter than the "small enterprise" definition used in the Accounting Act. If you see different numbers elsewhere, that's usually why.

EOOD vs EDPK — head to head

Note what is not in that table: tax. Both are capital companies, so the tax treatment is the same — 10% corporate tax, 5% dividend tax, and the owner insured, usually on the statutory minimum social base. The DPK is not a tax optimization; it's a corporate-governance instrument. If tax is what you're optimizing, the numbers in the EOOD taxation guide apply unchanged.

What the DPK is genuinely good at

Employee equity. The minimum nominal value per share is 0.01 EUR — one eurocent — and there is no statutory minimum total capital, which means you can slice ownership finely enough to grant granular equity to employees and contractors. Doing the same in an EOOD is clumsy: every allocation is a notarial share transfer and a Trade Register filing.

Taking on investors. Different classes of shares with different rights — liquidation preference, preferential dividends, multiple votes, redemption — are exactly what a funding round is made of. An EOOD's uniform shares force you to bolt this on with shareholder agreements that sit awkwardly on top of the corporate structure.

Changing the cap table without bureaucracy. Because capital is variable, issuing, redeeming, or transferring shares doesn't trigger a Trade Register filing each time — the amount is simply recalculated once a year with the financial statements, and the cap table lives in the internal shareholders' book. The formalities on the transfer itself are lighter than an EOOD's, and how light depends on how you draft the articles.

Modern governance. The law explicitly supports remote general meetings and electronic decision-making, and lets you run the company either with one or more managers (управители) or with a management board, without a rigid minimum board size.

The catch

It's new. Courts, tax authorities, banks, and counterparties have far less experience with the DPK than with the EOOD. Opening a bank account, getting a credit line, or satisfying a large client's compliance department is simply more predictable with a company type that everyone has seen a thousand times.

The size cap is a future problem. Reaching 50 employees, or exceeding both 4M BGN financial measures, forces a conversion — legal work and cost you did not have to plan for with an EOOD.

Privacy cuts both ways. Owners not being listed in the Trade Register is a genuine benefit for some, but some counterparties and lenders prefer the transparency of an OOD/EOOD.

The articles do a lot of the work. Because so many rights and procedures live in the company's articles rather than in the statute, poor drafting creates real risk — internal conflict, investor uncertainty, or rights that don't work the way you assumed. An EOOD is more rigid, but rigidity means fewer ways to get it wrong.

So which one should you register?

For most freelancers and small companies, the EDPK is the better fit. That's not an accident — it's the form the legislature actually designed for you. The tax is identical to an EOOD, the formation is cheaper and lighter (no capital subscription bank account), and the structure doesn't lock you into decisions you haven't made yet. If a co-founder, an investor, or an employee you want to give equity to shows up in year three, the EDPK absorbs that without restructuring — no Trade Register filing per transfer, and if you draft the articles for it, no notary either. An EOOD makes you pay a notary and file with the Trade Register for every one of those moves.

The flexibility costs you nothing while you don't need it, which is what makes it the sensible default rather than a bet.

Choose the EOOD if predictability matters more to you than flexibility. Concretely, that means: you deal with banks or large corporate clients whose compliance processes may not have caught up with the new form; you want the depth of 30 years of case law and established practice behind your structure; or you realistically expect to outgrow the small-enterprise cap and would rather not pay for a conversion later. It's the conservative choice, and for a stable, traditional business it's still a perfectly good one.

If you're still deciding between operating through a company at all versus registering as an individual freelancer (свободна професия), that's the more consequential decision — and it's covered in the structure comparison.

