turn-key Corporate Services
Our assistance for your Corporate Governance success
Legal support and accountancy compliance by VD&A
Corporate governance is, broadly speaking, the way in which a company is directed and controlled. Usually the most important for the successful governance of the company is the duties of the board of directors (BOD) to be carried out professionally. These duties are set by the shareholders and are essential for the company’s commercial policies. In Bulgaria, there may be no BOD present, in the case of OOD/LTD/LLC company. In such case, the duties of the BOD are passed on to the director(s) and even to the General Assembly (the shareholders).
Usually, corporate governance is to be distinguished from the day-to-day operations of the company. Often, the dividing line is hard to be defined. In recent years, corporate governance has also became very compliance oriented, as the interests of the shareholders are strongly constrained by the legal regulations.
Assisting the shareholders
Our company’s role is to help the shareholders to be more independent about their options to define the strategic goals of the company. By defining the legal constraints correctly, we are providing to the shareholders maximum angle of freedom without taking any legal risks. We are also assisting the shareholders to have better control about how their strategic tasks have been implemented by the BOD or the directors. And of course, we assist the BOD and the directors with legal advice in order to ensure that their actions are compliant with the regulations.
Controlling how the business policies are being implemented
In Bulgaria, the following main tasks should be addressed when it comes to corporate governance. First and most important is the strategic business policies of the company. Next comes the control of how these policies are implemented by the BOD or the directors. Last, but not least is the way the general policies are amended in time, based on the business performance (results) and compliance risks. We will discuss these tasks below in more detail.
Corporate strategy and legal compliance
The shareholders are those who ultimately define the global strategy of a company. By definition, the main goal of any commercial entity (company) is to provide profit to its shareholders. At the same time however, there are many other factors that need to be reckoned with. The general legal compliance is of extreme importance. Companies need to observe all laws and regulations, need to pay taxes, etc. The desire to maximize profits often leads to shifting the balance to more risky (from legal point of view) undertakings, which my have disastrous effect
No cutting corners
A good example of cutting (legal) corners for the sake of more profit is the scandal with Volkswagen AG when it became apparent that the company had deliberately rigged engine emission equipment in its vehicles in order to manipulate pollution test results. Ultimately, this has resulted in catastrophic losses and reputation damages for the company.
Special emphasize on taxation issues
Probably, most problems arise in the filed of taxation. Optimizing taxes is important for the profit of the company, but this often leads to penalties from the tax authorities, late payment interests and even criminal responsibility. Fiscal laws in Bulgaria are extremely complicated and there are many subjective factors that determine whether the company actions are compliant or not.
Professional preliminary assessment of the eventual legal consequences may be a life-saving for most companies. Here comes our legal expertise as we can advise our clients about the options, risks and consequences of their strategic decisions. We put legal compliance in Bulgaria first and can confidently say that our legal expertise has saved millions for many of our valued customers.
We will assist with:
- Preliminary legal assessment;
- Tax optimization, the right (legal) way;
- Legal transparency.
Overseeing the actions of the Board of Directors
Preventing conflict of interests
The Board of Directors, or the director(s) in the case of Bulgarian (E)OOD, have wide degree of freedom in their day-to-day management of the company. In many cases, this degree of autonomy may be misused by the directors or the BOD. There are cases when the managing body may act against the interests of some (or all) of the shareholders. It may be due to unsolved issues between the shareholders themselves, which may lead to the BOD leaning towards the interests of some of the shareholders, while depriving other stakeholder of their legal rights.
In other cases, the BOD may be managing the company correctly and quite fairly towards all shareholders. Lack of legal knowledge however, may result in catastrophic financial consequences for the company. Shareholders, logically, demand good financial results, but the legal conformity needs to be observed in first place. Unfortunately, the desire to maximize profits, often leads to some compromises in terms of legal compliance. This is where our expertise comes at hand, as we can assist the BOD with advice and legal guidance. We will also take care to protect the directors from making legally unsound decisions, which may lead to personal responsibility being engaged.
Our lawyer talking on Bloomberg TV about the hostile takeovers and “theft” of companies. Click to open the video in new window.
Staying informed about the legal responsibilities
Our lawyers will also inform the shareholders of the legal responsibilities of the management body so they will have realistic expectations and by careful planning, the financial results can be optimized significantly.
Special attention on tax responsibility of third parties
Last, but not least, we will oversee the financial responsibilities of both the shareholders and the BOD/directors, according to the Bulgarian tax codes. Special attention will be paid to the latest amendments of Art.19 from the Bulgarian Tax-Insurance Procedural Code.
