Bulgaria's Ghost Companies

1 min.

Ever since the economic crisis of 2008, Greek businesses have increasingly been moving their companies to Bulgaria. That is to say, on paper. At first, there seems to be nothing wrong with this trend, as all takes place in the realm of and accordance with international and national legislation. There are, however, some drawbacks to this scenario.


Author: Georgi Georgiev


Greek businesses move to Bulgaria to avoid Greek regulations.  In 2015, the Greek government implemented regulations concerning Greek companies’ capital. This led to problems with liquidity for many of these businesses.  Moreover, Bulgaria offers an attractive fiscal climate for Greek companies. Corporation tax, for instance, is merely 10% compared to 29% in Greece. The VAT in Bulgaria is also lower than in Greece.

How Does It Work?

This business model is known as the ‘triangle deal’: A Greek company imports goods from Turkey or China, for example, and invoices them through its Bulgarian entity (10% corporate tax versus 29%). Subsequently, these goods are sent to Greece. Although this circumvents Greek taxes, the business model is not illegal. In addition, Greek companies circulate their income among various Bulgarian bank accounts. Instead of paying 24% VAT tax in Greece, they pay only 20% in Bulgaria.


Research conducted by Bristol University shows that out of 14,000 Greek-owned companies in Bulgaria, only 3,000 are active in Greece. In other words, although most of the company’s day-to-day activities are still taking place in Greece, from a legal perspective, the entity is operating from Bulgaria. Often, these companies do not even employ staff in their so-called ‘offices’ in Bulgaria. They merely avail themselves of a mailing address.

Although moving to Bulgaria is not illegal, it can have legal consequences. For instance, if these Greek companies in Bulgaria start to incur debts, they can relinquish their Bulgarian ghost company. Tracing your business partner then becomes an extremely difficult task. So this construction whereby Greek businesses, on paper, are based in Bulgaria can lead to unpaid invoices.


Unfortunately, there is no specific solution to this problem. We strongly urge you to establish solid and transparent agreements with your trade partner.  We also advise you to carry out a background check on your potential business partner prior to entering into an agreement, to avoid unpleasant surprises. Additionally, we recommend that you put your agreement in writing, so that both parties are aware of one another’s expectations and legal obligations.