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If you live in Bulgaria, earn income there, buy a vehicle, or sell or rent property, Bulgarian tax obligations may apply. The result depends on your tax residence, the type of income and any relevant tax treaty. This overview is not tax advice; confirm current rates, thresholds and filing dates with Bulgaria's National Revenue Agency or a qualified adviser.
Personal Income Tax
Bulgarian tax residents are generally taxed on worldwide income, while non-residents are generally taxed on Bulgarian-source income. Tax treaties and specific exemptions can change the result.
Explanation: Tax residence is not determined by a residence permit alone. The number of days spent in Bulgaria, permanent address, centre of vital interests and applicable tax treaties may all be relevant.
Individuals
A 10% flat rate applies to many types of personal income, but exemptions, deductions and final withholding taxes may apply.
Taxable income can include employment income, self-employment or business income, royalties, rent, investment income and certain gains. The treatment of prizes and dividends depends on the source and the taxpayer's status.
Dividends paid by a Bulgarian company to an individual are commonly subject to a 5% final withholding tax, although a tax treaty may affect non-residents.
Foreign dividends and any available foreign-tax credit may need to be reported by Bulgarian tax residents. The applicable treatment should be checked for the relevant country and tax year.
Companies
Bulgarian corporate income tax is generally 10%. Deductibility depends on whether expenses are properly documented, business-related and allowed under the tax rules.
Bulgarian companies are generally taxed on worldwide profits. Foreign companies may owe Bulgarian tax on income from a Bulgarian permanent establishment or other Bulgarian sources. Special rules apply to non-profit organisations and cross-border arrangements.
Explanation:A company's tax residence depends on its place of incorporation and other legal criteria; an address alone is not sufficient.
Companies file annual returns and pay tax under the deadlines for the relevant tax year. Confirm the current calendar with the National Revenue Agency.
Tax on capital gains
Capital-gains treatment depends on the asset, the seller's status, the holding period and any available exemption. For taxable property sales, the calculation is generally based on the difference between the sale proceeds and the legally recognised acquisition cost, subject to the applicable rules.
Bulgarian tax residents may need to report taxable gains in their annual return. Non-residents can be subject to withholding or filing obligations on Bulgarian-source gains. Obtain advice before completing a property sale.
For a separate overview of taxes and fees connected with property, see: property taxes in Bulgaria
VAT
The standard Bulgarian VAT rate is 20%. Reduced rates apply only to specified supplies and can change; the VAT treatment of accommodation and property rental depends on the service and the supplier.
A zero rate may apply to qualifying exports and certain international transport services, subject to documentation and place-of-supply rules.
The compulsory VAT-registration threshold has changed over time. Check the current turnover threshold and any rules requiring registration below it.
Note: VAT on a new-build purchase depends on the seller's VAT status and the nature of the transaction, not simply on a BGN 50,000 purchase-price threshold. The contract should state whether VAT is included in the advertised price.
Patent Tax
Certain sole traders carrying out listed local activities may be subject to municipal patent tax instead of the standard income-tax calculation. Eligibility and the amount depend on the activity, location and current turnover rules.
Payment schedules and any early-payment discount are set by the applicable rules. Confirm them with the relevant municipality before paying.
Vehicle Taxes and Registration Fees
A vehicle purchase can involve several separate charges:
- A product or environmental fee, depending on the vehicle and registration history;
- Registration and administrative fees;
- Annual municipal vehicle tax, based on factors such as power, age and emissions;
- Insurance, inspection and road-vignette costs where applicable.
Rules and incentives for electric and hybrid vehicles change, so check the current treatment before registering a vehicle.
Individuals and companies can both be liable for vehicle-related charges. Confirm the amount, payment schedule and any discount with the municipality or registration authority.
