Bulgarian Holding Company for IP, Investment, and Group Structures: 2026 Guide
Bulgaria's EOOD or OOD can function as an effective holding vehicle: 10% tax on all income, 5% dividend withholding, EU Parent-Subsidiary Directive access, and participation exemption for qualifying shareholdings. For many international founders, it is the lowest-cost EU holding structure available.
What a Bulgarian holding company can hold
A Bulgarian OOD or EOOD can hold virtually any asset class from a legal standpoint:
- Shares in subsidiaries — Bulgarian or foreign, EU or non-EU. The holding company becomes the group parent.
- Intellectual property — software, trademarks, patents, domain portfolios, brand rights. Held and licensed to operating subsidiaries.
- Financial instruments — bonds, listed shares, private equity interests, fund units.
- Real estate — Bulgarian property directly; foreign property via sub-holding or directly depending on the jurisdiction.
- Cash and intercompany loans — the holding company can deploy surplus cash as intercompany loans to subsidiaries at arm's length rates.
Participation exemption: dividends from subsidiaries
Under the EU Parent-Subsidiary Directive (implemented in Bulgarian corporate tax law), dividends received by the Bulgarian holding from an EU subsidiary are exempt from Bulgarian corporate tax if:
- The Bulgarian company holds at least 10% of the shares in the paying subsidiary
- The shareholding has been maintained for at least 12 months
- Both entities are subject to corporate income tax in their respective jurisdictions
Capital gains on disposal of EU subsidiary shares (where the same 10%/12-month conditions are met) are also exempt from tax. For a holding company receiving dividends or planning a share sale, this is the most important feature of the Bulgarian holding structure.
For non-EU subsidiaries, dividends are included in the Bulgarian company's taxable income and taxed at 10% — with a credit for any withholding tax paid in the source country.
IP holding: royalties and licensing income
Bulgaria does not have a dedicated IP box regime (unlike the Netherlands' Innovation Box or Cyprus's IP regime). However, the flat 10% rate on all profit — including royalties — is competitive against most IP box effective rates in practice:
| Jurisdiction | IP regime | Effective rate on qualifying IP income |
|---|---|---|
| Bulgaria | No IP box (flat rate) | 10% on all profit |
| Netherlands | Innovation Box | 9% on qualifying profit |
| Cyprus | IP regime | 2.5% on qualifying profit |
| Ireland | Knowledge Development Box | 6.25% on qualifying profit |
| Luxembourg | IP regime | ~4.5% on qualifying profit |
Cyprus and Ireland have lower rates for qualifying IP, but significantly higher administrative costs, substance requirements, and setup costs. For most founders below €5M annual IP revenue, Bulgaria's total cost is lower.
Practically, if you own software IP or a brand and want to license it to an operating entity, a Bulgarian holding is a realistic structure. Transfer pricing rules apply — the licence must be at arm's length — and Bulgaria follows OECD guidelines.
Withholding tax on outbound payments
When the Bulgarian holding pays out to its own shareholders or to other entities, the following withholding taxes apply:
Dividends to individual shareholders
5% withholding. May be reduced by treaty (many treaties set 5% or 10%).
Dividends to EU corporate shareholders (≥10% shareholding, ≥24 months)
0% under the Parent-Subsidiary Directive.
Royalties to EU companies
0% under the EU Interest and Royalties Directive (where conditions met).
Interest payments
10% withholding domestically; 0% under the Interest and Royalties Directive for qualifying EU recipients.
Payments to non-EU companies in treaty countries
Reduced rates under applicable double tax treaties (typically 5–10% on dividends, 0–10% on royalties).
Typical holding structures using Bulgaria
The Bulgarian holding works best in a few specific configurations:
Solo founder holding structure
Founder (individual) → Bulgarian EOOD (holding) → Operating EOOD (Bulgaria) or operating entities elsewhere. Profits flow up to the holding and sit there at 10%. Dividends from the holding to the founder: 5%. Total effective rate on distributed profit: ~14.5%.
