Here is why you should consider applying for the official tax-residency certificate in Bulgaria. As a resident, you will need to pay taxes in Bulgaria anyhow and so do companies. The Tax Residency Certificate (TRC) is not mandatory but might prevent you from future hassles.
Evaluate your entire situation
Whenever you have to deal with authorities, especially in terms of taxes, registration, and residency, you might end up in a situation where you will need to explain to a clerk what you have done in the past five or ten years. Often there is no problem in the present time and you think all is good, but when you want to move back to your home country or when you want to move elsewhere. At some point in the future, if you fail to look ahead and prepare for those scenarios, you could end up in a very unfortunate situation. Imagine, a clerk asks you what you did the past five or ten years and you struggle to explain your past situation. In the worst case, you could end up paying back taxes for several years. Even if you do not need to pay back taxes and you need to explain what you did and what your situation was, you might end up searching for evidence to bolster your story. Collecting receipts and other documents could be a tremendous hassle and very stressful especially if it needs to be done in hindsight.
How to prevent future hassles?
The tax residency certificate could be an easy solution for you to be on the safe side and a great investment to be prepared for the future.
We recommend you to collect receipts, at least some restaurants, supermarkets, furniture stores, and etc. Additionally, old residency cards, official documents, rental contracts, and other certificates or invoices that show evidence that you spent time and money in a certain country can absolutely be vital for a hassle-free future and your peace of mind. Moreover, those papers will help you to apply for the tax-residency in Bulgaria.
How to claim the tax residency certificate in Bulgaria?
The main criteria for claiming tax-residency is time. It mostly depends on how long you earned and spent money within Bulgaria and the ability to prove that. A business, for instance, as well as a rental contract and bills you pay (e.g. utility bills, restaurants, supermarkets, etc.) are indicators and demonstrate to the authorities that you not only earned and spent money in BG but also that your life is based in Bulgaria. Where your life focus is, where you spend time, is a vital criterion within Europe to determine where you are ought to pay taxes, respectively where you are tax resident.
The process looks as follows: The application needs to be submitted to the National Revenue Agency along with your annual financial tax declaration and receipts, utility bills, rental contract (and/or other documents that prove that you stay and live in Bulgaria).
A tax inspector will examine your case and might request additional documents or information to eventually issue the tax residency status certificate.
The timeframe of the entire process is about one month.
Learn how to avoid future disasters and book a call with us! A tax-expert will explain what is best for you and what you can do to prepare: https://calendly.com/uweallg/45min
Get in touch if you want to apply for the tax residency certificate.
Yours truly,
Uwe Allgäuer
