In this article, you’ll find out more about expat taxes in Bulgaria.
If you want to invest as an expat or high-net-worth individual, which is what i specialize in, you can email me (firstname.lastname@example.org) or use WhatsApp (+44-7393-450-837).
This article isn’t formal tax advice and the facts might have changed since we wrote it.
Table of Contents
Bulgaria continues to attract expats from all over the world because of the lifestyle it offers. And it does so at an affordable cost of living, especially in comparison to other European countries. Picturesque mountains, beaches, and cultural sites abound, which are sure to keep you on your feet. Apart from that, taxes are favorable for individuals and businesses alike. With a flat tax system, more of your income finds its way into your pockets.
Who is considered a tax resident in Bulgaria?
Any person, regardless of nationality, who meets either of the following conditions is considered a tax resident in Bulgaria:
- Has a permanent address in the country, except for those whose center of vital interests is not established in Bulgaria
- Resides in the country for more than 183 days within a period of 12 months
- Established a center of vital interests in Bulgaria
- Resides outside the country due to assignment by the Bulgarian state, authorities, organizations, or enterprise
The period of stay excludes circumstances wherein residing in Bulgaria is only done for the purpose of education or medical treatment. A center of vital interest is deemed as such when the interests are closely connected to the country. This will depend on the following factors: family; property; location from where employment, professional, or business activities are conducted; and location from where the property is managed.
Personal Income Tax in Bulgaria
The Personal Income Taxes Act (PITA) stipulates the regulations for the taxation of personal income. A resident in Bulgaria is taxed on income earned within and outside the country. On the other hand, non-residents are only taxed on income earned in the country. The tax rate is 10% of the total annual tax base. This takes into consideration income earned from the following: employment, other economic activities, rent, use of rights or property, transfer of rights or property, and other sources.
Other economic activities refer to the production of products related to agriculture, forestry, hunting grounds management, or fisheries. It also includes copyright and license royalties, the practice of a skilled craft, and the practice of a liberal profession.
Taxes on Income from Activity in a Sole-Trader Capacity
The Corporate Income Tax Act stipulates the regulations regarding the taxable income in this given situation. The tax rate is 15% of the annual taxable amount.
Tax Reliefs in Bulgaria
Tax reliefs are applicable to the following:
- Individuals who have lost 50% or more of their working capacity
- Personal voluntary contributions to social and commercial insurance
- Personal contributions for the purpose of contributory service upon retirement
- Young married couples
- Children, with the specific figure depending on the number of children
- Children who have at least a 50% disability rate
- Non-cash payments
- Improvements or renovation of immovable properties
Final Tax in Bulgaria
Income earned by non-residents in Bulgaria are subject to a 10% tax rate. This is applicable to those that are not realized through a fixed base in the country. It includes income from the utilization and disposal of movable or immovable property; copyright and license royalties; technical assistance fees; and interest payments.
Moreover, found below are the tax rates applicable to various sources of income.
|Tax Rate||Source of Income|
|7% or 10%||Supplementary voluntary social insurance, voluntary health insurance, life insurances|
|5%||Dividends and liquidation of shares|
|10%||Gross sum of cash prizes and merchandise awards from competitions and contests; this excludes those obtained from an employer or commissioning entity|
|10%||Gross sum of taxable income obtained as state aid, subsidies, and other assistance from the European Agricultural Guarantee Fund, the European Fund for Rural Development, and the state budget; this is applicable to individuals not registered as farmers|
With this, expat taxes in Bulgaria are based on a flat taxation system. This means that they do not depend on the amount of income earned. Because of this, it provides an opportunity to reduce the burden of high pay cuts brought about by such considerations.
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