Registration specifics

If you do go with a DPK/EDPK:

• Founders can be one or more natural or legal persons, subject to the Commercial Act's general disqualification rules (which catch, for example, declared-insolvent individuals and former managers of insolvent companies with unsatisfied creditors).
• The name must carry the form — the company name has to include "ДПК" or "ЕДПК" (or the full Bulgarian wording) so the legal form is unambiguous.
• You must maintain an internal shareholders' book. This is a statutory obligation, and since the Trade Register doesn't hold ownership data, this book is the evidence of who owns what. Treat it as a real record, not a formality.
• You will have to declare beneficial owners under the anti-money-laundering rules. Note this is actually a step more than a plain EOOD: an EOOD owned directly by a natural person is exempt from filing a separate beneficial-owner declaration, precisely because the register already shows the owner. A DPK's owners aren't visible there, so the exemption doesn't apply. Reduced public visibility is not reduced AML compliance — if anything, it's slightly more paperwork.
• The articles matter more than in an EOOD. Budget for a lawyer who has actually drafted one of these, not a template.

What about Podnikio?

Podnikio supports Bulgarian companies with the full stack: registration end-to-end, invoicing, a business bank account, and a connected accountant handling bookkeeping, corporate tax, annual financial statements, and dividend declarations — for a single monthly fee. If you're unsure whether an EOOD or an EDPK fits your plans, that's exactly the kind of thing to settle in a consultation before you file anything, because changing it later is the expensive path.

Calculator

The tax treatment is identical for both company forms, so the EOOD calculator applies to a DPK too. Enter your expected annual revenue to see the breakdown — and if you're weighing other countries, check out the full tax calculator.

Sources

Primary legislation

• Commercial Act (Търговски закон)
• State Gazette (Държавен вестник) — the 2023 amendment
• Ministry of Economy — SME handbook on choosing a legal form

Professional analysis

• EY — 10 things we did (not) realize about the new entity (English)
• Kambourov & Partners — the variable capital company (English)
• Delchev & Partners — variable capital company (English)
• Schoenherr Bulgaria — the variable capital company (English)
• STZ Law — variable capital company introduced by Bulgarian Parliament (English)
• Deyan Sotirov — the new option for startup companies
• Advantage Austria — overview of the new company form
• Trud i Pravo — Дружество с променлив капитал

This article is general information, not legal advice. The DPK has little case law behind it and much of how it behaves in practice depends on how the company's articles are drafted — check your specific situation with a lawyer or accountant before you register anything.

Contact us

If you're deciding between an EOOD and the new variable capital company, or want to talk through what your structure should look like before you register, reach out. We offer a free initial consultation.

This is one of two detailed guides on Bulgarian taxation. See the overview article for a comparison of both structures.

Main takeaways

What it is

An Еднолично дружество с ограничена отговорност (EOOD) is the Bulgarian single-owner limited liability company — the Bulgarian equivalent of an LLC. As the sole owner, you operate the company and pay yourself by distributing dividends once the year is closed.

The key structural advantage of the EOOD is that the owner pays social insurance on the statutory minimum base only — regardless of how much the company earns. For a freelancer in the ordinary 25% recognized-expense category, this makes the EOOD more tax-efficient between roughly 16,400 and 66,300 EUR/year — but not below that, where the fixed social cost is no longer offset by anything and the 10% + 5% tax layers still apply in full.

Freelancers who qualify for the 40% category (author/licence remuneration, lawyers) have a lower taxable base to begin with, so their break-even points against the EOOD sit elsewhere — see the crossover FAQ for the exact numbers.

Rates at a glance (2026)

We use the minimum-base self-insurance scenario. If the owner wants, he can pay more than the minimum base, up to the maximum allowed, but most of the time, owners choose to pay the minimum and that's the scenario we model. The minimum base is a fixed cost, it does not grow with company revenue.

How the calculation works

Step 1 — Social contributions (fixed)

The owner registers as a self-insured individual without a salary. The minimum monthly insurable income rose mid-year — 550.66 EUR through July, 620.20 EUR from August — so the 2026 minimum blends both:

This is a fixed cost — it does not change as company revenue grows. From 2027 onward, once the 620.20 EUR base applies for a full calendar year, the equivalent run rate rises to ≈2,069 EUR/year (620.20 × 12 × 27.8%).

Step 2 — Corporate tax base

The owner's social contributions are paid personally, not by the company — they do not reduce the corporate tax base. Only genuine, documented company expenses do.

