Taxation in Bulgaria
Bulgaria has the lowest taxation rates within the EU. Our tax laws are strictly synchonized with the European Law and the case law of the European Court of Justice (ECJ).
Personal Income Tax
Bulgaria imposes personal income tax with a 10% flat rate on the worlwide income of its residents.
Benefits for EU residents
Residents of EU and EEA member states have the right to use the exemptions available to local individuals.
In some cases there is a possibility for EU and EEA residents to be subject to net taxation for certain types of incomes.
Corporate Income Tax
Bulgaria offers a flat-rate taxation for legal entities. The corporate tax rate is 10%. Taxes are imposed on the worldwide income of companies incorporated in Bulgaria.
Subject to tax are local companies registrated in Bulgaria, foreign legal entities with permanent establishment in Bulgaria as well as non-personalized establishments treated as entities only for tax purposes.
Bulgaria levies witholding tax on various incomes. Witholding taxation covers royalties, capital gains, technical services, dividents, interests, etc.The main rate of the Bulgarian witholding tax is 10%. Bulgaria levy 5% witholding tax on dividents and liquidation quotas.
Tax on Expenses
Legal entities in Bulgaria are subject to tax on some types of expenses. A final 10% flat-rate tax is levied on the following expenses:
- Enterntainment expenses
- Some expenses related to vehicle exploitation
- Certain social expenses provided in-kind to workers and employees
Alternative Types of Taxation
- Taxes on gampling activities with total tax rate of 15%
- Ship exploitation taxes with tax rate of 10%
- Taxes on the revenue of public enterprises with tax rate of 2% for municipalities and 3% for the other budgetary organisations
Value Added Tax
VAT is levied on both provision of goods and provision of services.The main VAT rate is 20%. The tax for tourist services is redused to a 9% rate. In addition to these tax rates there are reduced rates for some supplies, exempt supplies, supplies subject to a zero-rate tax as well as transaction relations which fall out of the VAT scope.