In the world of entrepreneurship, starting a new business is an exciting process filled with hopes, plans, and ambitions. Registering a company in Bulgaria is fast, relatively cheap, and can happen in a matter of days. But what happens when the business idea doesn’t work out, the market changes, or you simply decide to transition to a corporate career?
Many entrepreneurs fall under the false impression that once they stop issuing invoices and paying social security, their company simply „ceases to exist“ or is automatically „frozen.“ This is one of the most dangerous and costly misconceptions in the Bulgarian business environment. In the eyes of the law and the National Revenue Agency (NRA), a company exists and has administrative obligations until it is officially deleted from the Commercial Register.
The process of closing a company (legally called „liquidation“) is complex, slow, and strictly regulated. In this comprehensive article, we will examine step-by-step how to close a Single-Member LLC (EOOD) that has no activity in 2026, what the fees are, how long it takes, and where the biggest tax traps are hidden.
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1. What does a company „without activity“ mean?
Before we move on to the actual closure, we must clarify what exactly it means for a company to be „dormant“ or „without activity.“
For an LLC to be considered a company without activity during the respective calendar year, it must simultaneously meet the following conditions:
- It has not carried out any commercial transactions (has not issued and has not received invoices).
- It has not reported revenue and has not incurred expenses (including bank fees for account maintenance – if the bank deducts fees, accounting-wise, this is a movement).
- It has not depreciated any assets.
- It has no hired employees, and the manager is not insured through it.
Even if your company meets all these conditions, you still have annual obligations to the state. You must submit a declaration of inactivity to the National Statistical Institute (NSI) and declare the lack of activity. To understand your full commitments at the end of the year, be sure to read our material How to do an annual closure for freelancers. If you miss these declarations, fines start at over 250 euros and can grow with systemic violations.
If you do not wish to maintain this administrative burden every year, the only clean solution is liquidation. It might be worth considering switching to a lighter form of work, as described in Freelancer or LTD: Which Is the Better Option in Bulgaria?.
2. Stages of liquidation: Why does it take at least 6 months?
Closing an LLC is not a single act, but a process. This process is deliberately made long to protect potential creditors of the company (suppliers, employees, the state). The goal of liquidation is to collect all of the company’s receivables, sell off its property (if any), pay all debts, and only then distribute the remainder to the owner.
Even if your company has not a single euro of debt and zero assets, the law requires going through the exact same procedure, which takes at least half a year. Here are the four main stages:
Stage 1: Notifying the NRA (Art. 77 of the Tax and Social Security Procedure Code) The first real step is not in the Commercial Register, but at the NRA. Before you begin the deletion, you must submit a special Notification under Art. 77 of the TSSPC to the territorial directorate of the NRA where the company is registered. With this notification, you are telling the tax authorities: „I plan to close this company.“ The NRA has a deadline (usually up to 60 days) to check if the company has unpaid taxes, social security contributions, or fines. If everything is fine, the NRA issues a Certificate, which you will need for the next step.
Specifics with the NSSI: In addition to the NRA, you must also notify the National Social Security Institute (NSSI) regarding the handover of payrolls (if the company ever had employees). If it didn’t, a certificate for the lack of payrolls is issued.
Stage 2: Announcing the liquidation in the Commercial Register Once you have the document from the NRA, an application is submitted to the Commercial Register at the Registry Agency. In this application, three key decisions are made:
- Termination of the company’s commercial activity.
- Declaring the company in liquidation (the suffix „in liquidation“ is added to the company name).
- Appointing a liquidator.
The liquidator is the person who will manage the company over the next 6 months. Most often, this is the owner/manager of the LLC themselves. It is important to know that during this period, the company cannot conclude new commercial deals, except those related to the liquidation itself (e.g., selling remaining equipment).
Stage 3: Invitation to creditors and the 6-month period
Along with announcing the liquidation, an „Invitation to Creditors“ is published in the Commercial Register. This is an official notice that states: „This company is closing. If it owes you money, you have 6 months to claim it.“ This 6-month period is absolutely mandatory under the Commerce Act and cannot be shortened under any circumstances, even if the company hasn’t been active for 10 years. The counting starts from the date the invitation is published in the register.
