questions & answers about Bulgaria

From IT to automotive, from renewables to logistics, and even pharmaceuticals and defence: Bulgaria is emerging as one of the most dynamic economies in Southeastern Europe

With a tax framework that is among the most competitive in the EU, targeted incentives and a skilled workforce, Bulgaria is a natural partner for Italian companies seeking growth, innovation and integration into European supply chains. We discussed this with Ilko Stoyanov, Partner at Schoenherr Bulgaria.

Which sectors are currently growing the fastest in Bulgaria, and where do you see the most tangible opportunities for Italian investors?

Bulgaria is positioning itself as one of the most dynamic investment destinations in Southeastern Europe, with several sectors showing exceptional growth. The IT/software and BPO sectors continue to grow at double-digit rates (12 % in 2024, 16.5 % in 2023). The automotive and electronics cluster has established itself as a European supply base, with the greatest opportunities linked to the transition to electric mobility. Renewable energy is one of the fastest-growing fields: large-scale solar capacity has increased by over one gigawatt in the past two years. At the same time, Bulgaria has launched EU-supported programmes to promote large-scale energy storage, with over EUR 500m in state aid already approved.

In addition, with a long tradition in the pharmaceutical and medical research fields, Bulgaria has attracted growing investment in generic drug production, clinical trials and R&D outsourcing. Logistics and industrial real estate are also creating opportunities for new build-to-suit projects. Finally, defence-related manufacturing is gaining momentum, driven by rising military spending and the entry of major international players.

After more than 20 years of activity, what major transformations have you observed in the Bulgarian market and in the approach of foreign investors?

Over the past two decades, Bulgaria has evolved from being seen primarily as a low-cost location into a destination for high value-added investments. Today, the main drivers for investment are the opportunities to develop sophisticated operations in areas such as advanced manufacturing, IT services and research & development. At the same time, the labour market has matured. As a result, investors now view Bulgaria not merely as a low-cost hub but as a strategic location for innovation, regional growth and integration into European supply chains.

Bulgaria is often cited as a cost- and tax-competitive country. Which aspects of the legal and fiscal framework are genuinely most advantageous for an Italian company?

The main advantages are a 10 % corporate tax rate and a 10 % flat personal income tax. For group structures, dividends distributed within the EU may be exempt from withholding tax (under certain conditions), while the Italy–Bulgaria tax treaty eliminates double taxation and reduces withholding on cross-border payments.
On the investment side, Bulgaria offers promotion schemes such as "Class A/Priority" status, which guarantees faster permits, improved infrastructure, training support, and in some cases, land-use facilitation – all factors that reduce start-up times for Italian businesses.

Additionally, companies benefit from EU-harmonised VAT rules and a cap on social contribution bases, increasing the predictability of labour costs.

From a business and operational perspective, are there specific features of the Bulgarian system that make market entry easier or faster compared to other countries in the region?

Bulgaria offers several practical advantages that make market entry quick and smooth. Company incorporation is simple and usually completed within three to five working days. For industrial investors, the country has developed a network of construction-ready plots in specialised areas such as the Trakia Economic Zone in Plovdiv or Sofia, which accelerate operational start-up. On top of that, the government issues investment certificates that grant access to state subsidies, priority administrative services and dedicated infrastructure support.

What obstacles or complexities should a foreign entrepreneur realistically expect, and how can they best be managed?

Administrative procedures, for instance, may face delays at the local level. Judicial processes – especially in commercial disputes – can take longer than expected but are generally manageable. Choosing sites in established industrial zones helps reduce administrative hurdles, while partnering with experienced HR firms facilitates access to talent. For contractual matters, many investors adopt arbitration clauses to ensure greater efficiency and predictability.

How is investment protection ensured in Bulgaria, and which dispute resolution mechanisms are most commonly used by international operators today?

Investment protection in Bulgaria is based on EU membership, bilateral treaties and alignment with international standards.

In terms of dispute resolution, most foreign investors prefer arbitration, usually through the ICC or VIAC, confirming Bulgaria's strong alignment with established European legal practice. As a local option, the Arbitration Court of the Bulgarian Chamber of Commerce and Industry is also widely used, particularly for commercial disputes.

You have assisted Italian companies in Bulgaria for many years. In which sectors has their presence been most prominent, and could you share some positive experiences?

Yes, mainly in energy and manufacturing.

Italian companies have been particularly active in the renewable energy sector. These projects have brought not only investment but also the transfer of know-how and technology. A notable example is the participation of Italian firms in gas infrastructure and pipeline projects. On the manufacturing side, Italian investors have launched operations in sectors such as automotive components and textiles. Based on these foundations, Italian companies can build long-term, growth-oriented partnerships in Bulgaria.

If you were to give one piece of advice to an Italian entrepreneur considering Bulgaria as a destination for a new investment, what would be the first step?

My advice to Italian entrepreneurs is to start by analysing the investment incentive framework in Bulgaria, particularly the availability of state "cash-back" subsidies.

These programmes target high-tech sectors and regions with higher unemployment, offering financial support that reduces initial costs and promotes sustainable growth. By taking these opportunities into account from the outset, investors can shorten their market entry timelines, strengthen financial planning, and lay solid foundations for long-term success in Bulgaria.

Ilko Stoyanov | Partner | Schoenherr Bulgaria
T: +359 2 93310 72 | E: i.stoyanov@schoenherr.eu

Daniele Iàcona | Head of Italian Hub | Senior Attorney at Law
T: +40 733 730 119 | E: d.iacona@schoenherr.eu