Tax residency Bulgaria

Tax Residence in Bulgaria: A Guide for Expats and Investors

Are you considering a move to Bulgaria? Whether you’re charmed by the beautiful scenery, rich history, or thriving business environment, Bulgaria offers a lot to expats and investors. One important consideration when making your move is tax residency. Understanding your tax residency status will help you determine your tax obligations in Bulgaria.

What is Tax Residency in Bulgaria?

Being a tax resident in Bulgaria means you’re liable to pay taxes on your worldwide income in the country. There are four main criteria that determine your tax residency:

  • Physical Presence: This is the most common way to establish tax residency. If you spend more than 183 days in a calendar year within Bulgaria, you’ll be considered a resident for tax purposes in that year. It’s important to note that both the day you enter and depart Bulgaria count towards your total. Days spent solely for education or medical treatment typically don’t qualify.
  • Permanent Address and Economic Ties: Even with a shorter stay, you might be considered a resident if you have a permanent address registered in Bulgaria. This, combined with factors like owning property or having family living in the country, can indicate your economic ties are centered in Bulgaria.
  • Center of Vital Interests: This concept goes beyond just physical presence. It considers where your business interests lie, where you hold bank accounts, and the location of your main residence. If these factors show a closer connection to Bulgaria than any other country, you might be considered a resident for tax purposes.
  • Assignment Abroad: If you’re a Bulgarian citizen or resident assigned to work abroad by a Bulgarian company or state entity, you and your family members may be considered tax residents in Bulgaria despite your physical location.

Double Taxation Treaties

Bulgaria has signed double taxation treaties (DTTs) with many countries. These treaties aim to prevent individuals and businesses from being taxed on the same income in both Bulgaria and their home country. If you’re a resident of a country with a DTT with Bulgaria, the treaty might provide specific rules for determining your tax residency status. It’s always wise to consult the relevant DTT for additional details.

Benefits of Tax Residency in Bulgaria

Bulgaria offers a flat income tax rate of 10% on most income sources. This can be attractive for individuals with high incomes. Additionally, Bulgaria has a territorial tax system, meaning foreign-sourced income is generally not taxed in Bulgaria unless it’s remitted into the country.

Seeking Professional Help

Determining your tax residency status can be complex, especially if you have ties to multiple countries. If you’re unsure about your tax residency situation in Bulgaria, it’s always best to consult with a professional Bulgarian tax advisor. They can analyze your specific circumstances and advise you on the best course of action.

We Can Help

As a leading accounting firm in Bulgaria, we can assist you with navigating the intricacies of Bulgarian tax law. Our team of experienced professionals can help you determine your tax residency status, understand your tax obligations, and ensure you are filing your tax returns correctly.

Contact us today to schedule a consultation and discuss your tax residency in Bulgaria.

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