Bulgaria country tax guide

Bulgarian. Foreign documents must be translated (and legalized when required) in Bulgarian when provided to the Bulgarian National Revenue Agency. 

Under Bulgarian tax legal regime, individuals who are considered tax residents in Bulgaria are required to pay taxes on their income from all sources worldwide. On the other hand, non-residents are only subject to taxation on their income derived from Bulgarian sources, either through a permanent establishment or by means of withholding tax, depending on the specific circumstances. In the case of corporate entities, the general rule is that their corporate income is liable to corporate income tax at a flat rate of 10%. Collective investment schemes, national investment funds, other alternative investment funds, as well as organizers of gambling games are exempt from levy of corporate tax. 

Further, income generated by organizers of gambling games, wherein the bet amount is already incorporated into the cost of a phone or any other telecommunication service, is subject to an alternative tax rate of 15%. This tax is calculated based on the additional amount added to the regular price of the telecommunication service as a result of the inclusion of the gambling game. The alternative tax is levied on the difference between the original price of the service and the increased price attributed to the gambling game. 

Bulgaria does not have a corporate wealth tax. 

Under Bulgarian tax law, 5% withholding tax is due on payment of dividends and liquidation proceeds to local and foreign legal entities. The company shall be responsible for the withholding and payment of taxes, which shall be executed no later than the conclusion of the month subsequent to the calendar quarter in which the resolution for the distribution of dividends was passed or the liquidation proceeds were accrued. 

Royalties, interest, technical services, rent, franchise fees, factoring fees, scholarships, and directors' remuneration are subject to 10% withholding tax. Exemptions may apply for EU/EEA entities with respect to interest and royalties. Exemptions and relief available under applicable Double Taxation Treaties (DTTs). At present, Bulgaria is a signatory to 70 DTTs. 

Participation exemption: Dividend income deriving from local, or EU/EEA based companies are tax exempt (anti avoidance rules may apply). 

Bulgarian tax law does not provide for any general regime of exemption or taxation at a reduced rate. 

Resident individuals are taxed on their worldwide income, and non-residents on the Bulgarian source income. Taxable income includes income derived from employment, business activity as freelancer or other business activity, rent, capital gains, etc.  

Tax incentives and reliefs are available on personal contributions for voluntary insurance or retirement pension insurance, donations, for young families, for children and disabled individuals, in cases of electronic payments, etc.  

Deductions and allowances are available depending on the type of income, e.g. freelancers, farmers, agricultural products producers, etc. 

The general personal income tax rate is set at 10%. 

Regardless of his/her nationality, in Bulgaria a person shall be considered a "resident" to the extent that: 

1. has a permanent address; or 
2. resides on the territory of the country in excess of 183 days within each twelve-month period; or 
3. resides abroad on assignment of the Bulgarian government; or  
4. has his/her centre of economic interest in the country. 

Mandatory social insurance contributions include social security and health insurance contributions. 

The total national security contribution is 32.7% - 33.4% (split between employer and employee in the following ratio: employer 18.92% - 19.62%, and employee at 13.78%). The aggregate rate of social security contributions is 24.7% - 25.4% (split between employer and employee in the following ratio: employer 14.12% - 14.82%, and employee at 10.58%). The aggregate rate of health insurance contributions is 8%, of which 4.8% is payable by the employer and 3.2% is payable by the employee. The social security contribution base is the total income, capped at BGN 3,400 (approx. EUR 1,738) per month; however, minimum thresholds per position and industry sector also apply. 

There are no such mechanisms under Bulgarian law. 

Dividend income and proceeds of liquidation distributed to individuals are subject to 5% withholding tax. Tax at 10% rate applies to non-resident individuals on Bulgarian source income deriving from interest, royalties, rent and lease, capital gains on disposal of shares and property, management services. 

Capital gains derived from the sale of real estate are taxable at rate ranging between 0.1% – 3%, determined by the municipality where the property is located. Exemptions are available in certain cases depending on holding periods, types of property, etc. 

Real estate property tax is levied on the owner of property at a rate ranging between 0.01% and 0.45% of the tax value of the immovable property. 

