Tax residents pay tax on their worldwide income. Non-residents pay tax on income from sources in Bulgaria.
The tax rate is 10%.
Dividend income is generally taxed at 5% and interest income at 8%. Interest/discount income on bonds is exempt.
Capital gains are included in the taxable income. In some cases, there is an exemption for profit from the sale of a dwelling.
Profits from the sale of securities of public companies on the Bulgarian stock exchange and regulated exchanges in the EU / EEA countries are tax exempt.
Bulgarian companies pay corporate income tax on their worldwide income, foreign ones – on income from sources in Bulgaria.
The corporate income tax rate is 10%.
Profits from the sale of assets are included in the tax base. Profits from the sale of securities on regulated markets (exchanges) within the EU / EEA, as well as on equivalent markets outside the EU / EEA, as defined by law, are tax exempt.
Dividend income from Bulgarian companies and companies within the EU / EEA is generally tax exempt.
A foreign company is considered a controlled foreign company if it is taxed at a low rate (less than half of the Bulgarian corporate income tax rate), and a Bulgarian resident holds, directly or indirectly, more than 50% of its capital, voting rights or rights to profit. If a foreign company conducts substantial economic activity with adequate personnel, equipment, office space, and assets, the CFC rules may not apply.
Dividends paid are taxed at the rate of 5%.
Dividend payments to companies from EU / EEA countries are exempt.
Royalty and interest payments are subject to withholding tax at the rate of 10%. Interest payments on bonds listed on the EU / EEA exchanges are exempt. There are also other exemptions.
Tax rates are reduceable under double tax treaties and EU directives.
The standard VAT rate is 20%.
Some goods and services are subject to the reduced rate of 9%.
Social security contributions are paid by employees at the rate of 10,58% and by employers at the rate of 14,12% to 14,82% (depending on the sector of the economy) of the employee remuneration.
Health insurance premiums are 3,2% for the employee and 4,8% for the employer.
Property tax is paid annually on the value of immovable property at rates ranging from 0,01% to 0,45% depending on the municipality.
Transfers of immovable property and vehicles are subject to tax at rates from 0,1% to 3%.
The rates are set by municipalities.
Bulgaria has 69 Double Tax Treaties (DTC) and one Tax Information Exchange Agreement (TIEA) with the following jurisdictions:
69 DTCs: Albania, Algeria, Armenia, Austria, Azerbaijan, Bahrain, Belarus, Belgium, Canada, China, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, India, Indonesia, Iran, Ireland, Italy, Japan, Jordan, Kazakhstan, Korea, Kuwait, Latvia, Lebanon, Lithuania, Luxembourg, Macedonia, Malta, Moldova, Mongolia, Montenegro, Morocco, Netherlands, Norway, Poland, Portugal, Qatar, Romania, Russia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Syria, Thailand, Turkey, Ukraine, United Kingdom, USA, Uzbekistan, Vietnam, Zimbabwe.
1 TIEA: Guernsey.
In addition, Bulgaria has signed but not yet ratified the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI).
Bulgaria has no exchange control, but there are some reporting requirements.
