Sole Trader vs EOOD in Bulgaria: Which Fits a Freelancer or Foreigner?
If you want to work for yourself in Bulgaria, there are three main routes: work as a self-employed freelancer under your own name, register as a sole trader (ET, едноличен търговец), or form an EOOD — a single-owner limited liability company. They differ in liability, tax, paperwork and, crucially for foreigners, in whether you need to live in Bulgaria at all. This guide compares the sole trader vs EOOD in Bulgaria question side by side, so you can see which one fits a freelancer, a consultant or a non-resident founder.
The three options at a glance
| Self-employed freelancer | Sole trader (ET) | EOOD | |
|---|---|---|---|
| Separate legal entity | No | No | Yes |
| Liability | Unlimited, personal | Unlimited, personal | Limited to the company’s assets |
| Registered in | National Revenue Agency | Commercial Register | Commercial Register |
| Can you run it without living in Bulgaria? | Not in practice | No — a permanent address in Bulgaria is required | Yes |
| Tax on profit | 10% personal income tax after a statutory expense deduction | 15% on the sole trader’s taxable profit | 10% corporate tax, then 5% on dividends (14.5% combined) |
| Accounting | Personal tax return and income records | Double-entry books and annual accounts | Double-entry books and annual accounts |
| Best for | Residents with simple freelance income | Residents running a small local business | Foreigners, EU clients, growth, liability protection |
Social security contributions apply to the self-employed and to sole traders on top of the income tax. An EOOD owner who only receives dividends does not pay them on the dividend itself; a salary paid by the company does carry them. The right mix depends on where you live and pay tax.
Option 1: freelancing as a self-employed individual
Bulgarian tax residents can invoice clients as individuals in a free profession — consultants, designers, developers, translators and similar. There is no company: you register with the National Revenue Agency, pay social security as a self-insured person, and declare the income in your personal annual tax return, due by 30 April of the following year, with advance payments during the year.
The income tax rate is 10%, charged after a statutory deduction for expenses — 25% for most liberal professions — so you do not have to prove actual costs. On paper this is the lowest headline rate of the three options. The trade-offs are unlimited personal liability, social contributions on your declared income, and the fact that it only works if you are actually resident and registered in Bulgaria.
Option 2: registering as a sole trader (ET)
A sole trader in Bulgaria (ET) is an individual registered as a merchant in the Commercial Register. It has a trade name and a UIC, but it is not a separate legal entity: the business and the owner are the same person, and the owner answers for its debts with all personal assets.
- Residency: only an individual with a permanent address in Bulgaria can register as a sole trader. This rules it out for most foreigners who live abroad.
- Tax: the sole trader’s taxable profit is taxed at 15% as personal income, and the owner pays social security contributions.
- Accounting: as a merchant, an ET keeps double-entry books and prepares annual accounts — the same level of bookkeeping as a company.
- No dividends: profit is the owner’s income, so there is no separate dividend step.
An ET can make sense for a Bulgarian resident running a small local business who does not need limited liability. For most international freelancers it combines the paperwork of a company with the risk of an individual.
Option 3: forming an EOOD
An EOOD is a limited liability company with one shareholder — the Bulgarian equivalent of a single-member LLC. It is a separate legal entity, so business debts stay with the company, and the owner does not need to live in Bulgaria, have a residence permit or travel to set it up.
- Tax: 10% corporate tax on profit; dividends to an individual are generally taxed at 5%, a combined 14.5%. See corporate tax in Bulgaria.
- Capital: the legal minimum is €1 — see minimum share capital in Bulgaria.
- EU clients: with a VAT number listed in VIES, an EOOD invoices EU businesses like any other EU company — see VAT registration in Bulgaria.
- Banking: banks and payment providers onboard companies with clear ownership and a clear activity — see business bank account in Bulgaria.
More on the structure itself: Bulgarian LLC and EOOD vs OOD.
Which option suits a foreigner or non-resident?
If you do not live in Bulgaria, the choice is usually made for you. Freelancing under your own name and registering a sole trader both depend on Bulgarian residence and a Bulgarian address. An EOOD does not: EU and non-EU citizens can own 100% of it and manage it remotely. That is why almost every foreign freelancer, consultant and digital nomad who wants a Bulgarian business ends up with an EOOD — see opening a company as a non-EU citizen and remote company formation.
Owning a Bulgarian company does not change where you personally pay tax. Dividends and salary from the EOOD are taxed according to your residence and any double-tax treaty, and some countries look at where a company is actually managed. Check your home-country position before you rely on Bulgarian rates.
When a sole trader or freelancer status still makes sense
- You are a Bulgarian tax resident with modest, simple freelance income
- Your clients are mainly local and you do not need limited liability
- You want the lowest possible administration for a side activity
Once income grows, you take on contracts with real liability, or you work with EU clients who expect a company, the EOOD is usually the better long-term vehicle.
What it costs to start each one
Registering as a self-employed person or a sole trader has low state fees, but both routes require a Bulgarian address and residence. An EOOD with us costs €1,700 in person or €2,000 remote, including state fees, documents, Commercial Register filing, tax registration, a registered address for the setup period and bank-account coordination. Ongoing bookkeeping is separate for every option that keeps accounts — see bookkeeping in Bulgaria and the full cost breakdown.
Common questions
What is the difference between a sole trader and an EOOD in Bulgaria?
A sole trader (ET) is an individual registered as a merchant, with unlimited personal liability. An EOOD is a separate limited liability company with one owner, so business debts stay with the company.
Can a foreigner register as a sole trader in Bulgaria?
Only an individual with a permanent address in Bulgaria can register as a sole trader. Foreigners who live abroad usually form an EOOD instead, which does not require residency.
How is a sole trader taxed in Bulgaria?
The sole trader’s taxable profit is taxed at 15% as personal income, and the owner pays social security contributions. An EOOD pays 10% corporate tax, with 5% on dividends to individuals.
Can I work as a freelancer in Bulgaria without a company?
Yes, if you are a Bulgarian tax resident. Freelancers in free professions pay 10% income tax after a statutory expense deduction and pay social security as self-insured persons.
Which is better for a non-resident freelancer?
An EOOD. It can be owned and managed from abroad, offers limited liability and can register for EU VAT, while the sole trader and self-employed routes depend on living in Bulgaria.
Decided an EOOD fits you better?
We form EOOD companies for freelancers and foreign founders — in person in Sofia or fully remote, with registration, address, VAT support and bank-account coordination.