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General information for Bulgaria

Posted by Active Consult Ltd. - Accounting & Tax в 25/01/2013


Geography and climate

Bulgaria is situated in South-Eastern Europe, in the eastern part of the Balkan Peninsula. It borders Romania to the north, the Republic of Serbia to the west, the Former Yugoslav

Republic of Macedonia to the southwest, Greece to the south and Turkey to the southeast. The Black Sea is to the east of the country; it enables direct maritime links with the Russian Federation, Ukraine and Georgia. To the north, the Danube River separates Bulgaria from Romania. Bulgaria is strategically located along key land routes from Europe to the Middle East and Asia.

Bulgaria’s total area is 110,910 sq. km, with 1,808 km of land borders and 354 km of coastline. The country’s terrain is partly mountainous, with lowlands in the north and the southeast. The climate is Continental Mediterranean, it is temperate, with cold, damp winters and hot, dry summers.

Population and language

As per the results of the population census conducted by the National Statistical Institute in February 2011, Bulgaria’s population is approximately 7.36 million. Nearly 73 percent live in urban areas. The capital – Sofia – is by far the largest urban center having nearly 1.20 million inhabitants. Approximately 18 percent of the population is under the age of 19, while 63 percent is between the age of 20 and 64, and 19 percent is over the age of 65.

Ethnic Bulgarians represent almost 85 percent of the population, while ethnic minorities of Turkish and Roma descent make up another 8.8 percent and 4.9 percent respectively according to statistics from the population census in 2011. Smaller ethnic groups in Bulgaria include Russian, Armenian and Jewish among others. Nearly 76 percent of the Bulgarian population is Eastern Orthodox Christian. Another 10 percent of the population state they are Islam. Catholicism and Judaism are also represented.

Since 1990, the country’s net population growth has been negative (an average annual decrease of – 0.7 percent was recorded for the period 2001 – 2011), in part as a result of significant outward migration, but also due to the country’s aging demographics. The trend of increase in the birth rate in the country in the period 2004 – 2009 reversed in 2010 and the birth rate decreased by 6.7% further contributing to the decrease in the population.

 The country’s official language is Bulgarian. Secondary languages closely correspond to ethnic background. English, and to a lesser extent German and French, are used frequently in business.


Roads and railways

A network of international highways connects Bulgaria to Western Europe, Russia, Asia Minor, the Adriatic, the Aegean, and the Black Sea.

The European corridors No. 4 (from Germany to Istanbul), No. 7 (Rein, Main, Danube), No. 8 (from Durres, Albania to Varna), No. 9 (from Helsinki, Finland to Alexandropoulos, Greece) pass through the territory of Bulgaria.

According to the annual statistics published by the National Statistical Institute, the total length of the country’s road network is 39,512 km, which includes 458 km of designated motorways, 2,970 km of category I roads, 4,030 km category II roads, 12,054 km category III roads and approximately 20,000 km of category IV roads. Road transportation across most of the country relies primarily on two-lane roads. The main transport corridors are Kalotina-Svilengrad linking Serbia to Turkey, Vidin-Sofia-Kulata linking Romania to Greece, and Ruse-Kazanlak-Kardzhali linking Romania to Greece and Turkey.

Development plans focus on upgrades and investments, particularly of motorways, to further integrate the country’s road system into the international network. According to data from the Ministry of Regional Development and Public Works, priority road

infrastructure projects in Bulgaria until 2020 include construction of 778 km of motorways (Trakia, Maritsa, Struma, Sofia-Kalotina, Hemus and Black Sea) and construction/ rehabilitation of 914 km of speedways, two new bridges over the Danube river and the construction of Shipka Tunnel. The total budget for the planned road infrastructure projects listed above (excluding the two bridges) is estimated to amount to EUR 5,696 million until 2020. Financing sources include, Operational Programme Transport and Operational Program Regional Development (EU financing), the State Budget, State investment loans, financing from the European Investment Bank and the World Bank.

During 2012 and 2013, a total of 231 km of motorways are planned for completion, increasing by 50% the current motorways network. In early 2013, the last section of the Trakia motorway is scheduled to be completed, thus becoming the first entirely completed motorway in Bulgaria. Furthermore, the second bridge on the Danube river at Vidin – Kalafat is expected to be completed by the end of 2012.

