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Bulgaria

Financial Year – 1 January – 31 December
Currency – Bulgarian lev (BGN)

Corporate Tax Summary

Residence – A company is a resident of Bulgaria if it is incorporated in Bulgaria, or it is incorporated under Council Regulation (EC) No. 2157/2001. Also, any cooperative society incorporated under Council Regulation (EC) No. 1435/2003 whose registered office is situated in the country and which is listed in a Bulgarian register.

Basis of Taxation – Resident companies are taxed on worldwide income. A non-resident company generally pays taxes only on income derived from Bulgarian sources. The tax rates and treatment are the same for companies and branches of foreign companies.

Reference
Corporate Income Tax Rate (%) 10%
Branch Tax Rate (%) 10%
Withholding Tax Rate:
Dividends – Franked N.A. The concept of franking credit does not apply to dividends. Dividends are taxable only by way of withholding tax, and they are tax exempt for the investor if it is a Bulgarian resident (either company or individual).
Dividends – Unfranked 5% Dividends distributed to non-resident companies or individuals (resident and non-resident) are taxed with 5% withholding tax.
Dividends distributed to resident companies are not taxable.
Dividends distributed to EU companies are treated the same as those distributed to Bulgarian companies and if the company pays corporate tax in its own country, the distributed dividend is not taxable.
A reduced rate of withholding applies to treaty companies and ranges from 0% – 5%, depending on the country and level of ownership.
Dividends – Conduit Foreign Income 5% There are no special rules for the tax treatment of dividends from conduit foreign income.
Interest 10% There is a tax exemption when the beneficial owner of the income is a non-resident legal person of a Member State of the European Union and is a related party with the payee of the income.
Double tax treaty conventions with many countries provide relief from this tax.
Royalties from Intellectual Property 10% There is a tax exemption when the beneficial owner of the income is a non-resident legal person of a Member State of the European Union and is a related party with the payee of the income.
Double tax treaty conventions with many countries provide relief from this tax.
Fund Payments from Managed Investment Trusts N.A.
Branch Remittance Tax 0% Branches are taxed with 10% corporate tax. Any further transfer of profits to the company is not subject to taxation.
Net Operating Losses (Years)
Carry Back No carry back of losses
Carry Forward 5 years

Individual Tax Summary

Residence – A resident natural person, regardless of nationality, shall be any person who has a permanent address in Bulgaria, or who is present within the territory of Bulgaria for a period exceeding 183 days in any twelve-month period, or whose centre of vital interests is situated in Bulgaria. Any person, who has a permanent address in Bulgaria but whose centre of vital interests is not situated in the country, shall not be a resident natural person.

Basis of Taxation – A resident natural person shall be liable to taxes in respect of any income acquired from sources inside and outside the Republic of Bulgaria. A non-resident natural person shall be liable to taxes in respect of any income acquired from sources inside the Republic of Bulgaria.

Filing Status – A resident person with taxable income other than employment income should file a separate return each financial year; joint returns are not permitted.

Personal Income Tax Rates

Taxable Income Tax Payable – Residents Tax Payable – Non Residents
N.A. 10% 10%

The annual taxable income shall be determined as all the taxable incomes acquired by the taxable person during the tax year, decreased by the mandatory social insurance contributions paid which are for the account of the natural person. Expenses are recognised for some types of taxable incomes. Persons do not need documentation for this reduction (this applies only to residents).

Goods and Services Tax (GST)

Rate 20%, 9%, 0%
Taxable Transactions Value added tax (VAT) applies to:
– Each taxable supply of goods or services effected for consideration.
– Each intra-European Union acquisition effected for consideration, where the place of transaction is within the territory of the country, by a person registered under VAT law or by a person in respect of which an obligation to register has arisen.
– Receipt of goods within the territory of the country by a taxable person, which will be used for the purposes of the economic activity of the said person, where the said goods are dispatched or transported from the territory of another Member State in which the person is registered for VAT purposes.
– Each intra-European Union acquisition of new means of transport effected for consideration, where the place of transaction is within the territory of the country, including by natural persons, whose acquisitions normally are not subject to VAT.
– Each intra-European Union acquisition effected for consideration, where the place of transaction is within the territory of the country, of excisable goods where the recipient is a taxable person or a non-taxable legal person which is not registered under VAT law.
– Importation of goods.
– Distance selling of goods with a place of execution within the territory of the country.”Taxable supply” shall be each supply of goods or services effected by a taxable person under VAT law and where the place of transaction is within the territory of the country, as well as the zero-rated supplies effected by a taxable person, except where the VAT law provides for exceptions.A supply in which the recipient is a taxpayer shall not be subject to taxation by the supplier.
Registration Registration is mandatory for Bulgarian established persons with taxable turnover exceeding BGN 50,000 of taxable supplies with place of supply in Bulgaria in any previous 12-month period (except when the VAT must be self-assessed by the recipient). Foreign taxpayers making distance sales of goods with place of supply in Bulgaria also are required to register. The previous threshold of BGN 70,000 is removed as from 1 January 2020.

Non-Bulgarian entities should apply for VAT registration 7 days prior to their first supply in Bulgaria, irrespective of the value of the supply. Registration also is triggered by the receipt of services in Bulgaria that are provided by a taxable person not established in Bulgaria or rendering a service to a VAT registered client within the EU. A threshold of BGN 20,000 applies to intra-community acquisitions for compulsory registration.

Registration may be made on a voluntary basis, regardless of turnover.

Filing and Payment The tax period for VAT is the calendar month. VAT returns must be filled monthly, by the 14th day of the following month. The deadline for payment is the same.

Other Taxes Payable

Tax Reference
Payroll Tax Social security and health insurance contributions apply (between 32.7% and 33.4%), with an employer’s contribution ranging from 18.92% to 19.62% and an employee’s contribution of 13.78%. The base for contributions is total income, capped at BGN 3,000/month. A minimum threshold per position and industry also applies. Income tax is 10% and is applied on total income, decreased by personal social security contributions.
Stamp Duty No stamp duty tax. Transfer tax is imposed on the sale or exchange of immovable property and motor vehicles at rates which are different for each municipality, from 0.1 to 3%.
Land Tax The owner of real property is subject to a real property tax, ranging from 0.01% to 0.45% of the higher of the gross book value and the tax value of non-residential property. The rate is determined by the local municipality. For residential property, the same rates are applied on the tax value of the property. Agricultural land and forests, if they do not have buildings, are not subject to taxation.
The owner of the property is also subject to a garbage collection fee. The fee is generally levied as a percentage of the value (tax or gross book) of the real property.
  • License tax – for small entrepreneurs in some economic departments
  • Taxes on donations
  • Tourist tax
  • Inheritance tax
  • Transport vehicle tax
  • Taxes on gambling activity
  • Taxes on insurance premiums
  • Tax on vessels operation activity
  • Taxes on some expenses, such as social benefits, entertainment expenses, personal use of company assets
  • Tax on passenger taxi transport
  • Withholding tax on rent of movable property
  • Withholding tax on consultation services
  • Withholding tax on technical services
  • Withholding tax for management contracts

Last updated: 02.07.2020