Proactive legal updates
Frequent change of legal norms in Bulgaria
Laws change all the time, and Bulgaria is not an exception. The country is known for being extremely adaptive in terms of its corporate and tax legislation. This means that the Bulgarian parliament is actively trying to respond to the needs of both the businesses and the tax authorities, by making the expected amendments. This is definitely good for the business and for the budget, no matter how contra-intuitive this may sound. The trade-off is unfortunately that the companies need to constantly update their policies and legal compliance procedures.
Our team is providing regular updates and lectures on the most important taxation and corporate management legislative changes. We will also explain the correlation between the Bulgarian legislation and those of the EU and the legal implications for the businesses.
Accountancy services & GDPR
Good accountancy and GDPR compliance can be the key to your success in the EU
For any company working in Bulgaria, arranging good accountancy is one of the most important tasks. But good accountant alone is just not enough. Even a good team of accountants will not do the job. Even the best accountant needs help and professional legal backup in order to interpret correctly all different laws and regulations.
Basically, the companies in Bulgaria (and elsewhere) have three different options when deciding on how to meet the legal requirements in terms of accountancy.
The first option, and this is chosen mostly by small to medium sized start-up companies, is to completely outsource the monthly and annual accountancy responsibilities to an external accountant or accounting company.
For well established companies and businesses
The second option, usually utilized by companies who have their feet already in the water, is to have an internal accountant (or accountants) on payroll, but to count on external professional assistance by experienced accounting company.
The companies with substantial revenues and business presence are usually counting on their in-house accountants, with very limited external support from external tax consultants, such as PwC.
The importance of independent legal support
In all cases, the accountancy team of the company will need professional legal support from a qualified tax lawyers. The legal framework in Bulgaria is extremely comprehensive when it comes to tax compliance. At the same time, the sanctions for any wrongdoing are serious, to put it mildly. There is even criminal responsibility foreseen for tax evasion (many still call it “tax optimization”). In Bulgaria, there is also personal financial responsibility for the management and the shareholders of a company with unsettled tax liabilities. Those of you, who are already doing business in Bulgaria, should already know the most famous phrase (complaint) of the Bulgarian accountants: “You need to consult a lawyer for this…”. And then you are stuck in the middle of nowhere.
“You need to speak to a lawyer for this”
How many times have you heard that from your accountant?
Accountants are good at what they do best – filling forms and interpreting the tax laws on the most basic level. When things become more complicated, legally-wise, the operative accountants lose their footing. Even a team of experienced accountants is not qualified to correctly interpret the complicated tax laws. At the same time, very few lawyers are ultra-professional in tax compliance and can guarantee their clients the peace of mind that everything with their taxes is tip-top in order. So what is the solution then?
We are not the average accountancy office, not in the slightest
We are not an accountancy office with N number of young people, filling forms and preparing tax declarations. If this is what you need, there are plenty of such offices in Bulgaria to choose from. But if you need turn-key accountancy services, backed by professional legal support to guarantee problem-free operations of your company, then you are on the right place.
Turn-key accountancy and legal support – all under one roof
We provide to our clients the most important service – full accountancy services, backed by experienced tax lawyers to guarantee legal compliance and optimal taxation.
Finding reliable accountancy support
If you have already made some serious business in Bulgaria, you should know already, how difficult is to find reliable accountant(s). Even if you thought that your accountant is doing just fine, the first ever tax inspection has definitely shattered your dreams into pieces. In fact, a large portion of our clients come to us immediately after they have to deal with the tax inspectors for the first time. At that point they have obviously realized how helpless they are against the Bulgarian tax laws. And how vital, a professional legal tax support, would have been.
Defying the language barrier
The first thing a foreign company has to deal with, is the language barrier in Bulgaria. Even companies with Bulgarian managerial staff are facing this problem, if the shareholders are foreigners, which is often the case.
Unfortunately, the most professional and determined accountants in Bulgaria do not speak a word of English, let alone other languages. Those with good language proficiency are most often using it to their advantage to market their services better, but fail to perform and are delivering poor results. And poor results in the tax field can have catastrophic consequences.
We are different however. We tend to differentiate the work between three concurrent departments: The front (accountancy) office, with staff fluent in English, Russian and most other languages. The back-office with highly experienced accountants who are doing the core accountancy work. Both of these offices are supported by the tax lawyers who are assisting with legal advice and representation in court, when necessary.
The international and global approach
Unlike the regular Bulgarian accountancy companies, we are servicing predominantly foreign and international companies or such with foreign shareholding structures. We are therefore focusing strongly on the international part of the taxation and its correlation with the Bulgarian tax laws. We are cooperating with foreign legal offices and investment banking institutions to provide unique services that are enabling the companies in Bulgaria to legally coordinate their actions with their foreign counterparts.
Our partnerships with the most prestigious Swiss Private Banks are another sign of exclusivity and acceptance of our legal services on the international scene.
