Taxation in Bulgaria

The overall picture: Bulgaria is in the EU

Bulgaria is part of the European Union since January 1st, 2007. Bulgaria is not part of the Eurozone, nor is it part of the Schengen Area.

The currency is Bulgarian Lev (BGN) and it has been pegged to the Euro at a fixed rate of € 1 = BGN 1.95583 through a strictly managed  currency  board. Bulgaria has the second-lowest government debt in the EU and one of the lowest budget deficits. This makes Bulgaria one of the most stable countries in terms of doing business.

What exactly is the tax situation in Bulgaria?

Bulgaria is one of the countries with lowest tax rates in EU. Corporate income tax is fixed at the rate of 10% per annum, while capital gains tax is a flat 5%. Taxation on dividend payouts is 5%. What this translates to is that you pay less than 15% tax on your company income yearly.

VAT is set at 20% for purchase of goods and services. Tourism-related tax is only 9%. Due to these fixed flat tax rates, it is believed that Bulgaria’s tax regime is the most favourable for businesses in the entire European Union.

What is the process and how long does it take? 

Before you can become tax resident you have to apply for residency. The application process may take up to 14 days but often can be completed in less than 10 days. After you have received your residency card you need to wait six months before you can apply for tax residency. The application processes are pretty straight forward, however they could look a bit complex for new comers. We can assist you throughout the whole application, streamline the process and make your life easier!

The other good-to-know information is that once you become a tax resident, you do not need to permanently live in Bulgaria, if you are a EU citizen.