Income taxes

Last reviewed 02 Mar 2023

Tax Rate

10 % flat rate; sole proprietors: 15 % flat rate; 8 % for interest incomes of individuals

Special tax rates

See Income Tax Act

Tax liability

Unlimited

On worldwide income (except where restricted by DTA)

Resident natural persons:

• permanent address in Bulgaria; or
• 183 days in a 12-month period test of physical presence; or
• centre of vital interests (prevails over the permanent address criterion)

Limited

On certain income in Bulgaria

Any person who is not a resident person (see above)

Tax assessment period

Calendar year

Income categories

Income from

1. Employment relationships
2. Economic activity in a sole-trader capacity
3. Other economic activity
4. Rent or other income for the use of rights or property
5. Transfer of rights or property
6. Other income

Accounting

Double-entry bookkeeping in accordance with Bulgarian accounting regulations

Mandatory retention period for books and records

Loss set-offs

Permitted in principle

Loss carryback

not possible

Loss carryforward

Losses incurred by an individual entrepreneur in the course of business activities can be carried forward for a maximum of 5 years

Operating expenses

Business expenses

Tax allowable expenses

Expenses necessary for acquiring, securing or maintaining the revenue of the business

Lump sum option

Possible for incomes from self-employment, agriculture, forestry and specific proffessions.

Motor vehicles

Social insurance

Deductible

Withholding tax

Generally, 10 %:

lower rate may be provided by applicable DTA

Interest

10 % or applicable DTA (8% for local tax residents)

Royalties

10 % or applicable DTA

Dividends

5 % or applicable DTA