Our lawyers are travelling frequently to all parts of the world to visit important clients and to assist them with legal advice. We believe our clients will be able to best concentrate on their core business activities only when they have full peace of mind that their legal matters are perfectly in order. Paying a visit to the customer in his country relieves him from the burden of visiting Bulgaria if his schedule is overloaded.
Why is the licensed tax lawyer better?
Having a team of licensed tax lawyers behind your back can be a life-saving asset. Not only are our accountants backed by professional legal support, but in times of tax-inspections, legal representation (face-to-face) is essential. The tax inspectors are notorious with their pushy approach and the “always being right” attitude. During tax inspections, the regular accountants just can’t defend their rights and are often being “outspoken” by the inspectors. It is often a question of “authority recognition” that lacks the regular accountants when they communicate with the state authorities. Professional lawyer, present during the inspection, usually changes the picture completely. Definitely to the advantage of the client.
Another very important advantage of having tax lawyer at your side is the administrative compliance. During tax inspection for example, certain documents and protocols need to be furnished. Failure to do these correctly gives all the power in the hands of the tax inspectors. And usually, Bulgarian accountants do not have a clue of how to prepare those. Our lawyers however, are flawless!
GDPR compliance in Bulgaria
The dark side of GDPR
The General Data Protection Regulation (GDPR) was implemented on May 25th 2018. It brought a set of important regulations to the way in which entities and institutions in Bulgaria should collect, store and use personal data. While the core idea of the GDPR was to provide EU citizens with better data protection rights, the standard has its dark sides too. The ultra-heavy penalties that were introduced scared many companies and forced them into allocating huge budgets for education and hiring extra staff (more cost). Others, who were not that careful, had to pay huge fines and some even went out of business.
Two options for GDPR compliance
Basically, large companies have two basic options when approaching the challenges of the GDPR in Bulgaria. The first approach is hiring own staff, including Data Protection Officer (DPO). This implies also spending for regular education, as the legislation adapts frequently and relies on other legal norms in Bulgaria. The second approach is hiring external consultant and eventually external DPO. In most cases, the second option proves to be much more financially justified.
Complex GDPR solutions
Our professional support in the field of GDPR compliance is without any analogue in Bulgaria. We are capable of not only providing complex legal consultations, but are also regularly updating our clients about all changes and legal amendments. We can also provide our own DPO for the client’s peace of mind.
We will assist with:
- Provisions of DPO;
- Turn-key GDPR solutions;
- Risk mitigation.
Our services in Bulgaria
Peace of mind in terms of accountancy and GDPR compliance
We provide turn-key services in Bulgaria in the field of accountancy, legal and GDPR compliance. Our clients are mostly mid-sized and large international companies with sustainable business in Bulgaria.
Our professional services guarantee the customer, flawless interaction with the authorities, timely problem-solving procedures and most importantly – peace of mind that the company’s books are fully in order. Without professional assistance, financial losses from tax compliance issues may be huge. Especially in our, ever more bureaucratic business environment.
We work mostly on fixed monthly payment basis. We believe that providing complex legal and tax solutions requires fast decisions and negotiating hourly rates or work hours with the client is a waste of time. We also think that working on hourly basis makes the lawyer and the client feel like counterparts, rather than a single team.
The link between accountant and lawyer
Our most important strength is that we bridge the work done by our accountancy team and our tax lawyers. We provide combined turn-key service. You will never again hear your accountant complaining that his competency is not sufficient for certain problem. You will never need commissioning another lawyer to only find out that he can not communicate efficiently with your accountants. You will never have to worry that your company’s tax matters are not handled professionally. And when your next tax inspection is scheduled, you will not need paying any fines. Nor you will need worrying for the extra workload during the tax inspection – it will be all on us.
What we offer on turn-key basis
Our services comprise of many different legal and tax related operations. Most often however, our lawyer and accountants provide the following to the client:
Accountancy related services
- Daily bookkeeping and accountancy filing;
- Invoicing and issuing of credit-notes;
- VAT (Value Added Tax) registration;
- Preparation and submission of monthly VAT declarations;
- VAT returns;
- Statistical reporting;
- Reporting to the Bulgarian National Bank;
- Preparation and submission of annual financial reports;
- Annual closing and financial audits;
- Reporting of amounts paid to foreign entities and persons;
- Declaration of paid sums to local private individuals;
- Preparation and of dividend distribution;
- Provisions of GDPR Data Protection Officer.
Consultancy and legal services
- Legal consultations on the different VAT treatments, international invoicing, vat exemptions, zero-tax invoicing, etc.;
- Consultation on international taxation and applying double-tax-avoidance treaties;
- Consultation on dividend distribution;
- Personal taxation consultations for foreign individuals, related (ie shareholders) to Bulgarian companies;
- Consultations bank introduction in Bulgaria abroad;
- Consultations and lecturing, provided to shareholders and managerial staff of international companies in Bulgaria;
- GDPR consultations.