• Newcomers   

There are no such mechanisms under Bulgarian law.

• Expatriates 

There are no such mechanisms under Bulgarian law.

There is no personal wealth tax in Bulgaria. 

Subject to applicable tax treaties, gifts are subject to Bulgarian tax, which varies as follows (depending on the respective Municipal Council): 

• between siblings and their children, from 0.4% to 0.8%; 
• among other persons, from 3.3% to 6.6%. 

Property acquired by donation between direct relatives and between spouses is not subject to tax treatment. 

Subject to applicable tax treaties, inheritance is subject to Bulgarian tax, which varies as follows (depending on the respective municipality): 

• for brothers and sisters and their children – in the range from 0.4% to 0.8% for inheritance share over BGN 250,000 (approx. EUR 127,823); 

• for all other beneficiaries – from 3.3% to 6.6% for inheritance share over BGN 250,000 (approx. EUR 127,823). 

In case of acquisition of property for consideration, the tax shall be set by the Municipal Council at a rate from 0.1% to 3% on the valuation of the transferred property, and in case of exchange – on the valuation of the property with higher value. 

Inheritance tax is not paid by the surviving spouse and by the heirs in the direct line without restrictions. 

Upon the discovery of an inheritance, the taxable persons or their legal representatives shall be obliged to submit, within a period of six months, a declaration to the municipality of the last residence of the heir, and if the latter had a residence abroad – at the location of the majority of his property in the country. 

As of 2022, Bulgaria put an end to the possibility of foreigners to obtain so-called "golden passports" in exchange for investment. On the other hand, foreigners can apply for different types of residencies upon making certain investments: 

1. Temporary residence upon investment: 

• in an economically disadvantaged region by contributing no less than BGN 250,000 (approx. EUR 127,823) to the capital of a Bulgarian company, whereas the foreigner is a partner or a shareholder with registered stocks and owns at least 50% of the company's capital and as a result of the investment new tangible and intangible fixed assets at the value of no less than BGN 250,000 (approx. EUR 127,823) are acquired and at least five jobs are created for Bulgarian nationals, which must be maintained for the duration of the residence as certified by the Ministry of Innovation and Growth. 

1. Permanent residence upon investment / acquisition of: 

• shares or bonds of Bulgarian commercial companies traded on a regulated market or a multilateral trading system in Bulgaria, at a market value of not less than BGN 2,000,000 (approx. EUR 1,022,584); 
• rights under concession contracts on the territory of Bulgaria with a contract value of not less than BGN 1,000,000 (approx. EUR 511,292); 
• quotas or shares with a value of not less than BGN 1,000,000 (approx. EUR 511,292) in collective investment schemes originating in Bulgaria (and certain other conditions); 
• quotas or shares with a value of not less than BGN 1,000,000 (approx. EUR 511,292) in alternative investment funds established in Bulgaria (including certain other conditions); 
• invested in the country by depositing in the capital of a Bulgarian company an amount of not less than BGN 2,000,000 (approx. EUR 1,022,584) for a priority investment project implemented by the company, certified under the terms and conditions of the Investment Promotion Act, which is certified by the Ministry of Innovation and Growth; 
• invested in the capital of a Bulgarian commercial company whose shares are not being traded on a regulated market, in an amount of not less than BGN 6,000,000 (EUR 3,067,751). 

N/A 

As Bulgaria is a member of the European Union, Bulgarian citizens and persons having a Bulgarian visa or residence permit are allowed to travel in the European Union with a passport or a visa. 

Trusts and similar foreign structures are not recognised under Bulgarian law. Furthermore, in case of a death of a settlor, mandatory Bulgarian provision will apply in respect of the beneficiaries of the trust, whereas the surviving spouse and the direct heirs will be entitled a certain percentage of the trust's property. 

Foundations can be set under Bulgarian law: either with a public aim, or for a private aim. 

Trusts and similar foreign structures are not per se subject to a disadvantageous tax treatment in Bulgaria. However, such structures registered in countries with preferential tax treatment would be subject to stringent reporting and disclosure requirements in Bulgaria.