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Country welcomes non-EU investors to boost local start-up ecosystem
After Decree No 318 of 7 October 2022 adopting the Ordinance on the conditions and procedure for issuing, extending and revoking a certificate for a high-tech and/or innovative project (the "Ordinance") was promulgated in issue 82 of the State Gazette of 14 October 2022, Bulgaria joins the almost half of EU countries that issue "start-up visas".
The long-awaited amendments to the local legislative framework facilitate quick access to long-term residence in Bulgaria for third-country nationals who want to start innovative businesses using high-end technologies and producing high added value products. Luckily, the start-up visa is not tied to minimum financial investment requirements. The share capital of the company through which the start-up project will be implemented is irrelevant. There is also no need to create a certain number of jobs for Bulgarian nationals. This incentivises non-EU entrepreneurs to legally transfer their business to the country and take advantage of its tech ecosystem, access to funding and free movement of capital within the EU. For its part, Bulgaria will gain access to capital and accelerate economic growth. Foreign investors will bring experienced specialists from abroad and create new jobs for locals. Last but not least, the newly attracted companies will bring new know-how, new technologies and practices, and will enrich the country's business ecosystem.
All interested entrepreneurs will be able to apply electronically and free of charge, in Bulgarian or English, for a start-up visa certificate on the website of the Bulgarian Ministry of Innovation and Growth. The certificate will be issued within one month following an expert assessment prepared by an Expert Council comprised of representatives from the Ministry of Education, the Patent Office of the Republic of Bulgaria, the Bulgarian Academy of Sciences, the academic and business community, and two NGOs from the start-up and equity investment community.
After obtaining a type D long-term residence visa, the applicants should become partners or shareholders holding more than 50 % of the shares in a Bulgarian legal entity with the same business activities as requested when the start-up visa was issued. If the applicant obtains a long-term residence permit based on the start-up visa, they will be allowed to reside and work in Bulgaria for a year, with the possibility to renew for another two-year period a month before their start-up visa expires. Within the last month before the expiry of the one-year period, the visa holder should electronically submit to the Ministry of Innovation and Growth a report of what has been done to date, including whether they have become shareholders or partners in a Bulgarian legal entity.
The Ordinance defines the requirements for a high-tech and/or innovative project and sets out the evaluation criteria:
(i) A high-tech project is a project based on the use of high-end technology to produce new high-tech products and/or services. High-end technologies are those that are highly complex and require specialised knowledge and skills to use.
(ii) An innovative project is a project based on technology resulting from scientific progress and the latest scientific discoveries in the relevant field and/or the introduction of new, previously unknown models, methods or practices. Such a project has the potential to create a significant difference compared to the current situation and to be a catalyst for change in a sector or market.
(iii) Applications will be evaluated based on six criteria, each equalling a certain number of points: security of funds (0-3 points), financial projections and available capital (0-3 points), customer network (0-1 points), investment from an equity or venture capital fund not less than EUR 51,000 (0-1 points), valid patent or utility model registration certificate (0-1 points), as well as business plan and presentation showcasing the project's scalability and potential (0-5 points). Successful applicants must receive a minimum of eight out of 14 points.
The issuance of a start-up visa is not sufficient for a third-country national to obtain a long-term residence permit, but it will certainly make the process easier and faster. The overall duration of the residence permit procedure is expected to be around three months, of which:
Though the current entrepreneurial legal framework in Bulgaria is still not perfect, the start-up visa is a step forward. Feedback from applicants may lead to further improvements, and so the Bulgarian start-up ecosystem will get a boost.
author: Katerina Kaloyanova-Toshkova
Attorney at Law