Taxes

Tax rate for Bulgarians is 10% regardless of their income and whether they live and work in Bulgaria
or abroad. Self-employment income is also charged with 10% tax. Non-resident individuals are taxed
only on their income from sources in Bulgaria.

The annual tax return shall be submitted to the territorial directorate of the National Revenue Agency at the
permanent address of the natural person, from January 10 to April 30 of the year following the year of acquisition
of the income, with the exception of the cases for persons carrying out business activities.

Resides in the territory of Bulgaria for more than 183 days in each twelve-month period, or 3. resides abroad on
assignment of the Bulgarian State, its authorities and/or its organizations, or Bulgarian enterprise, and also the
members of his/her family, or 4. has his/her center of vital interests in Bulgaria.

Yes, however, the buyer needs to live in Bulgaria in order to gain residency.

Royalties are taxed on an annual basis with a 10% flat tax rate if received by Bulgarian tax residents and
a 10% final WHT if received by non-residents.

Individuals are taxed in Bulgaria based on their tax residency status. Bulgarian tax residents are taxed on
Their worldwide income. Non-residents are taxed in Bulgaria only on their Bulgarian-source income, which has
a very broad legal definition. Generally, this is all income derived as a result of economic activities performed
in the territory of Bulgaria or as a result of disposal of property in Bulgaria.

A flat tax rate of 10% applies to all personal income, with some exceptions.

Corporate income tax in Bulgaria is 10% and is regulated by the Corporate Income Tax Act (CITA).
The tax base for calculating the corporate tax is the tax profit.

Corporate income tax is levied on the taxable profit of local legal persons and foreign legal persons from
a place of business in Bulgaria. Legal persons that are not registered in Bulgaria and do not operate
in the country through a place of business, pay tax only on income derived from sources in Bulgaria.

Withholding tax is levied on dividends and liquidation quotas distributed by local legal persons for the benefit of:
foreign legal persons, except where the dividends accrue from a foreign legal person through
a permanent economic establishment in the country; local legal persons that are not merchants.
The tax rate withheld from the income from dividends is 5%.

Withholding tax is levied on the following income of foreign legal persons that have no permanent
economic establishment in the country:
• Income from financial assets and transactions with financial assets issued by local legal persons, municipalities and the state.
• Interests, including interests of payments under finance leases.
Income from rent or other provision for the use of movable property.
• Author and license fees.
• Fees for technical services.
• Remuneration under franchising and factoring agreements.
• Remunerations for management or control of a Bulgarian legal person.
• Income from rent or other provision for use of immovable property in the country.
• Income from the disposal of immovable property in the country.
• Remuneration of foreign legal persons established in jurisdictions with a low tax regime, for services or rights except when the services or rights are actually granted.
• Penalties and damages of any kind accrued to foreign legal persons established in jurisdictions with a low tax regime, except for benefits under insurance contracts.

The tax rate on the income tax from interest, author and license fees is 5% (under the provisions of the CITA)
& it is 10% on all other income.

VAT rate is 20% and applies to:
• any paid taxable supply of goods or services, except those specified in the Law, which are subject to a tax rate of 0%;
• imports of goods within the country;
• any paid intra-Community acquisition with place of performance within the country.
Reduced rate of 9% applies to accommodation in hotels and similar establishments, including
holiday accommodation and letting out of places for camping lots or caravans.

A zero tax rate applies to:
• the supply of goods dispatched or transported from a place in the country to a third country or a territory outside the European Community by or on behalf of the supplier;
• certain supplies related to international transport;
• delivery related to processing of goods;
• delivery related to duty free trade;
• delivery of services provided by agents, brokers and other intermediaries.
• Main transactions that are exempted from VAT are:
• delivery related to health;
• delivery related to social care and insurance.

Taxable person, who fails to submit a tax return under this Act, shall be liable to a pecuniary penalty varying
between BGN 500 and BGN 3,000. Any repeated violation is punishable by a pecuniary penalty varying
between BGN 1,000 and BGN 6,000.

Taxable person, who fails to submit any supplement to the annual tax return or who states any untrue
particulars or circumstances in any such supplement, shall be liable to a pecuniary penalty varying
between BGN 100 and BGN 1,000. Any repeated violation shall be punishable by a pecuniary penalty
varying between BGN 200 and BGN 2,000.

Taxable person, who fails to fulfil the obligations thereof under Article 92 (3) of CITA (submission of
annual activity report) shall be liable to a pecuniary penalty varying between BGN 500 and BGN 2,000
& upon a repeated violation, to a pecuniary penalty varying between BGN 1,500 and BGN 5,000.