Bulgaria’s railroad network includes about 4,098 km of railway lines. Some 68.0 percent of them are electrified and 23.6 percent are double-track. The majority of the network is designed to support a running speed of up to 100 km per hour, with only 150 km supporting a speed of up to 130 km per hour.

 The Bulgarian Railway Company has started to implement a program which includes spin- off and sale of the company’s freight businesses, sale of non-core assets and obsolete equipment and a gradual decrease of personnel over the next five years.

Priority railway infrastructure projects in the country until 2020 include rehabilitation, overhaul and modernization works of the existing railway infrastructure and construction of new high-speed railroads in the following directions – Sofia-Plovdiv-Burgas, Sofia-Vidin, Plovdiv-Svilengrad-Turkish border, Sofia-Dragoman, Sofia-Pernik-Radomir, Mezdra-Gorna Oryahovitsa, Sofia intermodal terminal and railroad junction, etc. The total budget for the planned railroad infrastructure projects as listed above is estimated to amount to EUR 4,671 million, which will be financed mainly by EU funds and the State Budget. Some sections of the Sofia-Plovdiv-Burgas and Plovdiv-Svilegrad-Turkish border high-speed railroad lines are due to be completed and lauched by the end of 2012.

The extension of the Sofia first metro diameter is expected to be completed by May 2012. The second metro diameter is planned for completion by August 2012 while the construction of the third metro diameter is planned to begin in 2015.


Both sea and river routes – the Black Sea and the Danube River – offer reliable shipping transportation to and from the country. The largest Bulgarian seaports are Burgas and Varna on the Black Sea coast. Varna mainly handles containers, grain and bulk goods, while Burgas mainly deals with crude oil and some bulk commodities. A ferry connection from Varna to Odessa (Ukraine), Kavkaz (Russia) and Poti (Georgia) facilitate the transport of goods between the countries.

The Danube River is navigable during most of the year and supports inland water transport. With the Rhine – Maine – Danube canal in use since 1992, Bulgaria has access to the large European ports on the North Sea. The main Bulgarian ports on the Danube River are Ruse, Lom and Vidin.

In June 2011, the Government granted a concession of the port terminal Burgas-East 2  to BMF AD. Furthermore, another call for concession bid is expected to be issued for the Lom port in 2012.

The Ministry of Transport, Information Technology and Communications is currently performing a pre-concession evaluation for Varna port (Varna-East, Varna-West and Ferry complex – Varna) and the concession call is expected to be issued by the end of 2012.

In addition, according to the plans of the Ministry of Transport, Information Technology and Communications, concession calls are also expected for the port terminals Ruse-west, Ruse-center, Vidin-south, Vidin-center, Nessebar, Nikopol, Tutrakan and Bourgas-west.


 Bulgaria has four operating commercial airports – in Sofia, Plovdiv, Burgas and Varna. They handle both international and domestic flights. A tender for a 35-year concession for the management of Burgas and Varna airports was held in June 2006 and the Government awarded the concession to a consortium between Fraport AG, Germany and a local company, named BM Star.

Furthermore, in response to the demand for cargo transport, the Government has  added the airports in Plovdiv (south-central Bulgaria), Gorna Oryahovitsa (north-central Bulgaria) and Ruse (northern Bulgaria) to the list of airports which accept international air traffic. In 2011, the Government issued calls for concession bids for the airports in Gorna Oryahovitsa and Ruse. Applications should be submitted by April 2012. In relation to Plovdiv airport, the Government is in the process of preparing the concession call for both the passengers and the cargo terminals of the airport.

Sofia airport, which handled about 3.5 million passengers in 2011, has undergone EUR  210 million investments which increased its capacity and provided modern facilities to deal with the increased demand for international air travel. The newly constructed terminal ensures a higher standard of passenger handling and landing of wide-bodied aircrafts.

In March-April 2012, the Government is expected to initiate a procedure for selecting a consultant to assess the feasibility of a concession of the Sofia airport. The purpose of the contemplated concession is to extend the cargo and passenger handling capacity of the airport and modernize its infrastructure.


Fixed-line communications

The fixed line system is extensive, with an estimated 1.9 million lines in operation in 2011, while the level of equipment used to support the network has significantly improved in recent years. The overall telephone density is estimated at 25.5 percent in 2011, representing a decrease in recent years due to the shift in consumer preferences in favour of mobile phones.

