In Bulgaria there are two main categories of taxes – direct and indirect.
Direct taxes are:
- Corporate income tax;
- Income tax on the revenues on the individuals;
- Withholding tax.
Indirect taxes are:
- Value added tax;
- Excise duties.
Corporate income tax
Corporate income tax is due on the accounting profit (revenues minus expenses) after adjustments for tax purposes. The applicable tax rate for the year 2024 is 10% (flat). Taxable persons are local entities, including unincorporated entities, conducting business in the country for the profits and income from all sources in Bulgaria and abroad.
Income tax on the revenues on the individuals
Income tax on individuals is 10% (flat). Bulgarian residents are subject to tax on their income from sources in Bulgaria and abroad (including the business as a sole trader) and the incomes of foreign individuals are taxed only if they are acquired from sources in Bulgaria.
Withholding tax
Bulgarian entities are obliged to withhold tax at the rate of 10% when they accrue the following types of charges which will be income to foreign persons: capital gains, rent, interest, royalties, franchising and factoring fees, fees for technical, advisory and management services. 5% WHT is due on dividends and liquidation quota distributed to foreign entities unless the latter are tax residents of a European Union in which case no WHT would be due in Bulgaria.
Value added tax
All taxable persons are subject to a mandatory VAT registration if their taxable turnover of local supplies for a period of 12 consecutive months reaches BGN 100,000 / EUR 50,000. There are three VAT rates applicable in Bulgaria – 20%, 9% and 0%.
Excise duties
Excise duties are levied upon the production and importation of certain goods such as alcohol and alcoholic beverages, tobacco products, energy products and electricity. Taxable persons for the purposes of excise duties are licensed warehouse keepers, importers of excisable goods.
For more detailed information about the tax burden in Bulgaria, please do not hesitate to contact us.