Can I switch from freelancer registration to company registration later on?

Yes, you can. If your business grows or your needs change, you can transition from being a registered freelancer to establishing a company. This involves a separate registration process.

As a freelancer, do I need to register for VAT?

VAT registration is mandatory in Bulgaria once taxable turnover exceeds EUR 51,130 within a calendar year. If your turnover is below this threshold, you are not required to register for VAT.

Can I hire employees as a freelancer?

Technically, yes, but it can be complicated. As a freelancer, you are registered as a self-employed individual. Hiring employees would typically require you to register as an employer and fulfill additional obligations. It’s often simpler to establish a company if you plan to hire employees.

What are the main differences in accounting requirements between freelancers and companies?

Freelancers have simpler accounting requirements than companies. They typically need to maintain records of income and expenses and submit an annual tax return. Companies, on the other hand, have more complex accounting obligations, including double-entry bookkeeping, financial reporting, and audits in some cases.

Which option is better for obtaining a residence permit in Bulgaria?

Both options can potentially lead to obtaining a residence permit, but the requirements and processes differ. Company registration might offer a more straightforward path to a residence permit, especially if you are investing in the business or creating jobs. However, it’s crucial to consult with an immigration lawyer to determine the best approach for your specific situation.

Working in Bulgaria: Freelancer vs. Company Registration

Welcome to Bulgaria! If you’re considering setting up a business here, you’ll need to decide whether to register as a freelancer (self-employed) or establish a company. This article will compare both options, helping you choose the best fit for your situation

Quick answer:

Freelancing in Bulgaria is generally suitable for solo professionals with limited expenses and lower risk exposure. Company registration is usually more appropriate for higher income levels, business growth, hiring employees, or when limiting personal liability is important. The right choice depends on your specific circumstances.

Freelancer Registration

Freelancer registration is a simpler and faster option, ideal for solopreneurs with limited expenses. If you’re a foreigner considering freelancing in Bulgaria, be sure to also check out our detailed guide: Freelancer in Bulgaria: Civil Contracts vs. Self-Employment.

Here’s an overview of what you need to consider when registering as a freelancer:

Benefits:

Easy Setup: Registration is straightforward and can be completed within a week.
Lower Costs: Initial registration and ongoing accounting expenses are generally lower than for companies.
Tax Advantages: You benefit from a flat 10% income tax rate after deducting a fixed 25% for expenses, regardless of your actual spending.
Flexibility: You have more control over your work schedule and business structure.

Drawbacks:

Full Liability: You hold full personal liability for your business debts and obligations.
Limited Access to Financing: Securing loans or investments can be challenging as a freelancer.
Higher Social Security Contributions: Social security payments are based on a minimum income threshold, which can be higher than your actual earnings.

Company Registration

Company registration offers a more formal structure and may be suitable for businesses with growth potential or those planning to hire employees. If you’re considering this option, you can learn more in our detailed guide: How to Set Up an LLC in Bulgaria (OOD/EOOD).

Benefits:

Limited Liability: Your liability is limited to the company’s capital, protecting your personal assets.
Access to Financing: Companies have better access to loans and investments.
Professional Image: A company registration projects a more established and professional image.

Drawbacks:

Higher Costs: Company registration and ongoing accounting fees are generally more expensive than freelancer registration.
More Complex Setup: The registration process involves more steps and formalities.
Double Taxation: Companies pay a 10% corporate tax on profits, and owners may pay additional taxes on dividends.

Choosing the Right Option

The best registration option depends on your specific circumstances. Here are some key considerations:

Business Size and Growth Potential: If you’re a solopreneur with limited expenses, freelancer registration might be sufficient. However, if you plan to hire employees or experience significant growth, a company structure might be more suitable.
Liability Protection: If limiting your personal liability is a priority, a company offers that protection.
Financial Considerations: Weigh the registration and accounting costs associated with each option.
Tax System: While both options involve social security contributions, the minimum income threshold can lead to higher contributions for freelancers compared to their actual income. Companies have a separate tax structure with corporate tax and potential dividend tax.

The choice between freelancing and establishing a company depends on structure, scale, and long-term plans. For a broader view of how these decisions fit into the Bulgarian business environment, see our article Doing Business in Bulgaria: A Practical Perspective.

If your move also involves relocation considerations — residence status, healthcare registration, and tax residence implications — our article Living in Bulgaria: A Practical Perspective provides the wider context.

We’re Here to Help!

Navigating the legal and practical aspects of working in Bulgaria — including social security contributions, VAT registration, and ongoing compliance — can be complex. Our team at Aidos helps you confirm the most suitable setup for your situation and supports you through registration, tax compliance, and ongoing accounting services.

If you want to move from comparison to action, our Company Registration in Bulgaria page explains how we assess suitability in practice, outlines timelines and fees, and describes how the registration process works from start to finish.

Schedule a free consultation

Contact us to discuss your plans and next steps. We’ll help you clarify your options and decide how to proceed — without pressure or pre-packaged solutions.

Need more background or practical guidance? You can also explore our Bulgaria Business & Tax Knowledge Hub for in-depth articles, tools, and reference material.

FAQs: Freelancing vs. Company Registration in Bulgaria

Can I switch from freelancer registration to company registration later on? Yes, you can. If your business grows or your needs change, you can transition from being a registered freelancer to establishing a company. This involves a separate registration process.
As a freelancer, do I need to register for VAT? VAT registration is mandatory in Bulgaria once taxable turnover exceeds EUR 51,130 within a calendar year. Turnover is monitored per calendar year, not on a rolling basis. If your turnover is below this threshold, you are not required to register for VAT.
Can I hire employees as a freelancer? Technically, yes, but it can be complicated. As a freelancer, you are registered as a self-employed individual. Hiring employees would typically require you to register as an employer and fulfill additional obligations. It’s often simpler to establish a company if you plan to hire employees.
What are the main differences in accounting requirements between freelancers and companies? Freelancers have simpler accounting requirements than companies. They typically need to maintain records of income and expenses and submit an annual tax return. Companies, on the other hand, have more complex accounting obligations, including double-entry bookkeeping, financial reporting, and audits in some cases.
Which option is better for obtaining a residence permit in Bulgaria? Both options can potentially lead to obtaining a residence permit, but the requirements and processes differ. Company registration might offer a more straightforward path to a residence permit, especially if you are investing in the business or creating jobs. However, it’s crucial to consult with an immigration lawyer to determine the best approach for your specific situation.

Disclaimer

This article provides general information about working in Bulgaria as a freelancer or through a company and does not constitute legal or tax advice. The appropriate structure depends on individual circumstances, and professional advice may be required.

Last reviewed and updated: February 2026