Mobile communications

Three mobile telephone companies currently provide services in Bulgaria: Mobiltel AD, Bulgarian Telecommunication Company AD and Cosmo Bulgaria Mobile EAD – doing business as M-Tel, Vivacom and GloBul – operating under the GSM 900 standard. The market has grown quickly, with the number of mobile subscribtions rising from 8.2 million in 2006 to an estimated 11.5 million in 2011. Based on publicly available information M-Tel has a 48.6% market share, followed by Globul with 35.9% and Vivacom with 15.5%.


 As at the end of 2011 there are an estimated 4.4 million internet users in the country which represents approximately 60 percent of the population. This is a vibrant market populated by numerous internet service providers (ISPs), whose rates and service quality vary widely. According to a market report issued by the Communications Regulatory Commission, there were 589 firms registered to operate data-transfer services as at the end of 2010. The largest companies which provide such services are BTCnet, Mobiltel (which has acquired Spectrum Net and Megalan in 2010), Blizoo (the new brand for Evrocom and Cabletel) and Net 1.

In 2005, the Bulgarian government granted the first point-to-multipoint wireless network licenses, which allowed operators to upgrade their infrastructure and provide high- speed wireless quality data, voice, video, and multimedia services based on the WiMAX standard. The companies providing WiMAX services were originally five, however, due  to operational difficulties the licenses of Trans Telekom, Carrier BG and Nexcom were revoked, while Mobiltel sold its license to Max Telecom, the only remaining participant in the sector.

Electronic payment methods

Credit and debit card use is gaining popularity, with an increasing number of consumer retailers accepting payments via such payment. Local banks are offering online banking services, debit card services, and various forms of electronic payment for utility and telephone charges.

A number of new electronic services facilitating the payment process are developing on the market i.e. electronic invoice, electronic signature and other. The latter are driven both by changes in regulation and market innovation.

The Bulgarian National Bank has granted a system operator license to System for Electronic Payments Bulgaria AD to develop and maintain a national mobile infrastructure for electronic payments in the country.


The official currency in Bulgaria is the Bulgarian lev (BGN). The BGN is circulated in notes of BGN 2, BGN 5, BGN 10, BGN 20, BGN 50, and BGN 100, and coins of BGN 0.01, BGN 0.02, BGN 0.05, BGN 0.1, BGN 0.2, BGN 0.5 and BGN 1.

In July 1997, a Currency board was introduced and the lev was pegged to the German mark at the rate of BGN 1 to DEM 1. Presently, the lev is pegged to the euro at a rate of BGN 1.95583 to EUR 1.

Exchange rates for the other currencies are quoted daily by the Bulgarian National Bank for statistical and accounting purposes.

Labor force

Approximately 3.3 million individuals or around 52 percent of the population aged 15  and over, comprised the country’s labor force in 2011. While the Bulgarian labor force is generally highly skilled and well educated, wage levels in the country are significantly lower than those in Western Europe, creating significant upside potential for labor- intensive investments. As per data provided by the Bulgarian National Bank, the average gross monthly salary for 2011 was EUR 362 compared to EUR 331 for 2010.

The overall trend of the annual unemployment rate over the period 2005-2008 was steadily downward, decreasing from 10.7 percent in 2005 to 6.3 percent in 2008. However, due to the negative impact of the economic crisis, unemployment rates in the country increased to 9.1 percent, 9.2 percent and 10.4 percent in 2009, 2010 and 2011, respectively.

Political system Bulgaria is a parliamentary republic. It held its first multiparty elections in 1990 and its current constitution was adopted on 12 July 1991. The national legislative body – a unicameral Parliament – is comprised of 240 members elected by popular vote who serve a four-year term. The president is the head of state and commander-in-chief of the army. The president and the vice-president are elected by a majority vote and serve a five-year term. The current president is Rosen Plevneliev and his term began in 2012. The President cannot initiate legislation but has a qualified power of veto.

Executive power rests with the Government. It is headed by a prime minister, who is appointed by a parliamentary majority. The current Prime Minister is Boyko Borisov, who is also the chairperson of the Council of Ministers. The latest parliamentary elections in Bulgaria were held on 5 July 2009 and won by the centre-right Citizens for European Development of Bulgaria (CEDB) party although lacking a parliamentary majority (it won 116 of 240 seats).

The country is divided into 28 administrative regions headed by regional governors appointed by the Council of Ministers. Bulgaria has 262 municipalities headed by mayors elected every four years. Municipal Councils, the local legislative bodies, determine the mayors’ executive functions.

