Last Updated on October 22, 2023 by Bulgarian attorney
Taxation in Bulgaria: A Brief Overview of 2023
Bulgaria has one of the most attractive tax systems in Europe, offering low tax rates for both individuals and corporations. With a corporate income tax rate of just 10%, Bulgaria’s business-friendly tax system has made it a popular destination for foreign investors.
Bulgaria proudly maintains the lowest inheritance tax rate in the European Union, standing at an impressive 0% for surviving spouses, children, and grandchildren. Our team is proficient in assisting with the strategic planning of your cross-border inheritance in Bulgaria.
Corporate Income Tax
Bulgaria’s corporate income tax rate of 10% is one of the lowest in Europe. This makes it an attractive destination for businesses looking to establish themselves in the European Union. In addition, the country offers several tax incentives for businesses, including exemptions for investments in certain industries and regions.
Capital Gains Tax
Bulgaria’s capital gains tax rate is also 10%. However, capital gains derived from the sale of shares through the Bulgarian stock market or a regulated market in an EU/EEA member state are exempt from taxation, making it an attractive option for investors.
Tax on Dividends
Dividends paid to legal entities that are tax residents in an EU/EEA member state are not taxed in Bulgaria. However, for those that are subject to taxation, the tax rate is just 5%.
Interest and Royalties
Interest and royalties are subject to a tax rate of 10% in Bulgaria. This rate is lower than the average tax rate in Europe, making it an attractive destination for businesses that deal with intellectual property.
Value Added Tax (VAT)
Bulgaria’s VAT rate is 20%. However, companies with an annual turnover of less than EUR 50,000 are not required to register for VAT. For those that are required to register, the refund period is three months under certain conditions.
Personal Income Tax
Bulgaria’s personal income tax rate is 10%, which is significantly lower than the average tax rate in Europe. This makes it an attractive destination for individuals looking to relocate to a country with a lower tax burden.
Social contributions in Bulgaria are split between employers and employees. In 2022, employers are required to contribute 18.92% of an employee’s salary, while employees are required to contribute 13.78%. The maximum monthly taxable base is BGN 3,400 (approx. EUR 1740) from 1st April 2022.
In conclusion, Bulgaria’s tax system is one of the most attractive in Europe, offering low tax rates for both individuals and corporations. With a corporate income tax rate of just 10%, a personal income tax rate of 10%, and a range of tax incentives for businesses, Bulgaria is a popular destination for foreign investors and entrepreneurs.