Step 3 — Corporate tax

Step 4 — Net retained in company

If you can retain the profits in the company, you can avoid the dividend tax layer and pay only the 10% corporate tax. But if you want to take the money out, the dividend tax on the next step applies.

Step 5 — Dividend tax

Dividends from the current year's profit can be distributed only after the annual financial statements are approved. A company may make more than one distribution decision from already approved retained profits, subject to the usual solvency and corporate-law checks; dividends are not a monthly substitute for salary.

Step 6 — Net income

Examples — zero company expenses

The effect of company expenses

If the company has genuine business expenses (subcontractors, equipment, software, office rent), those reduce the corporate tax base. Unlike the freelancer route, there is no fixed recognized expense rate — you deduct actual, documented costs.

Example at 60,000 EUR revenue with 10,000 EUR in company expenses:

Every euro of legitimate company expense reduces the effective rate by reducing the corporate tax base before dividends are calculated.

When EOOD beats freelancer

For a freelancer in the ordinary 25% category, the EOOD is more tax-efficient between roughly 16,400 and 66,300 EUR/year. Above 66,300 the freelancer route wins as its social-insurance cap takes full effect. Below 16,400 it also wins, because at the bottom of the range both routes use the statutory minimum social base.

But the freelancer benefits from its lighter income-tax layer and absence of dividend tax.

The 40% author/lawyer category has different break-even points — see the crossover FAQ.

Beyond taxes, the EOOD adds administrative overhead: proper bookkeeping, annual financial statements, a company bank account, and a formal dividend declaration process. The freelancer route is simpler to operate.

That said, the EOOD structure can be advantageous for those who want to reinvest profits into the company, have significant business expenses, or prefer the legal separation between personal and business finances.

In this example, we assume zero-expenses for both the EOOD and freelancer. If the EOOD has legitimate business expenses, its effective tax rate can drop below the freelancer's even at higher revenue levels. Always consider your specific situation and consult with a tax professional to determine the best structure for your business.

Administrative requirements

Operating an EOOD requires:

• Company registration with the Bulgarian Commercial Register (takes 1–2 weeks and may involve a notary and a Registry Agency fee)
• Separate business bank account — required by law
• Full bookkeeping — double-entry accounting records maintained by a professional accountant
• Annual financial statements — filed with the National Statistics Institute and Commercial Register
• Monthly VAT filing if VAT-registered
• Annual corporate tax return — filed by June 30 of the following year
• Dividend decisions and declarations — current-year profit becomes distributable after its financial statements are approved

What about Podnikio?

Podnikio supports Bulgarian EOOD companies with the full stack: company registration end-to-end, invoicing, a business bank account, and a connected accountant who handles bookkeeping, corporate tax filing, annual financial statements, and dividend declarations — all for a single monthly fee. No juggling between a lawyer, an accountant, and a bank.

Calculator

Enter your expected annual revenue to see your exact tax breakdown as a Bulgarian EOOD company — and compare it against the freelancer structure. And if you are considering other countries as well, check out the full tax calculator.

Contact us

If you have questions or want to discuss whether it's the right choice for your freelance business, feel free to reach out to us. We offer free initial consultation to help you navigate the complexities of freelancer taxation and find the optimal setup for your situation.

Main takeaways

Who this applies to

This article is written for freelancers and remote workers resident in Bulgaria, earning income from clients. Two structural options are available:

• Registering as an individual freelancer (свободна професия — liberal profession)
• Opening a limited liability company (EOOD/ЕООД)

Which structure is better?

The EOOD is more tax-efficient at many income levels because the owner pays social insurance on the statutory minimum base only, regardless of how much the company earns. The minimum base rose mid-year in 2026 (550.66 EUR through July, 620.20 EUR from August), so the 2026 minimum blends both and comes to ≈1,934 EUR/year — rising to ≈2,069 EUR/year once the new base applies for a full calendar year from 2027 onward. The individual freelancer pays contributions on actual income within the applicable monthly minimum and maximum, which follow the same mid-year split.