Multi-country group
Bulgarian OOD holds shares in subsidiaries in other EU countries. Dividends flow up exempt (PSD). The Bulgarian holding consolidates group profit at 10%. Useful when operating entities are in higher-tax jurisdictions and you want to retain profit at group level.
IP holding + opco split
Bulgarian EOOD owns the IP (software, brand, patents). It licences the IP to an operating company (same or different jurisdiction). Royalties flow to the Bulgarian IP holder and are taxed at 10%. The opco deducts the royalty as a business expense in its higher-tax jurisdiction.
Investment vehicle
Bulgarian EOOD holds a portfolio of listed shares, bonds, or fund units. Investment income (dividends, interest, capital gains) taxed at 10%. No minimum tax on passive income. Useful for founders who want to invest surplus cash in a tax-efficient EU wrapper.
Important limitations to be aware of
- Substance matters for tax treaty access. If the Bulgarian holding is challenged as a conduit (no real management decisions made there), treaty benefits and the PSD exemption can be denied. The holding should have real management — board decisions, board minutes, a manager who actually exercises management functions from Bulgaria.
- CFC rules in your country of residence. If you are personally tax-resident in Germany, France, the UK, or most other developed countries, your local CFC (Controlled Foreign Company) rules may attribute the Bulgarian holding's undistributed profits to you personally and tax them at your domestic rate. This is the most common reason Bulgarian structures do not deliver their theoretical tax benefit. Consult a tax adviser in your country of residence before proceeding.
- Anti-avoidance rules. Bulgaria implements the EU Anti-Tax Avoidance Directive (ATAD). Structures that lack genuine economic substance or whose main purpose is tax avoidance can be challenged by the Bulgarian NRA.
- Transfer pricing documentation. Intercompany transactions (royalties, management fees, intercompany loans) must be at arm's length and documented. For groups with >€750M revenue, full country-by-country reporting applies. Below that threshold, documentation requirements are lighter but still exist.
What Bizport EU handles for holding structures
We do not provide tax advice for your country of personal residence. For holding structures, we strongly recommend coordinating with a local tax adviser in your country before proceeding. We can provide a referral to advisers who work regularly with Bulgarian structures.
Frequently asked questions
Can a Bulgarian company hold shares in other EU companies?
Yes. A Bulgarian OOD or EOOD can hold shares in companies incorporated anywhere in the EU or globally. Dividends received from EU subsidiaries where the Bulgarian company holds at least 10% for 12+ months may qualify for the participation exemption under the EU Parent-Subsidiary Directive — meaning they are received tax-free at the holding level.
Is Bulgaria good for IP holding structures?
Bulgaria has a flat 10% corporate tax rate that applies to all income, including IP royalties. There is no dedicated IP box (unlike Netherlands or Cyprus), but the 10% flat rate is competitive against most EU IP box effective rates for founders below €5M IP revenue. Royalties received and capital gains on IP sales are both taxed at 10%.
What is the withholding tax on dividends paid out of a Bulgarian holding company?
Dividends paid to individuals: 5%. Dividends paid to EU corporate shareholders holding ≥10% for ≥24 months: 0% under the Parent-Subsidiary Directive. Dividends to non-EU shareholders: 5% (may be reduced by treaty).
Can a Bulgarian holding company own real estate?
Yes. A Bulgarian EOOD or OOD can own Bulgarian or foreign real estate directly. Rental income is taxed at 10%. Capital gains on property sales are included in ordinary profit at 10%. Annual property tax and transfer tax apply to Bulgarian real estate regardless of ownership structure.
Do I need a Bulgarian resident director for a holding company?
No Bulgarian law requirement for a local director — the manager can be a non-resident. However, for substance purposes (proving management and control is actually exercised from Bulgaria), having board decisions documented in Bulgaria and a manager who genuinely exercises management functions is important. This is a tax substance question, not a legal requirement.
Set up your Bulgarian holding company
€299 flat fee for registration. Book a free 30-minute call first if you'd like to discuss whether a Bulgarian holding works for your specific group structure or IP portfolio — we'll tell you honestly if it doesn't.
Also read: Best EU country for company formation · Bulgaria vs Cyprus for holding companies · EU company as non-resident · Bulgarian company for SaaS