Opportunities created via EU-funding

Upon accession to the EU on 1 January 2007, Bulgaria became eligible to receive and utilize resources from EU funds aimed at Member States. The funds are the main instrument for implementation of the EU Cohesion Policy and support of the common market of the EU.

Access to EU financial aid is granted by means of implementation of national Operational Programs (“OPs”) funded jointly by the national budget and by EU funds as well as from two national Programmes in the field of agriculture, rural development and fisheries.

The OPs cover the period 2007 – 2013 and are mainly focused on achieving enhanced and stable economic growth, competitiveness, employment, regional and infrastructure development.

 The EU assistance currently available covers the period 2007 – 2013 and amounts to EUR 12 billion from the EU budget, of which approximately EUR 4 billion are targeted at supporting Bulgarian businesses, including agriculture, rural development, fisheries and aquaculture aid measures. The funding opportunities for businesses registered and operating in Bulgaria refer to the following:

  • OP Development of the Competitiveness of the Bulgarian Economy (“Competitiveness”);
  • OP Human Resources Development;
  • Rural Development Programme, and
  • Fisheries Operational Programme.

OP Development of the Competitiveness of the Bulgarian Economy is specifically targeted at supporting the development of private economic operators.

Public aid is provided in the form of grants which are approved following a competitive project selection procedure. The supported activities for 2012 include energy efficiency and renewable energy projects for small and medium enterprises (SMEs), and the setting-up  of regional business incubators.

There are specific measures – such as the EU initiative JEREMIE – which aim at facilitating the access of enterprises to financial resources through the establishment of specialized financial instruments. It envisages EUR 199 million for investment and credit lines distributed among SMEs through guarantee funds, risk capital funds and micro credit funds. EUR 30 million is channeled to start-ups through the risk capital funds and another EUR 120 million is dedicated to growth equity and mezzanine funds. Guaranteed loans to SMEs are also provided under JEREMIE, involving the local commercial banks which take part in the so called “First Loss Portfolio Guarantee”.

OP Human Resources Development provides support to companies aiming at improving their personnel capacity through delivery of trainings. Training may involve:

  • Vocational training for improvement and qualification of employees
  • Training on key competencies, such as foreign languages, communication skills, digital competencies, etc.

Enterprises can also apply with projects for improving working conditions, developing and introducing prevention systems for monitoring and control of risks related to health and safety standards at the working place.

The Rural Development Program envisages the implementation of measures that are aimed at supporting the modernization of agricultural holdings, adding value to agriculture

and forestry products, setting up of producer groups for increasing the production and supply of high-quality products as well as for provision of farmers’ advisory services. The program also supports projects for diversification of farming sector activities, transition  to non-agricultural activities, establishment and development of micro-enterprises to promote entrepreneurship in rural areas. Public aid is also envisaged for projects related to investment in rural tourism activities to create additional income and jobs in rural areas and to preserve the rural heritage. Specific measures are also targeted at food companies aiming to modernize their production/processing facilities.

The Fisheries OP supports projects related to the processing and marketing of fisheries produce, modernization of fisheries ports, rest places and boat shelters. The program also provides grants for investments in aquaculture by financing the construction or modernization of aquaculture manufacturing facilities, as well as of fisheries facilities on the bank of the Danube River.

Bulgaria and NATO

Bulgaria, together with six other East European countries, joined NATO on 29 March 2004.

In order to become a NATO member, Bulgaria undertook a sizable modernization of the army and compulsory military service was abolished.


The Bulgarian economy continued its recovery from the global economic and financial crisis in 2011, realizing real GDP growth of 1.7 percent compared to a growth of 0.4  percent in 2010. This was mainly driven by export growth, while domestic demand continued to decrease. Despite the export recovery, retail trade, construction and industrial output remain depressed, while credit growth is still low.The International Monetary Fund forecasts real GDP growth of 1.3 percent in 2012. As a result of the rise in oil, electricity and food prices in the last quarter of 2011, the annual inflation rate averaged 4.2 percent in 2011 as compared to 2.4 percent in 2010. The inflationary pressure caused by increasing oil and food prices is expected to keep inflation levels around 3 percent in 2012.

The current account deficit continued to shrink in 2011, resulting in a surplus of 0.9 percent of real GDP in 2011 as compared to 1 percent deficit in 2010. This is mainly due to the strong export performance in 2011 and the rise in commodity prices leading to a reduction in the trade deficit. According to the Economist Intelligence Unit’s forecast, the current account deficit is expected to record a smaller surplus in 2012.