Note that as the company owner, you might not need to self-insure on the minimum base — you could choose a higher base, take a salary, or have another insurance title. The numbers here assume the minimum-base scenario for comparison, as it's the most common way.

For a freelancer in the ordinary 25% recognized-expense category, this creates a crossover around 66,300 EUR/year: below it, the EOOD's fixed social cost wins decisively; above it, the freelancer's capped contributions catch up and the gap reverses.

There is also a second, lower crossover around 16,400 EUR/year — below that the EOOD's social cost is no longer low relative to the freelancer's, and the freelancer route is cheaper again.

Beyond the numbers, the structures differ in complexity. The freelancer route requires no company: no bookkeeping, no annual financial statements, no formal dividend process. The EOOD requires an accountant and more administration, but provides legal separation between personal and business finances and lets you retain and reinvest profits inside the company without triggering dividend tax immediately.

Freelancers who qualify for the 40% category have a lower taxable base and different break-even points — see the crossover FAQ for the exact numbers.

Individual freelancer (свободна професия)

Bulgarian law allows certain professionals to register as individual freelancers without forming a company. This is a common option for IT consultants, designers, translators, accountants, engineers, and other independent professionals.

Key features:

• 25% recognized expenses deducted automatically from gross income for ordinary free-profession income and non-employment-contract remuneration. Author/licence remuneration and lawyer income get 40% instead — see the full freelancer guide for which category applies to you.
• 10% income tax on the remaining taxable base (after deducting social contributions)
• Social insurance calculated on monthly income net of the applicable recognized-expenses deduction, capped between a band that changed mid-year in 2026 — 550.66–2,111.64 EUR/month through July, then 620.20–2,300 EUR/month from August: DOO 14.8% + DZPO 5% + NZOK 8% = 27.8% total

The social insurance cap is important: once your net-of-expenses monthly income clears both periods' ceilings, contributions stop increasing, fixed at ≈26,281 EUR/year in social base for 2026. For the ordinary 25% category that happens at roughly 36,800 EUR/year in gross income; for the 40% category it happens later, at roughly 46,000 EUR/year. This makes the freelancer route increasingly attractive at higher incomes.

Example — 100,000 EUR gross, ordinary 25% category:

→ Full breakdown: Freelancer taxation in Bulgaria

Company (EOOD)

An EOOD is the Bulgarian single-owner limited liability company — the equivalent of an LLC. The owner registers as a self-insured individual without a salary, paying social contributions on the statutory minimum base only — 550.66 EUR/month through July 2026, 620.20 EUR/month from August — regardless of actual company revenue. This is the key structural advantage over the freelancer route at lower incomes.

Key features:

• 10% corporate tax on company profit
• 5% dividend tax when distributing profit to yourself
• Social insurance on minimum base: DOO + DZPO + NZOK = 27.8% → ≈1,934 EUR/year fixed for 2026 (≈2,069 EUR/year once the new base applies for a full calendar year), regardless of revenue
• Administrative overhead: proper bookkeeping, annual financial statements, separate bank account

Example — 60,000 EUR gross, no company expenses:

→ Full breakdown: EOOD company taxation in Bulgaria

Practical notes

Get an accountant. Bulgarian accounting is not complicated by EU standards, but it has its own rules and requirements. Budget for professional accounting support from day one.

We handle all of this for you. Podnikio is an all-in-one platform for freelancers and company owners: invoicing, a business bank account, and a connected accountant — all in one place for a single monthly fee. We also manage the initial registration process end-to-end, whether you are setting up as a freelancer or opening an EOOD.

Calculator

Compare both structures for your specific income in the calculator below. And if you are considering other countries as well, check out the full tax calculator.

Contact us

If you have questions or want to discuss whether it's the right choice for your freelance business, feel free to reach out to us. We offer free initial consultation to help you navigate the complexities of freelancer taxation and find the optimal setup for your situation.