Putting money into your Bulgarian company: capital increase, shareholder loan or additional contributions

For money you expect to take back within a few years, a written shareholder loan is usually the cleaner route: principal comes back tax-free, but any interest paid abroad carries 10% Bulgarian withholding tax and loans of €25,000+ are reported to the BNB. Share capital suits money meant to stay — it strengthens the balance sheet, but getting it out needs a capital reduction with a three-month creditor period. Additional cash contributions sit in between.

Current as of September 2026. Bulgaria has used the euro since 1 January 2026 (1 € = 1.95583 BGN). This is general information for owners of a Bulgarian EOOD or OOD, not tax or legal advice for a specific structure — treaty positions in particular depend on where you are resident.

The three options side by side

Option 1: increasing the share capital

How it works. For an OOD the general meeting decides unanimously; for an EOOD the sole owner signs the decision in the same form (Commerce Act Art. 147(2)). Under Art. 137(4) the decision is recorded in minutes with simultaneous notarial certification of signatures and content, unless the company’s articles provide for ordinary written form. The capital can be increased by raising existing shares, subscribing new shares or admitting new members (Art. 148). The new money is paid into the company’s bank account, and the change is registered in the Commercial Register.

For a foreign owner the notarial step is the practical bottleneck: it is typically done before a Bulgarian notary, through an attorney-in-fact, or abroad with the apostille and certified translation the Bulgarian register will accept. Check your articles first — if they already allow written form, the step disappears.

What it costs. No Bulgarian tax on the contribution itself. The costs are the notary (if required), the register fee and the preparation of the documents. Our fixed prices for filing a capital increase are on the company changes page.

Why owners choose it. Capital is permanent equity. It improves the balance sheet that banks, landlords, public tenders and payment providers read, and it cannot be recalled by the owner on a bad day — which is exactly what counterparties like about it.

The catch: getting it out. Since 2026 the minimum capital of an OOD or EOOD is €1 (Art. 117). Anything above that is locked in until you reduce the capital. A reduction is a change to the articles; the decision is filed and announced in the Commercial Register, and creditors are presumed to agree only if they do not object within three months of the announcement (Art. 150). Only then is the reduction registered (Art. 151). Four months from decision to cash is a realistic minimum.

Option 2: the shareholder loan

How it works. A loan agreement between you and the company. Two rules matter from day one:

• Interest is owed only if agreed in writing (Obligations and Contracts Act Art. 240). A bank transfer with “loan” in the reference is a weak record; a signed agreement with amount, rate, term and repayment schedule is the document your accountant and the tax authority will ask for.
• If no term is agreed, the borrower must repay within one month of being asked (Art. 240, same article). For a company that has spent the money on equipment, that is an uncomfortable default — agree a term.

Tax on interest paid to you abroad. Interest paid by a Bulgarian company to a non-resident is income from a Bulgarian source subject to 10% withholding tax — for a foreign company under the Corporate Income Tax Act (Art. 195 and 200), for a foreign individual under the Personal Income Tax Act. The company withholds and pays it and declares it quarterly. Two routes reduce it:

• a double tax treaty between Bulgaria and your country of residence, with the paperwork collected before payment;
• for a lender that is an EU company associated with the Bulgarian borrower, the exemption in Art. 195(7), subject to its conditions and anti-abuse rules.

The mechanics — residence certificates, the threshold for self-applying a treaty, quarterly filings — are in our note on withholding tax on payments abroad.

Interest in the company’s own tax return. Interest on a loan from a related party counts for Bulgaria’s thin-capitalisation test (Corporate Income Tax Act Art. 43). If the company’s borrowed capital stays within three times its equity (each averaged over 1 January and 31 December), the test does not bite. Above that ratio, interest expense in excess of interest income plus 75% of the result before interest is not deductible in the year, and carries forward. A separate EBITDA-based cap (Art. 43a) only applies once net borrowing costs exceed €3,000,000 — not a small-company issue.

