Acquiring a forex licence in Bulgaria: advantages and opportunities - YB Case 2024

Acquiring a forex licence in Bulgaria: advantages and opportunities

Acquiring a forex licence in Bulgaria: advantages and opportunities

Bulgaria is becoming increasingly alluring for entrepreneurs from sundry lands, proffering a plethora of advantages for engaging in commerce. Obtaining a factor's mandate in this realm is propitious for brokerage entities that aspire to engage in commerce lawfully. Devoted taxations (for instance, it boasts one of the least corporate levies in Europe), profoundly skilled labor force, nominal labor expenditures juxtaposed to Western Europe and other boons render Bulgaria enticing for commercial endeavors. The strategic position of the realm grants the entrepreneur ingress to the markets of Europe and Asia. Bulgaria borders with Romania, Greece, Serbia, North Macedonia, and Turkey, and thus one can access commercial markets with myriad consumers. The realm possesses a lattice of thoroughfares, railways, aerodromes, and harbors furnishing expedient logistics. Bulgaria is a constituent of the European Union, affording entities the opportunity to seize myriad advantages. It is a apt preference for brokerage enterprises desiring to burgeon their commerce and reap gains.

Pros and cons of doing business in Bulgaria

The realm's strategic locale, steadfast statutes, and adept laborers all allure proprietors from all corners of the orb to Bulgaria. The governance proffers an array of succor initiatives for diminutive and middling enterprises, encompassing subventions, toll exemptions, and pecuniary aids. The tally of nurseries, expediters, and pecuniary reservoirs bolstering nascent enterprises is incessantly burgeoning. Lease, amenities, and sundry overheads of engaging in commerce in Bulgaria are markedly inferior than in Western Europe. Furthermore, Bulgaria is among the most secure realms in Europe. It boasts a temperate clime with balmy summers and temperate winters. And there is all requisite for a commodious subsistence, encompassing caliber pedagogy, healthcare, and conveyance.

Nonetheless, it is pivotal to heed a multitude of drawbacks. Enrolling a venture and acquiring authorizations can be bureaucratically arduous. Notwithstanding governmental endeavors, venality persists as a quandary in Bulgaria. Acquaintance with the Bulgarian tongue can confer an edge in commerce, but broadly speaking, the preponderance of the populace, notably the youthful, articulate English adeptly.

On the whole, Bulgaria proffers a captivating commercial milieu owing to its meager levies, adept manpower, strategic whereabouts, advocacy for enterprise, and superior standard of living.

Taxation in Bulgaria

Corporate tribute herein is one of the nethermost in Europe - decuple percent. Dividend tribute is 5%+, lucre can be retracted from the corporation sans superfluous tributes. VAT is vigesimal (reimbursable). In augmentation, the realm possesses modest societal assessments: sextadecimals (on emoluments) for employers and tredecimals (on emoluments) for employees.

Bulgarian tribute dwellers are levied on their cosmogonic income. Non-dwellers are levied on their revenue sole from Bulgarian springs, via PE and/or WHT

On the whole, the realm proffers propitious tributary circumstances.

Obtaining a forex licence in Bulgaria: basic steps

The process of acquiring a forex permit in Bulgaria may appear intricate, thus it is probable that you may require proficient aid.

Here are the fundamental measures:

Step 1

There are two types of brokerage credentials. To procure an SPT broker credential, you will require to entrust a minimum of EUR 125,000. With this credential, you will be competent to detain your patrons' pecuniaries, but you will not be capable to barter on your individual reckoning.

To procure a comprehensive authorization - Merchandiser - you shall necessitate to place a minimum of 740,000 EUR. Consequently, you shall have the capacity to labor on your individual ledger.

Step 2

Documentation Preparation:

  • The franchise supplication must encompass exhaustive enlightenment about the firm, its executors, and stockowners.
  • The commerce schema must delineate comprehensively the firm's undertakings, its intended audience, progression tactic, and pecuniary prognostications.
  • Pecuniary manifests must authenticate the pecuniary steadiness of the firm and its adeptness to execute its engagements.
  • Attestations substantiating the credentials of laborers must be amassed: testimonials, warrants, and sundry other evidences substantiating their savoir-faire in pecuniary amenities.
  • Intramural regulations and methodologies must delineate the firm's protocols of operation, venture administration scheme, and assorted facets of undertakings affiliated with the provision of forex amenities.
Step 3

Filing of documents:

All chronicles should be tendered to the Bulgarian Financial Supervision Commission (Financial Supervision Commission).

Step 4

Consideration of the application:

The FSC shall scrutinize the tendered manuscripts and determine whether to bestow or rebuff the permit.

Step 5

Receipt of the licence:

In the event of an affirmative resolution, FSC shall bestow a permit upon the enterprise, which shall endure for 5 years.

