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 The biggest mistake when dissolving Bulgarian company

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Andy
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PostSubject: The biggest mistake when dissolving Bulgarian company   Sat Jul 12, 2014 12:52 pm

Just got this info from my lawyer and thought I would share it here. It might be useful

There are two main reasons why foreigners dissolve their Bulgarian limited companies:

They failed to re-register by end of 2012 OR

They want their property on their personal names

Regarding the first point, we have alarmed in the past few years that all companies in Bulgaria which haven’t been re-registered or dissolved voluntarily, will be subject to compulsory liquidation by the government. According to §5а paragraph 1 of Companies Register Act, the deadline for voluntary dissolving of the non-reregistered companies is set to 31 January 2015, which is just 6 months away. Regarding the second point, people realised the benefit of having the real estate property on their own name and decided to dissolve their holding company. In order to do this, they hired a solicitor or an accountant to conduct the liquidation procedure.

Liquidation has started but is it being done professionally?

Many Brits and Irish who own their properties through limited companies have already started their liquidations, so that they keep their properties. Even if they have not been forced to dissolve their companies, it is still better to do it because of various reasons such as lower annual expenses, better inheritance procedures and security, tax efficiency etc. In this short article I will bring your attention to just one of possible pitfall which you might face if you hire ‘just any’ accountant or solicitor in Bulgaria to dissolve your company. The trouble is that not many accountants and solicitors specialise in company dissolution and, let me tell you, it’s not a straight forward procedure as one might think.

Taxes, taxes..

The purpose of the liquidation, because of which one will bother dissolving his company, will be transfer of the existing real estate property to shareholder’s name. However, the normal goal of the company dissolution is to cash any existing assets of the company, to pay all creditors and to return whatever has been left to the company shareholders. As you can see, the liquidator needs to undertake some legal actions of dispossession. They of course lead to creating some tax obligations, both for the company being dissolved and to the shareholders who accept the ownership of the property or the cash, left after selling it to a third party. The liquidator is obliged to notify the Bulgarian National Revenue Agency [You must be registered and logged in to see this link.] National Social Security Institute [You must be registered and logged in to see this link.] (in case the company traded and had employed people) which brings the attention of those two authorities to the company dissolution procedures and the possible taxes/fines it owes to the government or to the local town council. The way the liquidator manages and plans the property transfer process is crucial to the tax obligation which would follow after the company is dissolved.

How about HMRC/Irish Revenue and Customs?

Even if you think HMRC doesn’t talk to NRA, you might be wrong. There are many cases of cooperation between those two authorities and not only in the VAT filed. When it gets to collecting tax, HMRC knows how to chase people and check their overseas assets. Therefore it is essential to have the liquidator on your side and plan your money/property transactions carefully so that no additional tax will be paid. After all it’s your property, why you should pay income tax on it?
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