The Bulgarian economy has been operating under a currency board arrangement since 1997. The Bulgarian lev is pegged to the euro at a fixed exchange rate of 1.95583 leva per euro. The currency board regime has effectively eliminated the exchange rate risk for many companies trading with the Eurozone. Bulgaria is well integrated into the European economy, as the Euro area is the major export market for Bulgarian producers. The macroeconomic stability and predictability has attracted many foreign investors. As a result, foreign direct investments since 1998 have reached €42 billion in total.
FREEDOM of repatriating profits
Bulgaria has favorable legislation regarding repatriation of profits. Dividends distributed by Bulgarian companies to entities resident in EU Member States and the EEA are not subject to withholding tax. Dividends and liquidation quotas if distributed to individuals and non-EU/EEA companies are subject to 5% withholding tax.
The regulatory environment has improved in recent years in Bulgaria. According to the World Bank Bulgaria offers relatively strong investor protection, which is one of the reasons for the significant inflows of foreign capital during the past 15 years. Bulgaria has favorable regulatory framework compared with other countries in the EU. Bulgaria maintains the same level of investor protection as Poland and Romania according to the last installment of the Doing Business Report.
Bulgaria offers investors a predictable regulatory and tax environment. Unlike many other European states, the Bulgarian government has refrained from raising taxes on business, which has had positive impact on the business environment. Compared to most European countries, Bulgaria’s labor laws are more flexible and business friendly, striking the right balance between defending the interests of employees and employers.