EOOD vs OOD: Choosing the Right Bulgarian Company Structure

When incorporating a Business in Bulgaria, most foreign entrepreneurs and digital nomads must choose between two primary legal structures: the EOOD and the OOD.

1. What is an EOOD?

The abbreviated term EOOD stands for "Еднолично дружество с ограничена отговорност", which translates to a Single-Member Limited Liability Company. As the name suggests, this structure is entirely owned and controlled by a single individual (or a single parent company).

2. What is an OOD?

The abbreviated term OOD stands for "Дружество с ограничена отговорност", translating to a standard Limited Liability Company. This structure requires at least two shareholders.

3. Converting an EOOD to an OOD

A common strategy for solopreneurs is to incorporate an EOOD initially to keep the setup lean and fast. If you later decide to bring on a co-founder or an investor, you can easily file an amendment with the Bulgarian Commercial Register to convert the EOOD into an OOD.

4. Tax Implications

Both structures enjoy the exact same flat 10% tax rate on corporate profit, making them functionally identical from a tax perspective.

5. Operational Workflow Differences

Beyond the legal definitions, the day-to-day operations differ. In an EOOD, the sole owner can simultaneously act as the General Manager. Any decisions regarding dividend distribution, address changes, or capital increases require only a "Decision of the Sole Owner" protocol, which is drafted and enacted instantly.

In contrast, an OOD requires formal General Assemblies. By law, these assemblies must be convened with at least 7 days' advanced written notice to all partners (unless all partners waive this right). Decisions are made via a voting protocol that must strictly adhere to the quorum requirements established in your initial Articles of Association.

6. Liability Protection

A critical question founders ask is: "If my business fails, can the government seize my personal assets?"

The answer for both EOOD and OOD structures is No. The phrase "Ограничена отговорност" translates directly to "Limited Liability." Whether you are the sole owner or one of five partners, your financial liability is strictly limited to the amount of share capital you injected into the company. If you incorporated with €1, your maximum exposure is €1. Personal bank accounts, real estate, and investments are entirely shielded from corporate creditors, provided no criminal fraud was committed.

7. Social Security & Managing Directors

Bulgarian labor law states that any company operating and generating revenue must have an active manager who is socially insured. As a foreign director of an EOOD or OOD, you have two structural choices regarding insurance:

• Management Contract (Договор за управление): You pay social security on a statutory minimum threshold based on the industry your company operates in. This grants you full health and pension rights in Bulgaria.
• Self-Insured Person (Самоосигуряващо се лице - СОЛ): You register as a freelancer acting as the manager of your own company, paying a lower flat minimum social security contribution (around €110/month).

Conclusion: Which should you choose?

If you are a solo consultant, remote developer, or e-commerce operator without co-founders, the EOOD is undeniably the most efficient vehicle.

If you are building a SaaS product with a technical co-founder and a marketing partner, the OOD enforces necessary legal boundaries, protecting everyone's equity and ensuring major decisions require consensus.