Foreign direct investments (FDI) in the country reached EUR 1,341million in 2011, which comprises an 11 percent increase compared to 2010 but is still far from the peak level of EUR 6,728 million in 2008. This can be attributed to the global financial crisis resulting in decreased investor activity, especially in the real estate sector, and reduced access to external financing.

The Currency board has a key role in sustaining the macroeconomic stability in the country. As a result of prudent government policy in recent years, the gross foreign currency reserves of the Bulgarian National Bank amount to EUR 13,349 million as at the end of 2011 compared to EUR 12,977 million an year earlier.

The table below lists some key Bulgarian macroeconomic indicators:

Indicator 2007 2008 2009 2010 2011
Real sector
GDP (million EUR) 30,772 35,430 34,932 36,052 38,483
GDP per capita (EUR) 4,017 4,648 4,605 4,785 5,189
Private consumption (% of GDP) 85.6% 83.0% 79.5% 79.0% 76.3%
Annual real GDP growth (%) 6.4 6.2 -5.5 0.4 1.7
Inflation (av.) (%) 8.4 12.3 2.8 2.4 4.2
Average monthly wages (EUR) 220 279 311 331 362
Unemployment rate (%) 6.9 6.3 9.1 9.2 10.4
Trade balance, FOB (EUR million) (7,245) 8,598) (4,174) (2,764) (1,975)
Export, FOB (EUR million) 13,512 15,204 11,699 15,561 20,227
Import, FOB (EUR million) 20,757 23,802 15,873 18,325 22,201
Foreign direct investments (EUR



6,728 2,437 1,208 1,341
Foreign sector
Current account deficit (% of GDP) (25.2) (23.1) (8.9) (1.0) 0.9

Foreign direct investments % (GDP)   29.4     19.0        7.0             3.4            3.5

Source: Bulgarian National Bank and Economist Intelligence Unit

Trade agreements

Framework agreements liberalizing foreign trade between Bulgaria, the European Union, European Free Trade Association (EFTA) and Central European Free Trade Agreement (CEFTA) countries, as well as with Turkey and Macedonia have expanded the market presence of domestic manufacturers. Bulgaria’s major trade agreements are with the following organizations:


Bulgaria has been a member of the World Trade Organization since 1996.

European Union

In March 1993, Bulgaria and the European Community and its Member States became signatories to the Europe Agreement of Association effective from 1 February 1995 and the Interim Agreement on Trade and Trade Related Matters covering various trade components, effective from 31 December 1993. In accordance with the Agreement of Association, customs duties on industrial goods between Bulgaria and EU countries

phased out by 2007. Since 1998, the EU import of industrial goods of Bulgarian origin has been duty-free. Significant relief for agricultural produce is also provided. The EU accession of Bulgaria and Romania in January 2007 expanded the export opportunities available to Bulgarian producers.


According to this 1993 Agreement, trade with EFTA countries (Switzerland, Norway, Iceland and Liechtenstein) enjoys preferential terms and conditions that are almost identical with those in the Europe Agreement of Association.

Bilateral Free Trade Agreements

As of 1 January 2007, the bilateral free trade agreements signed between Bulgaria and other countries in the region were cancelled and the country adopted the preferential  trade agreements of the EU with various countries. Presently, the EU has such agreements with countries from the Mediterranean region (Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, Syria and Tunisia) and, EFTA member countries, Mexico and Chile. The EU has signed Stabilization and Association Agreements with Macedonia, Croatia, Albania, Montenegro, Serbia and Bosnia and Herzegovina.

Foreign investment

According to the Bulgarian National Bank, FDI for 2011 amounted to EUR 1,341 million

(3.5 percent of GDP). The total value of FDI for 2010 was EUR 1,208 million (3.4 percent of GDP), whereas FDI for 2009 was EUR 2,437 million (7.0 percent of GDP).

The estimated top five FDI contributing countries ranked by total FDI flow for 2011 were the Netherlands, Austria, Russia, Cyprus and France.

Based on preliminary data, the top five industries that attracted the largest FDI in 2011 were the transport, storage and communication sector with EUR 498 million (37 percent of total FDI flow), wholesale and retail trade sector with EUR 223 million (17 percent), electricity, gas and water supply sector with EUR 153 million (11 percent), financial intermediation sector with EUR 152 million (11 percent) and hotels and restaurants sector with EUR 56 million (4 percent).

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