Bulgaria tax system - taxation of Bulgarian companies and individuals: VAT, income tax and capital gains. Tax treaties of Bulgaria.

Basic taxes (briefly)

Personal tax 10%
Corporate tax (in detail) In general, flat rate is 10%
Capital gains tax. Details Included in the income tax rate
VAT. Details The standard VAT rate is 20%. A reduced rate of 9% applies to certain goods and services
Other taxes Social Contributions, Property Tax, Property Transfer Tax
Government fee
Stamp duty No

International tax agreement

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Personal Income Tax

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.

Corporate Income Tax

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.

CFC Rules

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.

Withholding Tax

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.

VAT

The standard VAT rate is 20%.

Some goods and services are subject to the reduced rate of 9%.

Social Security Contributions

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

Property tax is paid annually on the value of immovable property at rates ranging from 0.01% to 0.45% depending on the municipality.

Property Transfer Tax

Transfers of immovable property and vehicles are subject to tax at rates from 0.1% to 3%.

The rates are set by municipalities.

Double Tax Agreements

Bulgaria has entered a whole range of double tax and tax information exchange mechanisms:

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.

Exchange Control

Bulgaria has no exchange control, but there are some reporting requirements.

    Taxes of Bulgaria

    Min. rate for corporate tax 10%
    Capital gains tax Regular rate
    VAT 20%
    Withholding tax 5%/10%/10%
    Exchange control No
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