Taxation in Bulgaria: A Guide for Businesses and Individuals

Bulgaria has become an increasingly attractive destination for businesses and individuals alike, thanks in part to its favourable tax system. Characterised by low tax rates and a straightforward structure, taxation in Bulgaria offers a competitive advantage within the European Union. This guide provides a comprehensive overview of the main taxes relevant to businesses and individuals operating in Bulgaria.

This article is an updated version of our previous post on taxation in Bulgaria, providing the latest information and changes for 2024.

Corporate Income Tax

Bulgarian corporate income tax is levied at a flat rate of 10%, making it one of the lowest in the EU. This applies to both resident and non-resident companies.

• Taxable Base: Resident companies are taxed on their worldwide income, while non-resident companies are taxed only on their Bulgarian-source income.
• Tax Return and Payment: All companies must file an annual corporate tax return by June 30th of the following year. Payments can be made electronically or at a bank.
• Dividends: A 5% withholding tax applies to dividends paid to shareholders. This tax is due within one month of the dividend payment.

Personal Income Tax

Like corporate income tax, personal income tax in Bulgaria also follows a flat rate of 10%. This applies to various types of income, including:

• Employment income
• Self-employment income
• Rental income
• Capital gains (with certain exemptions)
• Interest and dividends

Tax reliefs and deductions are available, such as a personal allowance and deductions for specific expenses. Employees typically have their income tax withheld from their salaries, while self-employed individuals must file an annual tax return by April 30th.

Value Added Tax (VAT)

Bulgaria, as an EU member state, implements a Value Added Tax (VAT) system.

• VAT Rates: The standard VAT rate is 20%. A reduced rate of 9% applies to specific goods and services, such as accommodation, books, and certain food products. A 0% rate applies to intra-EU supplies of goods.
• VAT Registration:
  • Businesses with an annual turnover exceeding 100,000 BGN must register for VAT. This threshold will increase to 166,000 BGN from January 1st, 2025.
  • Businesses engaged in intra-community supplies of goods, irrespective of turnover, must also register.
  • Voluntary registration is available for businesses below the threshold.
• VAT Compliance: For a detailed understanding of VAT compliance, including invoicing requirements and VAT return filing, refer to our dedicated guide: VAT in Bulgaria: A Comprehensive Guide for Businesses (2024).
• More on VAT in Bulgaria you can read here: https://aidosbg.com/vat-in-bulgaria/

Other Taxes in Bulgaria

In addition to the main taxes outlined above, businesses and individuals in Bulgaria may encounter other taxes, including:

• Property Tax: Levied on both residential and commercial properties, with rates varying by municipality and property value.
• Social Security Contributions: Mandatory contributions for both employers and employees, funding social security benefits like pensions and healthcare.
• Other Taxes and Fees: This category encompasses inheritance tax, excise duties on specific goods (alcohol, tobacco, fuel), local taxes, and vehicle tax.

Taxation of Non-Residents in Bulgaria

Non-residents are generally taxed on their Bulgarian-source income. Tax rates can vary based on the type of income and applicable double taxation treaties. Bulgaria holds numerous double taxation treaties to prevent double taxation for individuals and businesses with income sources in other countries.

Staying Updated on Taxation in Bulgaria

Tax legislation is subject to change. Staying informed about updates and amendments is crucial. Refer to official sources like the National Revenue Agency (NRA) website: NRA website for the latest information.

Seeking Professional Advice on Taxation in Bulgaria

Need help navigating Bulgarian taxes? Contact us today for expert advice and personalised guidance on tax compliance and optimisation.

Conclusion

Bulgaria’s tax system, with its low rates and clear structure, presents a favourable environment for businesses and individuals. Understanding the different taxes and staying compliant is essential for successful operation within the country.

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Frequently Asked Questions (FAQ) on Taxation in Bulgaria

1. What are the main types of taxes in Bulgaria? Bulgaria’s tax system includes corporate income tax, personal income tax, Value Added Tax (VAT), property tax, social security contributions, and other taxes and fees like inheritance tax and excise duties.
   
2. What is the corporate income tax rate in Bulgaria? Bulgaria has a flat corporate income tax rate of 10%, one of the lowest in the European Union.
   
3. How do I file a tax return in Bulgaria? Tax returns can be filed online through the National Revenue Agency’s (NRA) website or in person at a tax office.
   
4. What are the deadlines for filing tax returns in Bulgaria? The deadline for filing the annual corporate tax return is June 30th of the following year. The deadline for the personal income tax return is April 30th of the following year.
   
5. What are the VAT registration requirements in Bulgaria? Businesses with an annual turnover exceeding 100,000 BGN (increasing to 166,000 BGN from 2025) must register for VAT. Businesses involved in intra-community supplies of goods within the EU must also register, regardless of turnover.
   
6. Does Bulgaria have double taxation treaties? Yes, Bulgaria has double taxation treaties with many countries to prevent double taxation of income for individuals and businesses.
   
7. Where can I find more information about taxation in Bulgaria? You can find detailed information on the NRA website: https://nra.bg/ and the Invest Bulgaria Agency website: https://investbg.government.bg/ . Or, book a free consultation with us to discuss your specific tax questions and needs.