Bulgarian national taxes are administered by the National Revenue Agency.
Companies registered in Bulgaria pay corporate tax. Foreign legal entities trading in Bulgaria through a branch also pay corporate tax Companies not registered in Bulgaria and do not trade in the country through a branch pay tax only on revenue gained from sources in Bulgaria.
Corporate tax is 10% and is regulated by the Corporate Income Tax Act (ZKPO).
Corporate tax is also paid by Bulgarian non-trading legal entities on any profits they make on transactions subject to Article 1 of the Bulgarian Trade Act (TZ), or on the rental of movable or immovable property.
Who has to pay corporate tax?
- Bulgarian legal entities – commercial enterprises.
- Bulgarian non-trading legal entities on any profits they make on transactions subject to Article 1 of the Trade Act (TZ), or on the rental of movable or immovable property.
- Bulgarian unincorporated companies.
- Foreign entities trading in Bulgaria through a branch.
- Foreign unincorporated entities trading in Bulgaria through a branch.
The following pay tax in place of corporate tax:
- State budget-funded enterprises (departments, municipal authorities, etc.). The tax rate is 3% (2% for municipal authorities).
- Gambling operators pay a gambling tax based on the number of bets made or the number of gaming machines operated. The taxation rate is 15%. The tax for the use of gambling machines is based on the number of machines.
- Merchant shipping operators pay 10% tax on their vessel operations, based on the net vessel tonnage per day of operation.
- Certain revenue for foreign legal entities and unincorporated companies generated in Bulgaria is taxed at its source. The rate is 10%.
A 5% tax is levied on dividends and shares in liquidation distributed by local legal entities to:
- foreign legal entities, with a few exceptions
- local non-trading legal entities, including municipal authorities.
A 5% tax is levied on interest and royalties, when the following conditions are simultaneously met:
- the beneficiary is a foreign legal entity from an EU Member State, or a branch of a foreign legal entity from an EU Member State;
- a Bulgarian legal entity – the payer, or the entity trading in Bulgaria is the payer, is an entity linked to a foreign legal entity – the beneficiary, or to an entity trading in Bulgaria is the beneficiary.
The following are subject to tax at 10%:
- social expenses provided in kind to employees under management contracts;
- business-related entertainment expenses;
- vehicle use-related costs for management purposes.
Tax on the income of natural persons, include the income generated by sole traders, is regulated by the Personal Income Tax Act (ZDDFL).
Persons subject to this law are:
- local natural persons – for income gained from sources in Bulgaria and abroad;
- foreign natural persons – for income gained from sources in Bulgaria;
- local and foreign persons, who are required to withhold and pay back taxes under the Personal Income Tax Act (ZDDFL).
The types of taxes payable on income by natural persons are:
- tax on the total annual tax base – 10%
- tax on the annual tax base – 15%
- withholding tax – 10, 7 or 5%.
The tax on the total annual tax base is payable on income from remuneration, other commercial activities (freelancing, professional work, etc.); rent or other payments for the use of rights or property; income from the transfer of rights or property; and income from other sources.
Tax on the annual tax base is payable on income from business activities as a sole trader, as well as by natural persons registered as agricultural or tobacco producers, who are taxed in a similar way to that as sole traders.
Withholding tax is payable on specifically listed income calculated/paid out to foreign legal entities from sources in Bulgaria, if they are not carried out via a permanent base in Bulgaria, as well as on types of income generated by local natural persons. The tax rate is 5% for earnings from dividends and liquidation shares paid out to local and foreign natural persons, and 7% on taxable earnings on long-term life insurance policies (when the contract period is 15 or more years). For all remaining earnings subject to withholding tax under the Personal Income Tax Act (ZDDFL), the tax rate is 10%.
Wherever a taxation agreement or any other international convention ratified by Bulgaria contains provisions that differ from those in Bulgarian tax law, the provisions of the taxation agreement or convention takes precedence.
Value Added Tax (VAT) is payable on:
- any paid goods or services provided;
- any paid intra-Community acquisition, with the transaction occurring in Bulgaria and done by a legally registered or obliged-to-register entity;
- any paid intra-Community acquisition of new vehicles, with the transaction occurring in Bulgaria;
- any paid intra-Community acquisition, with the transaction occurring in Bulgaria, of excise goods, whenever the recipient is a tax-liable person or a legal entity not liable for tax, which is not legally registered;
- import of goods.
For VAT on trade between EU Member States purposes, the terms "export" and "import" are replaced with "intra-Community supply".
Customs duties are regulated by the Excise Duties and Tax Warehouses Act (ZADS).
Customs duties are applied on the following products:
- alcohol and alcoholic beverages;
- tobacco products;
- energy products and electricity;
- coffee and its extracts;
Customs duties are administered by the Customs Agency.
These are taxes and fees collected by municipalities, such as taxes on immovable properties, inheritances, donations, vehicles, tourism tax, patent tax and local fees for domestic waste removal, produce markets, pavements, child care centres, and for technical and administrative services and more. These vary from one region to another, and are collected by municipalities.
- Immovable Property Tax.
- Vehicle Tax.
- Inheritance tax.
VAT registration is either mandatory or optional.
Mandatory registration – Any tax-liable person with a taxable turnover of BGN 50 000 or more in the 12 months prior to the current month must apply to register for VAT within 14 days of the end of the tax period in which the turnover was generated.
Optional registration – Anyone who does not meet the requirements for mandatory VAT registration may voluntarily register for VAT.
The obligation to register when making intra-Community acquisitions – Any legal entity not liable for tax or tax-liable entity not registered under any other basis, and makes intra-Community acquisitions of goods, when the total cost of taxable intra-Community acquisitions for the current calendar year exceeds BGN 20 000, are subject to VAT registration.
Submitting tax returns
If you are subject to corporate tax under the Corporate Income Tax Act (ZKPO), you or your representatives must submit annual tax returns to the regional office of the National Revenue Agency according to the company's place of registration. You can submit these via the Internet or by post, submitted with an annual statistical report.
Deadlines for submitting your tax return and paying tax:
- Tax returns – 31 March in the following year,
- payment of corporate tax after deducting advance payments – 31 March in the following year.
The law gives details on duty-free regimes, duty rates, procedures on delayed customs duty payments, etc.
Useful information on Bulgaria's economic situation, and advice to entrepreneurs: