Opening a Business Bank Account in Bulgaria for Non-Bulgarian Citizens
The process of opening a bank account for a foreign company presents practical challenges in establishing the customer's identity and beneficial ownership. This is the reason why banks require a multitude of documents and information to conduct various checks. The primary objectives are to ascertain the customer's identity, assess potential risks associated with their financial situation, and verify the legitimacy of their transactions.
Can I open a business bank account in Bulgaria as a foreigner?
Yes. According to Bulgarian legislation, foreigners can open business bank accounts in Bulgaria. However, non-citizens are additionally subject to extra requirements.
According to the Constitution of Bulgaria, everyone has the right to free economic initiative, granting them the prerogative to engage in business activities. According to Bulgarian law, in order for a person to engage in business, they must register a company. In order for this company to operate, it needs a bank account.
It is noteworthy that some banks impose a condition of local presence on their customers, although such a requirement is not explicitly mandated by the law itself.
Obstacles to Opening a Bulgarian Business Bank Account
After the changes in the Anti-Money Laundering Measures Act (AML), banks were obliged to adopt stricter measures in relation to establishing the beneficial owner of the capital. This led to additional complications related to the creation of a company bank account, which is one of the requirements for registering the company in the Commercial Register. In March 2019, practically all banks introduced special conditions for opening bank accounts of legal entities with foreign owners. Some of the banks have introduced fees for document examination without making a commitment that the bank account will be opened. Other banks accept the documents for review, but subsequently either refuse to open the bank account (without any justification) or do not act on the request at all. There are also bank branches where foreigners are directly refused to open an account.
When opening a bank account for a foreign person, the bank must perform an identification of the actual owner of the capital. Since he is not a Bulgarian citizen, there is an obligation to perform a specific check and provide a different number of documents, depending on his citizenship.
What documents do I need to open a business bank account as a foreigner?
To open a business bank account, you’ll need the following:
- Proof of ID, such as a passport, ID card or driving licence
- Proof of address - the passport does not indicate an address, therefore the foreigner must carry a driver's license or another document (lease agreement, bank statement) which can be used for address verification purposes.
- Articles of association / partnership agreement / company’s memorandum of partnership
- Protocol of the founding meeting / minutes of the founding meeting of the company / certificate of Incorporation.
- Details of signatories on the account / signature samples of the company’s founders
After presenting all the necessary information you’ll need to complete an application form and answer questions about your business activity.
15 Questions They Might Ask When Opening a Business Bank Account
This checklist serves as a valuable resource to prepare for the inquiries that may arise while opening a business bank account. Although it encompasses fundamental questions that most financial institutions are likely to pose, it is important to acknowledge that the chosen bank may request additional information, either due to regulatory requirements or to cater to the specific financial service needs of the client.
Below are the essential questions to consider:
- What is the rationale behind the necessity of holding an account with a Bulgarian bank?
- Could you provide information about the permanent residency of foreign citizens involved and their relationship with Bulgaria?
- Could you elucidate the precise nature of the company's activities?
- How does the company deliver its products or services?
- Does the company have a website?
- Has the company acquired rented premises, such as an office or a shop?
- What entities are located at the registered address in the Commercial Register?
- Could you present a clear outline of the business, detailing products/services, counterparties, and related transfers?
- What specific products are being sought, along with the desired number of accounts, preferred currency, banking preferences, and potential debit card requirements?
- What is the extent of the company's connection with the territory of Bulgaria?
- Could you elaborate on any relationships with territories outside Bulgaria?
- Are there any Bulgarian counterparties involved?
- Are there other counterparties that need to be considered?
- Does the company have any employees?
- What is the projected volume of payments to be transacted through the accounts? Could you provide details on the frequency and size of such payments?
How Long Does it Take to Open a Business Bank Account in Bulgaria?
Once you have completed all the necessary paperwork, it should take up to a week for the business bank account to be opened.
Using a Power of Attorney to Open a Business Bank Account
Following the amendments to the Law on measures against money laundering in 2019, the majority of commercial banks have adopted a stringent approach and now decline to open a company account for a foreign individual through a proxy without a direct, personal acquaintance with the beneficial owner of the capital.
The bank will need to meet at least one representative of the company face-to-face to sign a bank mandate to open the business bank account.
Once the account is successfully opened, subsequent actions related to account management can be conducted by a duly authoriсed proxy. To do this you need to register a power of attorney with the bank, so you can manage the donor’s accounts in branch.
Refused or Declined to open a business bank account
The constitutionally guaranteed right to free economic initiative conflicts with certain provisions of the Anti-Money Laundering Measures Act, which stipulates that banks can refuse to open a bank account if they cannot fulfill the requirements for a thorough customer verification process. These refusals often stem from the banks' risk assessment of potential criminal affairs or fraud.
Can I Appeal The Bank Account Refusal?
In Bulgaria, there is no legally established possibility to appeal the bank's refusal. The law does not provide for such a procedure. For this reason, in practice, the Constitutionally guaranteed right to free economic initiative is infringed, since the registration and operation of the company are made dependent on the judgment and approval of third parties, such as banks.
Possible Workaround to Circumvent Bank Account Refusal
Many legal experts recommend opening a bank account through a Bulgarian legal entity specifically registered for this purpose, entailing an opening fee of up to BGN 10. Once the bank accounts have been set up, the entity should be acquired by the foreign parent company. This approach, while presenting the bank with a fait accompli, does not offer formal grounds for refusal. The bank is duly notified of the change in ownership, thereby adhering to the necessary formalities.
Getting Help With Opening a Business Bank Account
By focusing on compliance and tailored solutions, we can help you with preparing and submitting all necessary documentation accurately. In our practice, we have established partnerships with certain banks that assist us in the faster examination of documents and the opening of a company bank account for legal entities established by foreigners.
We also provide representation to the bank, but in most cases, as we indicated above, it is necessary for the actual owner of the capital to appear at the bank.