Stage 4: Final deletion
After the 6 months expire and no creditor has filed claims, the final stage can proceed. The liquidator prepares a final liquidation balance sheet of the company (an accounting document proving the company has no liabilities and assets). A final application for deletion is submitted to the Commercial Register. After it is processed, the company officially ceases to exist in the legal world.
3. Tax traps before closure
If the company genuinely had no activity and assets, the process is just an administrative burden. But if the company worked in the past, there are several serious traps that the NRA will check uncompromisingly.
Trap 1: The problem with the fictitious cash register (Cash on hand)
This is the most common problem among Bulgarian companies. Over the years, the manager withdrew money from the corporate account using the debit card for personal needs (coffees, repairs, vacations) without presenting invoices for them. The accountant reported this money as „cash on hand“ (cash that the company physically possesses). During liquidation, the NRA requires this money to be physically available. If, according to documents, the company has 50,000 euros in the cash register, but in reality they are gone, the NRA considers this a hidden distribution of profit. You will have to pay a 5% dividend tax on this amount (and possibly additional sanctions) before you can close the company.
Trap 2: VAT Deregistration
If your company is VAT registered, it must be deregistered before the liquidation is finalized. Upon VAT deregistration, the NRA conducts an audit. If the company has available assets (e.g., a purchased corporate laptop, car, or inventory) for which tax credit was used upon purchase, you will have to return this VAT to the state. The NRA will evaluate the assets at their current market value and demand payment of the tax. To recall the basic principles, review What is VAT and when do we have to register for mandatory VAT?.
Trap 3: Liabilities to the manager Often at the beginning of the business, the owner „credits“ their own company to pay initial expenses (rents, fees). Accounting-wise, the company owes this money to the owner. Upon liquidation, the company must either return this money, or the owner must officially waive their receivable through a special protocol.
4. How much does it cost to close a company?
The process involves state, notary, and accounting fees. Even if the company is „dormant,“ you must allocate a budget for its closure in 2026. Here are the approximate costs:
- State fees to the Commercial Register: Submitting the applications and announcing the invitation to creditors costs between 30 and 50 euros (if submitted electronically with an e-signature).
- Notary fees: Certifying the liquidator’s signature will cost about 10-15 euros.
- Certificates from the NRA and NSSI: Usually free or with minimal issuance fees (under 5 euros).
- Lawyer/Accountant fee: Since the procedure lasts at least 6 months and requires drawing up an initial and final liquidation balance sheet, as well as communication with the NRA, the experts’ fee usually ranges between 200 and 400 euros depending on the complexity and history of the company.
The total budget for the smooth closure of a dormant company is around 300 – 500 euros.
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5. The Alternative: Can I just sell the company?
Because of the long liquidation procedure, many people are tempted by ads like: „Buying companies with and without debts.“ The idea is to transfer the company shares to another person (often for the symbolic sum of 1 euro) and thus make the company their problem.
Why is this an extremely bad idea? Selling a company is a legal procedure when it comes to an operating business changing owners. But transferring a non-operating company, especially if it has old accounting irregularities (like a missing cash balance), to a low-income or straw person hides huge risks. The NRA has the right to seek joint liability from the old manager and owner for concealed taxes or financial crimes committed during their management. Selling the company does NOT erase your history as its manager. If the company is used for VAT fraud by the new owner, you will be summoned for questioning regarding the period you managed the entity. If your company is clean and has no debts, the only correct, ethical, and safe way for you is official liquidation.
Stopping activity is not the end of a business in the eyes of the state. Leaving the company hanging in the register only generates unnecessary obligations for filing zero declarations and hides the risk of fines upon forgetting. Arm yourself with patience, hire a trusted accountant or lawyer, and go through the 6-month liquidation process so you can close this chapter of your life cleanly and without future surprises from the institutions.
