A Limited Partnership — known in Bulgaria as a KD — is a hybrid commercial structure that combines two distinct categories of partners: those with unlimited personal liability and those with limited liability. It remains relevant for specific business arrangements where this separation of liability and control is commercially useful.
What is a Limited Partnership?
A KD is formed by at least two partners — a minimum of one unlimited partner and one or more limited partners.
An unlimited partner bears full personal liability for all obligations of the partnership — creditors can pursue their personal assets without any cap. A limited partner is liable only up to the amount of their capital contribution. Once their deposit is made, their personal exposure ends there.
This makes the KD a structure where the unlimited partner typically takes on the active management role and bears the associated risk, while limited partners participate financially without exposing their personal assets beyond their investment.
Key facts
A minimum of two partners is required — at least one unlimited and at least one limited. Both individuals and legal entities of any nationality may participate. There is no minimum capital requirement. At least one director of any nationality must be appointed, and a registered local address in Bulgaria is mandatory.
The company name must include the abbreviation “KD” and the name of at least one unlimited partner. One important rule: if the name of a limited partner appears in the company name, that partner is automatically deemed unlimited — meaning their personal liability becomes unrestricted. This is a significant legal consequence that founders must consider carefully when choosing the company name.
Tax treatment
A Bulgarian KD is subject to the flat 10% corporate income tax on net profit — one of the lowest rates in the EU. Profit distributions are subject to a 5% dividend withholding tax. Bulgaria’s network of over 70 Double Taxation Treaties may reduce withholding taxes on cross-border distributions depending on the country of residence of the partners.
Is a KD the right structure for you?
For most foreign investors, an OOD or EOOD remains the preferred choice — offering full limited liability for all participants and simpler administration. A KD may be appropriate where a foreign investor wishes to participate as a limited partner in a business managed by a local partner who accepts unlimited liability, or where the specific separation of roles and risk between partners has a clear commercial purpose.