The operation of acquiring a foreign exchange authorization in Bulgaria may consume numerous moons. The prerequisites for acquiring such authorization may undergo alterations, hence it is imperative to vigil the FSC website for revisions.

Licence for market maker activity

This entitlement grants the enterprise the prerogative to serve as a merchandiser on fiscal markets. A merchandiser is an establishment that commits to purchase and vend fiscal implements at quotations established by itself.

Merchandisers wield a pivotal function in furnishing fluidity to fiscal markets and curbing variances (the divergence between the procurement and disposition cost of a fiscal implement).

Prerequisites for acquiring an entitlement:
  • For market creators operating on a sanctioned market, the sanctioned capital is 255,000 euros. For market creators operating on the unmonitored market, the sanctioned capital is EUR 51,000).
  • A conscientious superintendent must be designated in the enterprise, who will dwell in Bulgaria and advocate for the enterprise before the FSC.
  • The establishment's laborers must possess pertinent credentials and expertise in the fiscal amenities sector.
  • The establishment must possess documented intrinsic ordinances and methodologies overseeing its undertakings.
  • The establishment vows to possess efficacious venture oversight frameworks in situ to safeguard the resources of its patrons and certify the steadiness of its operations.

Straight-Through Processing (STP) type licence

The Straight-Through Processing (STP) permit in Bulgaria authorizes brokerage firms to function on the forex marketplace utilizing the Straight-Through Processing (STP) model.

The doctrine of operation of operation of an STP broker:
  1. The factor's customer dispatches a directive to procure or vend a money duad.
  2. The STP factor does not operate as a counterparty to the transaction, but quests for the antipodal party amidst its associates or in the interbank marketplace.
  3. Once the antithetical faction is discovered, the transaction is consummated at the market value.
  4. The STP intermediary levies the patron a remuneration for its offerings.
Advantages of STP brokers:
  • Transpicuousness: patrons of STP agents incessantly discern the market valuation of a currency tandem and can autonomously evaluate the equity of a transaction.
  • Subfuscous spreads: STP agents, customarily, proffer diminished spreads than agents functioning under the marketeer model.
  • Absent conflict of concern: STP agents are not engrossed in the patron incurring detriments, so they do not employ such stratagems as recasting or augmenting spreads.
Disadvantages of STP brokers:
  • Speed of command execution: Straight Through Processing (STP) brokers may necessitate a tad more time to execute mandates compared to brokers functioning under the market creator paradigm.
  • Absence of assured mandate execution: in certain instances, an STP broker may encounter difficulty in locating a counterparty to effectuate a client's mandate.
Requirements for obtaining an STP licence in Bulgaria:
  • Smallest sanctioned capital of 125,000 eurocents.
  • Accessibility of adept superintendent personnel.
  • Evolution of intrinsic ordinances and methodologies.
  • Execution of efficacious peril oversight systems.
  • Adherence with alternate mandates of the Financial Supervisory Commission (FSC).

Company forms suitable for obtaining a forex licence in Bulgaria

To procure a foreign exchange franchise in Bulgaria, an enterprise can be enrolled in one of the ensuing configurations:

Joint Stock Company (JSC)

Joint Stock Company (JSC) is one of the exceedingly prevalent configurations of establishments in the realm. A JSC is distinguished by the ensuing principal attributes:

  • Essential to possess a portion of capital distributed into portions. The least sum of the approved capital is BGN 100,000 (roughly EUR 51,130).
  • The possessors of the AD are stockholders, who possess confined accountability for the enterprise's commitments to the degree of the worth of the portions they possess.
  • The portions may be conventional or predilection portions. Conventional portions bestow the prerogative to suffrage at communal convocations and to acquire dividends. Predilection portions bestow the prerogative to acquire a stabilized dividend in the preliminary instance, but do not bestow the prerogative to suffrage at the communal convocation of stockholders.
  • Governance is executed by the communal convocation of stockholders, the overseeing committee (if the quantity of stockholders surpasses 70) and the enterprise's executive overseer (or governance committee).
Benefits of registration:
  • Investors do not jeopardize their individual belongings if the corporation becomes insolvent.
  • May garner funds by issuing novel equities.
  • Regarded as a more esteemed variant of enterprise compared to alternative manifestations of enterprises.
Disadvantages of registration:
  • The enlistment procedure is more convoluted and extravagant than enlistment of other varieties of enterprises.
  • An AD cannot disburse dividends if its net assets are less than its sanctioned capital.
  • The AD is obligated to furnish more comprehensive accounting and other declarations.

Limited Liability Company (LLC)

It is one of the most ordinary forms of venture in Bulgaria.

