Bulgaria: tax guide for immigrants

Parent Category: ROOT Published: Tuesday, 15 February 2022 Print
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Expat's guide on the Bulgarian tax

Bulgaria is a beautiful country located in South-Eastern Europe. It shares its borders with Serbia, Macedonia, Greece, Turkey, and Romania. Bulgaria has a total population of 7 million people and Sofia is its capital city.

Bulgaria joined the EU in 2007 and has been an active member of the European Union since. They also adhere to the policies and regulations laid out by the EU for cooperation between the tax authorities of EU member states.

The tax year in the country is the same as the usual calendar year. Expats and foreigners will be considered taxable residents if they reside in the country for more than 183 days in 365 days. All Bulgarian tax residents have their worldwide income taxed at a flat rate.

Bulgaria has one of the most effective tariff collection systems in all of Europe. The main sources of tax revenue for the state are corporate taxes, withholding taxes, alternative taxes, personal income taxes, and VATs.

In this article, we’ll be looking over the individual, expatriate, corporate taxes in Bulgarian. This way you know how to handle your taxes whenever you visit the country for a long-term stay or a short visit.

 

Personal income taxations

All Bulgarian residents are liable to pay taxes on their worldwide income, with tax credits on taxes paid overseas. The Bulgarian charges a flat 10% personal income levy rate.

According to Bulgarian tax law, irrespective of your nationality, you will be considered a tax resident if you have a permanent address in the country, reside in Bulgaria for more than 183 days within an a12-month period, or work in another country on behalf of a Bulgarian enterprise, government, or organization.

You will also be considered a Bulgarian tax resident if your center of vital interests is in Bulgaria. Most foreigners who meet these requirements are usually people who intend on obtaining permanent residency or even citizenship.

If a double taxation treaty exists when the citizen resides abroad, there is the elimination of double taxation following that treaty with that country.

The taxable income includes all forms of cash and non-cash incomes from any income source like employment, real estate, business transaction, etc. A special regime exists for determining the levy base.

All income taxes from civil contracts, royalties, management charges, and freelance arrangements must be paid in advance. While income taxes payable in advance on employment are determined by the nature of work.

If the beneficiary is a company, it must withhold the tariff and pay it by the 10th day each month following the month in which the income was earned. But if the beneficiary is an individual, the liable levy must be paid by the recipient before the 15th day each month following the quarter in which the income was earned.

There are also some exceptions to income taxes. All income obtained from the sale of certain properties under certain conditions, scholarships for education, income from interests, and bank deposits are not taxable.

The 10% flat tax rate does not apply if the net income of a sole proprietor is taxed separately at a 15% final flat tax. The only personal allowance available in the country’s tax regime is the annual BGN 7,920 allowance for disabled individuals.

Taxable residents whose net income in the previous year was not more than BGN 200,000 are also exempted from quarterly payments.

 

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Corporate Taxation

The Bulgarian corporate tax rate is currently 10%. The corporate taxation of companies in Bulgaria is dependent on the nature of its activities. These taxes are payable by the 31st of March following the end of the tax year.

Some options allow advance payments for either monthly or quarterly depending on the profit acquired from the previous year. If the previous tax year produced a taxable profit, the forthcoming year's payments will be due and paid by the 15th day of each month.

The formula used to determine the previous is determined by the state. If the previous tax year resulted in a tax loss, then the forthcoming year's payments would be based on quarterly profit and paid on the 15th day of the month after the previous quarter.

Most companies situated in Bulgaria usually deduct their employees’ income taxes from their salaries every month, thereby saving their employees the stress of doing the paperwork themselves.

Bulgarian companies are also taxed on the revenue spent on representation relating to an activity, social expenses provided in kind to employees, and revenue spent on the operation of vehicles used for any managerial activity.

 

Expatriate taxes

Expats in the country are also taxed for income generated in the country. Fees for any paid services to a foreign tax resident are subject to a 10% final one-off tax with no deductions allowed.

Foreigners who perform business transactions or provide services in Bulgaria must possess a BULSTAT registration number with the Bulgarian Registry Agency.

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