Should the loan be interest-free? It is allowed commercially. But the Corporate Income Tax Act lists loans at a rate different from the market rate, including interest-free loans, among the arrangements that can be treated as tax avoidance (Art. 16(2)(3)). An interest-free loan into a Bulgarian company rarely reduces Bulgarian tax, which is why it is common in practice — but agree the rate deliberately, document why, and check how your home country views it.

BNB reporting. A financial credit between a Bulgarian company and a non-resident of €25,000 or more is declared to the Bulgarian National Bank on form SPB-1 within 15 working days, followed by periodic reports while the loan is outstanding. It is a statistical obligation, not an approval — and it is routinely forgotten.

Getting the money back. Repayment of principal is not income, so no withholding applies to it. This is the decisive advantage over capital for money you expect to recover.

Option 3: additional cash contributions

Art. 134 of the Commerce Act lets the members of an OOD — or the sole owner of an EOOD — be obliged to pay in extra money for a fixed term, to cover losses or a temporary need for cash. The decision needs more than three quarters of the capital (Art. 137(3)), without the notarial form required for a capital change. The contributions are proportional to shares unless agreed otherwise, do not change the registered capital, and interest on them may be agreed.

In a multi-member OOD this is the tool that forces every member to chip in; a member who voted against may leave the company within one month. For a single foreign owner the difference from a loan is mostly legal form — and because its tax and statistical treatment is less routine than a plain loan, agree the details with your accountant before the money moves.

A worked example: €60,000 for 18 months

A German-resident individual owns a Bulgarian EOOD with €1,000 of capital. The company needs €60,000 now and expects to repay it from client payments within 18 months.

Route A — capital increase to €61,000. Decision in notarial form (the articles require it), payment, registration. In month 18 the owner wants €60,000 back: capital reduction, announcement, three months’ creditor period, registration. Realistically the cash returns in month 22 or later. No tax on the round trip, but two register filings and two sets of documents.

Route B — written loan at 4% a year for 18 months. Interest for 18 months is €3,600. The EOOD withholds 10% = €360 unless the treaty paperwork supports a lower rate, pays the owner €3,240, and declares the tax quarterly. The loan is over €25,000, so an SPB-1 declaration goes to the BNB within 15 working days of the transfer. The EOOD’s debt of €60,000 against small equity exceeds the 3:1 ratio, so part of the €3,600 may not be deductible in the year and carries forward. At month 18 the company repays €60,000 — no tax on the principal.

Route C — additional contribution for 18 months. Legally possible to cover a temporary cash need, returned at the end of the term. For a one-owner company it adds little over Route B and has less settled practice, so most single owners use the loan.

The verdict for this owner. Route B. The money is meant to come back, and the cost of doing that through capital — a three-month creditor window at the moment the company is finally cash-positive — is worse than 10% withholding on a modest amount of interest. If the same €60,000 were meant to finance the company permanently and support a bank facility, Route A would win.

Mistakes we see

• Money sent without any paperwork. Months later nobody can say whether it was capital, a loan or a gift, and the tax authority is free to form its own view.
• Interest paid, tax not withheld. The liability sits with the Bulgarian company, plus interest for late payment.
• The SPB-1 declaration never filed for a loan above €25,000.
• Capital increased “to look serious” with money the owner needs back next year.
• “Loan repayments” larger than the loan. Anything the owner takes out above the documented principal and agreed interest is not a repayment; profit leaves the company as a dividend with 5% withholding, and mixing the two streams is how a payment starts to look like a hidden profit distribution. How dividends work for non-resident owners is covered in extracting profits as a non-resident owner.

We prepare the loan agreement or the capital decision, file the Commercial Register change and handle the withholding and BNB reporting as part of ongoing bookkeeping — see company changes or our accounting services.

Would rather not deal with this yourself? See how we handle it and what it costs.