Tax in Bulgaria

There are many advantages when operating a business in Bulgaria,
including the EU's lowest tax rate, social security rates and more.

Here's what you need to know:

Corporate income tax

Companies and partnerships are liable to pay Corporate Income Tax at the rate of 10%.

Taxation of company expenses

The following company expenses are subject to tax at the rate of 10%:

  • Representative expenses
  • In-kind fringe benefits
  • Maintenance, repair and exploitation of vehicles, used for management purposes

Standard rate* – 10%

Reduced rate* – 5%

Non-resident individuals and entities, without a permanent establishment in the country to which the income can be attributed, are subject to WHT on the following income:

  • Interest including under finance lease agreements
  • Royalties
  • Technical services fees
  • Payments under management contracts
  • Rental income
  • Payments under operating lease, franchising and factoring fees
  • Capital gains from disposal of shares, securities and other financial assets
  • Capital gains for alienation of immovable property
  • Service fees, remuneration for the use of rights and penalty or damages payments

The WHT rates may differ depending on the provisions in Tax Treaties concluded between Bulgaria and other states.

Dividends distributed by local entities to:

  • Bulgarian resident or EU/EEA residents companies – 0%
  • Non-EU/EEA companies – 5%
  • Bulgarian residents and non-Bulgarian resident individuals – 5%

Standard rate – 20%

Hotel accommodation services – 9%

Registration threshold

Mandatory – taxable turnover exceeding BGN 50,000 for the last 12 months or intra-community acquisitions exceeding BGN 20,000 for the calendar year.

Voluntary – Any entity or individual can apply for voluntary registration.

General rules

Residents are individuals having domicile in Bulgaria, residing in the country for more than 183 days in any 12-month period or whose center of vital interests is in Bulgaria. Residents are subject to tax on their worldwide income. Non-residents are taxed only on their Bulgarian-sourced income.

Tax rate

Individuals, working under labour contracts are liable to make monthly advance payments against their annual personal income tax liability. The 10% monthly advance tax is withheld and remitted to the Bulgarian Revenue Authorities by the employer.

Contributions

*The rate for Labour Accident and occupational Diseases Fund varies between 0.40% – 1.10% depending on the type of economic activity performed.

The basis for calculation of the contributions is the overall income capped at BGN 3,000.00 per month.

Coverage

All Bulgarian national and expatriates are liable to make the contributions above unless the EU social security regulations or a bilateral social security agreement apply and provide otherwise.

Notes: The exchange rate of BGN is pegged to the EUR at rate of EUR 1 = BGN 1.95583.

Corporate income tax

Companies and partnerships are liable to pay Corporate Income Tax at the rate of 10%.

Taxation of company expenses

The following company expenses are subject to tax at the rate of 10%:

  • Representative expenses
  • In-kind fringe benefits
  • Maintenance, repair and exploitation of vehicles, used for management purposes

Standard rate* – 10%

Reduced rate* – 5%

Non-resident individuals and entities, without a permanent establishment in the country to which the income can be attributed, are subject to WHT on the following income:

  • Interest including under finance lease agreements
  • Royalties
  • Technical services fees
  • Payments under management contracts
  • Rental income
  • Payments under operating lease, franchising and factoring fees
  • Capital gains from disposal of shares, securities and other financial assets
  • Capital gains for alienation of immovable property
  • Service fees, remuneration for the use of rights and penalty or damages payments

The WHT rates may differ depending on the provisions in Tax Treaties concluded between Bulgaria and other states.

Dividends distributed by local entities to:

  • Bulgarian resident or EU/EEA residents companies – 0%
  • Non-EU/EEA companies – 5%
  • Bulgarian residents and non-Bulgarian resident individuals – 5%

Standard rate – 20%

Hotel accommodation services – 9%

Registration threshold

Mandatory – taxable turnover exceeding BGN 50,000 for the last 12 months or intra-community acquisitions exceeding BGN 20,000 for the calendar year.

Voluntary – Any entity or individual can apply for voluntary registration.

General rules

Residents are individuals having domicile in Bulgaria, residing in the country for more than 183 days in any 12-month period or whose center of vital interests is in Bulgaria. Residents are subject to tax on their worldwide income. Non-residents are taxed only on their Bulgarian-sourced income.

Tax rate

Individuals, working under labour contracts are liable to make monthly advance payments against their annual personal income tax liability. The 10% monthly advance tax is withheld and remitted to the Bulgarian Revenue Authorities by the employer.

Contributions

*The rate for Labour Accident and occupational Diseases Fund varies between 0.40% – 1.10% depending on the type of economic activity performed.

The basis for calculation of the contributions is the overall income capped at BGN 3,000.00 per month.

Coverage

All Bulgarian national and expatriates are liable to make the contributions above unless the EU social security regulations or a bilateral social security agreement apply and provide otherwise.

Notes: The exchange rate of BGN is pegged to the EUR at rate of EUR 1 = BGN 1.95583.

If you have any questions on the above, or want to talk about working with us, feel free to get in touch.