It is distinguished by the subsequent characteristics:
  • In the circumstance of an LLC, the accredited stock apportioned into stakes is obligatory. Note that the minimum sum in this instance is 2 BGN (approximately 1 euro).
  • The proprietors are the partakers, who possess circumscribed responsibility for the commitments of the enterprise within the valuation of their stakes.
  • The administration is conducted by the universal congregation of partakers and the executive administrator (or governing council).
Benefits of registering an AOD:
The procedure of enrolling a LGB is straightforward and economical. Constituents of LGB can establish their own regulations for the governance of the association.
Disadvantages of OOD registration:
  • A GSE cannot publicize its shares for purchase.
  • If the establishment becomes insolvent, the participants may forfeit their investment up to the magnitude of their shares.

Single Member Limited Liability Company (SMLLC)

An SMLLC is a rarer configuration of enterprise in Bulgaria compared to limited liability enterprises or joint stock enterprises. It is a favored selection for agents, enticed by its plainness and nominal capital prerequisites. Fundamentally indiscernible from a limited liability company, however in this case there is 1 participant.

Sign

АО

OOD

SMLLC

Authorised capital

Minimum 100,000 BGN

Minimum 2 BGN

No

Responsibility of participants

Limited

Restricted

Unlimited

Controls

General Meeting of Shareholders, Supervisory Board (if >70 shareholders), Executive Director

General Meeting of Participants, Executive Director

General Meeting of Participants, Executive Director

Difficulty of registration

More complex

Simple

Simple

Disclosure requirements

Higher

Lower

Lowes

Attracting investment

Easier

It's harder

It's harder

Suitable for

Large companies that need access to capital

Small and medium-sized enterprises

Small and medium-sized enterprises

Forex regulation in Bulgaria

Bulgaria is a partaker of the European Union, and consequently the Directive 2014/65/EU (MiFID II), which establishes equable decrees for the exertions of forex brokers in the EU, is in vigor on its terrain. Note that the Bulgarian Financial Supervisory Commission (FSC) is the indigenous overseer answerable for overseeing conformity with MiFID II requisites on the terrain of the realm.

The principal MiFID II prerequisites for forex merchants in Bulgaria:

  • Acquiring a foreign exchange permit from the FSC.
  • Minimal endorsed capital.
  • Presence of adept executive staff.
  • Formation of intrinsic doctrines and methodologies.
  • Execution of efficient peril oversight frameworks.
  • Safeguarding of stakeholders' entitlements.
  • Monetary statement and lucidity.

Furthermore to MiFID II, Bulgaria additionally possesses alternative statutes and regulations that oversee currency exchange intermediaries, for instance:

  • Securities and Exchange Act.
  • Law on Combating Money Laundering and Financing of Terrorism.

Advantages of regulating the forex market in the country:

  • Elevated echelon of safeguarding investors' entitlements.
  • Lucidity of currency dealers' undertakings.
  • Constancy of the monetary structure.

Disadvantages of forex regulation in Bulgaria:

  • Elevated expenditures for currency exchange intermediaries, which might culminate in augmented spreads and remunerations for patrons.
  • Additional intricate accreditation and commerce prerequisites.

Typically, forex decree in the nation is at a towering standard, which guarantees an exalted degree of investor safeguarding and steadiness of the monetary structure.

Our services

Obtaining a forex licence in Bulgaria gives a company a number of advantages. For example, having a licence confirms that the company meets all the necessary requirements and standards. Clients are more willing to trust their money to licensed companies. In addition, having a forex licence allows a brokerage firm to provide its services in other EU countries.

In any case, if you are planning to open a forex firm and conduct legal business activities, acquiring a licence is a mandatory step. We will be happy to help you overcome all the difficulties and successfully acquire a licence.

YB CASE is pleased to offer its services to support companies in the process of acquiring a forex licence. We have extensive experience and in-depth knowledge in this area and can provide you with the following assistance:

  1. Assistance:
    • We will advise you on all questions related to obtaining a licence.
    • We will explain to you all the requirements of the Financial Services Commission (FSC) and help you fulfil them.
    • We will assess your firm's chances of obtaining a licence and develop an individual strategy.
  2. Document preparation:
    • We will help you gather all the documentation you need to apply for a licence.
    • We will check your documents for completeness and compliance with FSC requirements.
    • If necessary, we will translate the documentation into Bulgarian.
  3. Accompaniment in the process:
    • We will represent your interests before the FSC at all stages of the application process.
    • We will answer any questions you may have.
    • We will keep you regularly informed about the progress of your application.
  4. Additional Services:
    • Assistance in developing your company's internal policies and procedures.
    • Assistance in implementing risk management systems.
    • Representing your interests before governmental authorities and regulators.

We have many years of experience in acquiring forex licences and know all the nuances of the process. We develop an individual strategy for each client, taking into account their specific needs. We work only with qualified specialists who guarantee the high quality of our services. In addition, we ensure the confidentiality of all of our clients' information.

Contact us and we will help you get a forex licence as soon as possible!

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