Last Updated on December 22, 2024 by Bulgarian attorney

Bulgaria Tax Resident

Bulgaria is quickly becoming one of the most attractive destinations for entrepreneurs, digital nomads, and high net worth individuals looking for a favorable tax environment. With a low flat tax rate of 10%, Bulgaria offers significant tax savings for individuals and businesses alike. However, to fully take advantage of these tax benefits, it’s important to understand the rules and requirements for tax residency in Bulgaria.

What is Tax Residency?

Tax residency is the concept that determines where an individual or a company is liable to pay taxes. This is usually determined by the country in which an individual or company is considered to be a resident, which is typically based on factors such as the length of time spent in the country and the individual’s ties to that country.

In Bulgaria, tax residency is determined based on the following factors:

1. Physical presence: An individual is considered a tax resident of Bulgaria if they spend more than 183 days in the country within a calendar year.
2. Economic ties: An individual is also considered a tax resident of Bulgaria if they have a permanent address in the country, own or rent property, or have family members living in Bulgaria.
3. Center of vital interests: An individual is considered a tax resident of Bulgaria if their center of vital interests is in the country. This can include factors such as where an individual’s business is based, where they hold a bank account.

Under point 1, you will be considered a tax resident of Bulgaria only in the year when you have resided in the country for 183 days. On the other hand, you are not required to satisfy the strict residence requirement if you justify that the center of your vital interests is in Bulgaria.

Center of Vital interests when applying for Bulgaria tax residency

To determine the center of vital interests, the tax office will consider the location of your employment/ self-employment, business, the country where you pay social contributions, residence permits, properties, family, and others. Our dedicated and recommended by Legal500 team of Bulgarian tax lawyers will make sure that you are granted Bulgaria tax residency status hassle free.

How can I obtain a tax domicile certificate in Bulgaria?

To obtain a tax domicile certificate in Bulgaria, there are certain procedures that need to be followed. Seeking the assistance of Advocate Markov can expedite and streamline this process. They can guide you through the necessary steps and help you obtain the certificate in the most efficient manner possible.

Do businesses and individuals need a tax residency certificate in Bulgaria?

Yes, it is necessary for both businesses and individuals to obtain a tax residency certificate if they wish to take advantage of the double taxation agreements in Bulgaria. This certificate serves as proof of your official tax residency status in Bulgaria and is required to claim any applicable tax benefits under a specific Double Taxation Treaty (DTT).

What is a Tax Residence Certificate (TRC)?

A Tax Residence Certificate (TRC) is an official document issued by the National Revenue Agency in Bulgaria. This document verifies the tax residency status of an individual or business in Bulgaria under a specific Double Taxation Treaty (DTT) between Bulgaria and another country.

What is the purpose of a Tax Residence Certificate (TRC)?

The primary purpose of a Tax Residence Certificate (TRC) is to support a claim for tax benefits under a specific Double Taxation Treaty (DTT) between Bulgaria and another country. The TRC is a crucial document for individuals and businesses seeking to take advantage of tax benefits offered under the DTT and to ensure compliance with tax regulations in both countries.

What are the Limits of Bulgaria Tax Residency?

While the Bulgarian tax residency certificate offers enticing opportunities, it may not be universally applicable to all nationalities. Take, for instance, Italian citizens – they can readily secure a Bulgarian tax residency certificate, but they might still find themselves subject to taxation in Italy. This discrepancy arises from the fact that the double taxation treaty between Bulgaria and Italy exclusively benefits those holding dual citizenship – Bulgarian and Italian.

However, being an Italian citizen with Bulgarian tax residency can still be advantageous, though it is limited to income derived from Italy. For instance, an Italian pension will always be subject to Italian taxation. On the other hand, Italian citizens who are tax residents of Bulgaria and have diverse income sources outside of Italy (such as income from Dubai, the UK, or Bulgaria) will be subject to taxation in Bulgaria.

If you have any doubts about whether Bulgarian fiscal residency is the most suitable option for your situation, please feel free to reach out to our team.

Is it possible to retroactively obtain Bulgarian tax residency?

The Bulgaria fiscal residency card can be applied for retroactively. For instance, if you met the requirements in 2017, you can still submit an application in 2024. In such a case, the fiscal residency status would be valid for the period from January 1, 2017, to December 31, 2017.

Bulgarian residence and Bulgarian ID card for EU citizens

To qualify for Bulgaria tax residency, it is a prerequisite to hold a Bulgarian residency card. To facilitate your tax residence application under point 2 (vital interests), we can help you obtain a Bulgarian residency card. Our immigration lawyers will ensure the issuance of your Bulgarian residency card within 3 working days, and it will be valid for 5 years.

What is the difference between Tax Residency and Residency card?

A Tax Residency Certificate is a document granted to natural and legal persons who are entitled to benefit from the Bulgaria’s double taxation avoidance agreements on income. On the other hand, a Residency Visa is a permit granted to a foreigner who wishes to enter Bulgaria and stay for a certain period of time, usually for study, work, or other purposes.

How long does Tax Residency certificate normally take to process?

If your consultant completes all the necessary steps accurately, the tax residency certificate is typically issued within one month of the application.

Become a Bulgarian tax resident

The procedure of issuing a residence permit in Bulgaria for individuals, who are citizens of the European Union (EU) is governed by the Law on Entering, Residing and Leaving the Republic of Bulgaria of EU citizens and members of their families . According to this law:

Art. 6. (1): A European Union citizen shall reside in the Republic of Bulgaria with identity card or passport within a term of up to three months. Art. 7. (1): A European Union citizen may reside in the Republic of Bulgaria long-term or permanently, for which a certificate shall be issued by the “Migration” directorate in the Ministry of Interior Affairs, the Sofia Directorate of the Interior Affairs or the regional directorates of the Ministry of Interior Affairs or by officials authorised by the directors.

Alternatively, a foreign national may become a tax resident of Bulgaria by the way of obtaining Bulgarian citizenship by investment .

Bulgaria Tax Residency

Bulgaria offers the lowest tax rates across the entire European Union, making it an attractive destination for tax residents. Compared to other European countries such as Belgium, France, and Austria, where corporate tax rates can be three times higher than Bulgaria’s, the country imposes a flat rate of only 10%. Furthermore, Bulgaria’s personal income tax rate is also the lowest in the EU, with a flat rate of 10%. By becoming a tax resident of Bulgaria, you can take advantage of these low tax rates and potentially save a significant amount of money.

To be recognized as a tax resident of Bulgaria, the National Revenue Agency must certify that a person is a resident within the meaning of the Double Tax Convention and is subject to taxation on their worldwide income in Bulgaria.

If you are a non-EU national who wishes to immigrate to Bulgaria, you may consider registering a trade representative office in Bulgaria. By doing so, you can apply for a D visa and obtain a Bulgarian residence permit. The residence permit is the first step to obtaining a tax residency of Bulgaria.

*The government authority responsible for granting Bulgaria tax residency status is the National Revenue Agency.

It’s important to note that while Bulgaria offers many tax benefits, you should consult with a tax professional to determine whether it’s the right tax jurisdiction for your individual circumstances. Factors such as your business operations, citizenship, and residency status in other countries can all impact your tax liability in Bulgaria.

Tax residency in Bulgaria offers many benefits for individuals and businesses looking for a favorable tax environment. By understanding the rules and requirements for tax residency in Bulgaria, you can take advantage of the country’s low tax rate and double taxation agreements to maximize your tax savings.

Don’t hesitate to contact us if you’re interested in learning more about taxation in Bulgaria and becoming a Bulgarian tax resident.

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