What is an OOD (LLC) in Bulgaria?

The Bulgarian OOD (дружество с ограничена отговорност, or LLC) is the most commonly used legal form for businesses in Bulgaria. Its core feature is limited member liability — members are not personally liable for the company's debts beyond their capital contribution. It's favoured by both Bulgarian entrepreneurs and foreign investors who want a predictable, stable structure for commercial activity.

How does an OOD protect members' personal assets?

Limited member liability is the OOD's defining feature. The company is a separate legal person and answers to creditors with its own assets — members generally do not become personal debtors of company creditors merely by reason of membership. Personal exposure can still arise through statutory exceptions (personal guarantees, manager liability, unlawful distributions), but the default position is that members' personal assets are insulated from ordinary business risk.

How is an OOD managed and structured?

OOD governance is flexible. The company is run by one or more managers, who may be members or external persons. The law does not require a board of directors or a complex management structure, which keeps decision-making fast. Members are free to regulate their relationship in the articles of association — including voting rights, profit distribution and the conditions for transferring shares.

How is an OOD taxed in Bulgaria?

An OOD is subject to corporate income tax at a flat 10% on annual profit — one of the lowest rates in the European Union. Distributions of dividends to individual members carry a further 5% final tax. For corporate shareholders, EU/EEA parent companies and treaty-entitled recipients, the outcome can be different. The combined effective rate is what makes Bulgaria attractive as a jurisdiction for both operating companies and holding structures.

Is the OOD right for your business?

The OOD combines legal certainty, structural flexibility and favourable taxation. It works well for small and medium businesses and for larger investment vehicles alike. Before incorporating, take an individual legal and tax consultation — alternatives like an EOOD (single-member), AD or EAD (joint-stock), the new variable-capital company (ДПК / VCC), or a branch may suit your goals better in certain situations.

This article was prepared by the legal team at YARD Law Co., a full-service law firm based in Sofia, Bulgaria. It is for general information only and does not constitute legal advice on a specific case.