Taxes
Our promise your total tax burden will be max 5%.
1. Languages used by local tax authorities -> foreign documents must be translated (and legalized when required) in Bulgarian when provided to the Bulgarian National Revenue Agency.
2. Corporate tax rate 10%. Deadlines: Tax return prepare & submit 1st March – 30th June next year. Deadline to pay 30th June next year.
Under Bulgarian tax legal regime, individuals who are considered tax residents in Bulgaria are required to pay taxes on their income from all sources worldwide. On the other hand, non-residents are only subject to taxation on their income derived from Bulgarian sources, either through a permanent establishment or by means of withholding tax, depending on the specific circumstances. In the case of corporate entities, the general rule is that their corporate income is liable to corporate income tax at a flat rate of 10%.
3. Specific tax regime for dividends. Dividends tax 5%. Withholding tax 10%. Deadlines: Tax return prepare & submit quarterly till 15th month after the quarter. Deadline to pay end of the month after the month of declaration.
Under Bulgarian tax law, 5% withholding tax is due on payment of dividends and liquidation proceeds to local and foreign legal entities. The company shall be responsible for the withholding and payment of taxes, which shall be executed no later than the conclusion of the month subsequent to the calendar quarter in which the resolution for the distribution of dividends was passed or the liquidation proceeds were accrued.
Royalties, interest, technical services, rent, franchise fees, factoring fees, scholarships, and directors’ remuneration are subject to 10% withholding tax. Exemptions may apply for EU/EEA entities with respect to interest and royalties. Exemptions and relief available under applicable Double Taxation Treaties (DTTs).
4. Personal income tax rate 10%. Deadlines: Declare & pay monthly till 25th next month. Annual recalculation, declare and pay the difference if any till 28th February next year.
Resident individuals are taxed on their worldwide income, and non-residents on the Bulgarian source income. Taxable income includes income derived from employment, business activity as freelancer or other business activity, rent, capital gains, etc.
Tax incentives and reliefs are available on personal contributions for voluntary insurance or retirement pension insurance, donations, for young families, for children and disabled individuals, in cases of electronic payments, etc.
Deductions and allowances are available depending on the type of income, e.g. freelancers, farmers, agricultural products producers, etc. The general personal income tax rate is set at 10%.
Please find additional info on the topic @ FAQ page, section: Taxes
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Why Paramount Services? Taxation Bulgaria. Prices. Tax rate reduce to 5%. Accounting services Bulgaria.
Taxation Bulgaria. Corporate tax. Flat tax rate 10%.
The basic principles for the taxation of business profits, you can find in the Corporate Income Tax Act. The current taxes and levies imposed by the Corporate Income Tax Act are:
• corporate income tax
• lump sum tax levied on certain types of expenses accrued by local tax residents
• withholding tax.
Corporate entities incorporated under the Bulgarian Commercial Act define Bulgarian tax residents. Upon registration in Bulgaria, these legal entities are subject to tax on their worldwide income. Regardless of whether or not it is generated in Bulgaria. Also, there is no withholding tax or income tax on undistributed profits.
Taxation Bulgaria. Capital gains and losses
For capital gains in an entity’s profit subject to corporate income tax, except in the following cases, entities have to follow:
• Capital gains, non-resident taxpayers realize from the sale of real estate property situated in Bulgaria or from the sale of shares are subject to a 10-percent withholding tax
• Liquidation proceeds, non-resident taxpayers and local individuals earn, exceeding the value of their initial investment. Zero tax rate for residents of EU/EEA Member States or 5 % for all other non-residents;
Taxation Bulgaria. Dividends and liquidation quotas
Dividends and liquidation quotas, local legal entities distribute also local unincorporated entities and foreign persons, in this case due a 5% withholding tax.
No withholding tax is due in Bulgaria on liquidation quotas and outbound dividends, Bulgarian entities distribute. Also for those tax resident companies in the EU/EEA without any participation or holding requirements. Except for cases of hidden profit distribution.
Taxation Bulgaria. Value added tax
Generally, VAT is due on any supply of goods or services with a place of supply in Bulgaria made by taxable persons in the course of their economic activities. “Supply” normally means goods or services; entities provide in exchange for consideration. Certain transactions, entities carry out for no consideration are also considered to be supplies, for example, the private use of business assets.
The following transactions are generally subject to Bulgarian VAT:
• supply of goods or services with a place of supply in Bulgaria
• intra – Community acquisition of goods
• import of goods into Bulgaria.
• Tax regime and place of supply of goods
The location of goods at the time of the supply determines the VAT treatment. For the goods, entities keep in Bulgaria, for their supply to location in Bulgaria, entities have to pay 20 percent Bulgarian VAT.
Taxation Bulgaria. VAT rates
The standard rate of VAT, which applies to most taxable supplies, is 20 percent. Two reduced rates, entities apply for specific supplies.
9-percent VAT rate
A reduced rate of 9 percent applies to accommodation in hotels, sheltered housing and other places for accommodation.
Mandatory VAT registration for local supplies
Mandatory VAT registration applies for taxable persons, local or foreign, who perform taxable supplies with place of supply in Bulgaria. When turnover exceeds the registration threshold of BGN 100,000 for a period of 12 consecutive months. Then VAT registration is mandatory. Zero-rated supplies count toward the VAT registration threshold. The taxable person must complete an application for registration 14 days. From the end of the tax period when the registration threshold was reached.
Mandatory VAT registration for providing/receiving of services
Subject to mandatory VAT registration are all taxable persons. They have to receive services from suppliers established abroad. Either provide B2B services to another EU Member State. Taxable person fills in a claim for VAT registration with the revenue authorities not later than 7 days before the tax on the supply becomes due.
The registration for providing/receiving services is a specific registration which does not entitle the taxpayer to deduct input VAT.
Deregistration
Voluntary terminate registration when: during the last 12 consecutive months before the current month. The taxable turnover of the registered person does not exceed BGN 100,000. Voluntarily registered persons cannot apply for de-registration before the expiration of 24 months from the beginning of the calendar year following the year of registration.
VAT returns
Each VAT registered person submits VAT returns, purchase and sales ledgers. The tax period under the Bulgarian VAT Act is the calendar month.
Taxable person prepares the VAT return on the basis of the information from the purchase and sales ledgers for the respective month. The deadline for submission of the VAT return and ledgers is the 14th day of the month following the reference tax period. Relevant important: accountant submit the VAT records electronically with a qualifying electronic signature.
