Bulgaria Summary Guide

Taxation of Business People in Bulgaria

Taxation of Individuals in Bulgaria

Personal Income Tax is payable on income from employment, self-employment, capital gains, rental income and so forth. The tax rate is 10%. Where a person’s sole source of income is wages from a Bulgarian company, they are not usually required to file an annual tax return, and the employer will deduct the tax directly from their wages.

A self-employed individual must file an annual tax return and make advance payments towards income tax liability. They must pay any outstanding tax due (the balance between the advance payments and the total due on the tax return) by 30th April of the year following the taxation period. Individuals and companies should register for tax at the National Revenue Agency, although if a company has been registered with the Commercial Register, they will automatically be registered for tax as well.

Social Security contributions must be paid by law and are calculated on the gross income of each individual.

It is mandatory for self-employed individuals to pay insurance for disability, illness and retirement but apart from pensions provision, they must make their own contributions – the state only contributes to the pension fund.

The total payable for employees and employers is up to around 29% of an employee’s gross wage – just over 12% of this is paid by the employee, the rest by the employer. These contributions cover disability, sickness, maternity benefits, unemployment and pensions

Corporation Tax is a flat rate 10%. Tax losses may be carried forward in some cases for up to five years. Usual business expenses and costs can be deducted to arrive at the taxable base.

The standard rate of VAT is 20%. There is also a reduced rate of 7% applicable to tourist industry bookings. The annual turnover threshold for VAT registration is EUR25,600 (BGN50,000), with alternate thresholds of BGN20,000 and BGN70,000 applying with regard to intra-community transactions and distance selling from Bulgaria respectively.

Taxes are due on property by way of an annual tax (levied by the local municipal authorities) and capital gains tax is due on the sale of property where it is not a person’s main residence.

Withholding tax is imposed on interest and royalty payments at 10% (with transitional arrangements in place meaning that Bulgaria will apply the exemption for connected EU corporate entities as from 2014), and on dividend payments to individuals and non-resident corporate recipients at 5% (with the EU rules on payments to connected corporate recipients already applying in this area.

Bulgaria Summary Guide Contents

Bulgaria Summary

Bulgaria Summary Chart

Bulgaria Residence

Taxation of Business People in Bulgaria

Living and Doing Business in Bulgaria

Business Forms in Bulgaria

Latest Comments

Expat Brit

Hi,

I am facing a dilemma and would like to invite any reader to advise me.

I am a Brit who has lived outside UK since 1993- initially in Belgium (5 years) & subsequently in 4 African countries. After a year outside UK, the UK Inland Revenue confirmed my status as ‘non-resident’ for tax purposes and as I have had no income in UK, I have not completed a UK tax return for many years. I visit UK very rarely, normally for one or two weeks per year.

In May 2011, I was made redundent by my employers, who were downsizing. This coincided with a move to retire in the Netherlands, where I now have official residency (my wife is Dutch). I thought that, at 63 years of age, I would be unlikely to find suitable employment; in fact, I have not tried hard and had resigned myself to permanent (but slightly premature) retirement.

However, to my surprise, I have recently been approached (through a mutual acquaintance) by a company that wishes to use my skills on a project in the Isle of Man. The role, if & when confirmed, would see me working for about 10 days a month in Isle of Man, with about 5-7 additional days per month, working from home. Contract will be for about two years. The firm has asked me to confirm if I would prefer to be paid (and therefore be taxed) in Netherlands or Isle of Man, the idea being that I create a self-employment entity for this employment. I have no data on which to base a response. Given Isle of Man's traditional ‘low tax ‘environment, are there any benefits to declaring an income in IOM? Are there any Isle of Man residency implications? Netherlands takes a tax cut on total world wide income, and, as I have never had any contact with the Dutch authorities, I am reluctant to start such a relationship now. Do I have to declare income in both countries, with a breakdown prorata to the time spent in each jurisdiction? Should I declare income to UK Inland revenue?

If anyone has pertinent advice on these points, I’d be grateful to hear them.

TJM @ Eindhoven, NL

T. Dog

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Jersey vs. Malta??

Hi, I live in South Africa, and along with 2 business partners (one in South Africa and one in Ireland - all South African citizens though) are setting up a company that designs Smart phone applications. As they will be sold on the various platforms (none of which operate out of South Africa)we have to list our company as operating out of Ireland anyway. As such, we have decided to set up our company in the best tax country and are wanting info on whether Jersey or Malta is best? If anyone has some inside info we would really appreciate it!! Thanks!Mary

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Purchasing investment-link insurance for my staff

Would that count as income tax to my staff? And would that count as expense to my company?Michael

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Irish crisis - effects on small business?

Hi all,

Just wondering if anyone 'on the ground', as it were, might be reading and able to help me...I was considering relocating my hairdressing business from the UK to Ireland before the economy started to go properly belly-up...now, not so much.

Are things as bad as they seem over there, or is it being over-hyped by the media? And is the government still keen to support small business people? Cos if not, I'll look elsewhere...

Thanks,Kate

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Living in France contracting to Australian company

I am moving full time to France in Jan 2012 where I will be working as a freelance contract engineer to a number of Australian based companies. It is my choice to move to France not a work requirement. I will be renting my house out in Austrlalia and renting a house while I am in France. I hold both EU & Austrlain citizenshiip. I am married with 2 young children. Approx total family income $100k AUD.
Do I pay tax in France or Australia or both ?
Any help or guidance would be much appreciated.France move

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