Bulgaria: Tax Rates

1. Corporate Profit Tax - The corporate profit tax rate in Bulgaria is flat at 10%. Liable entities over the corporate profit tax are companies and partnerships established under Bulgarian law, also places of conducting business in Bulgaria of non-resident entities. Taxable profit is the financial result adjusted for tax purposes.
2. Dividend Tax - Dividends are subject to 5% withholding tax when distributed either to individuals or resident non-profit entities or non-residents except for EU / EEA entities. Dividends distributed to resident companies are not included in their taxable income except for dividends distributed by Special Purpose Investment Vehicles
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(REITS) and Non-EU / EEA foreign entities.
3. Withholding tax - The withholding tax is flat at 5% on the gross amount of dividends and liquidation quotas but 0% for distributions to EU / EEA entities and 10% on the gross amount for all other taxable income. The withholding tax rates may be reduced or waived under an applicable tax treaty.
3.1.Income subject to withholding tax at source is due on: Dividends and liquidation quotas; Interest, royalties, franchising and factoring fees; Technical, consultancy and management services fees; Capital gains from transfer of real estate; Capital gains from disposal of financial assets issued by resident entities or the State and municipalities (exemption for capital gains from disposal of shares on a regulated Bulgarian, EU or EEA market); Rents from letting of equipment, real estate and other properties
4. Personal income tax - Personal income tax rate is set at 10% flat on the taxable income. No income brackets with different tax rates are applicable.
III. Annual Return and Tax Payment
1. Tax residency
1.1 Individuals are considered Bulgarian tax residents if they have stayed in Bulgaria for more than 183 days in any 12- month period or the center of their essential lifelong interests is in Bulgaria, determined in view of their personal and economic ties to the country, such as permanent address in Bulgaria, family, employment, possession of property, investments etc.
2. Fiscal year
2.1. The tax (fiscal) year is the calendar year with no availability to opt for different reporting and accounting dates.
2.3. Very important document is the Annual Report. The annual report of the company contains Tax Declaration and Financial report. It is filed up to March 31 of the present year for the previous one at the Revenue Agency and the National Statistic Institute. It is also filed at the Registry Agency up to 30 of June of the present year for the previous one. Annual report must filed even if the company had been non active during the year. The tax (fiscal) year is the calendar year with no availability to opt for different reporting and accounting dates. 5 % discount applies when the annual tax return is filed and the tax is paid before 10 February of the following year or the annual tax return is submitted electronically.
3. Tax returns and payment
3.1. The annual personal income tax return has to be submitted by 30 April of the following year. The tax has to be paid by the same deadline.
3.2. Individuals do not have to file annual tax returns if they have received only employment income for which an annual reconciliation of the tax liability was made by the employer, non-taxable income and/or income subject to one-off taxation.
4. Taxable income
4.1. Taxable income includes monetary income, as well as benefits received in-kind. Non-taxable items and “in kind social benefits” may be excluded. Bulgarian tax
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residents are taxed on their worldwide income. Non-residents are taxed only on their Bulgarian-sourced income at source.
5. Payment
5.1. The resident payer of the income has to withhold the tax and remit it to the budget within:
-Three months following the month of accrual of the income when the recipient is tax resident of a country which has a tax treaty with Bulgaria
- One month following the month of accrual in all other cases.
The recipient has to remit the withholding tax due within the terms indicated above in the case of capital gains.
6. Deductions - Tax deductions apply in some cases, including: Mandatory social security and health insurance contributions, Statutory deductions for freelancers, for rental income, etc., Voluntary personal insurance up to certain limits, Certain donations, Other specific situations (disability, mortgage, etc.)
7. Refund provisions
Entities resident in the EU may declare tax deductible expenses and claim a corresponding deduction or refund of the withholding tax paid on a gross basis. The claim is annual and should be filed by 31 December of the following year.
8. Tax depreciation rules
Maximum annual tax depreciation rates between 4% and 50%, depending on the type of asset.
Buildings – 4%
Machine – 30%
Transport facilities – 10%
Computer, telephones – 50%
Automobiles – 25%
Others – 15%