Taxes for Business in Bulgaria: A Guide for Entrepreneurs

Bulgaria has one of the most favorable tax regimes in Europe, making it an attractive destination for businesses looking to set up operations in the region. In this article, we will provide a comprehensive guide to taxes for businesses in Bulgaria.

Corporate Income Tax

Bulgaria has a flat corporate income tax rate of 10%, which is one of the lowest in Europe. This applies to all companies that are registered and operating in Bulgaria. The corporate income tax is payable on the company’s profits after deducting all allowable expenses.

Value-Added Tax (VAT)

All businesses that are registered in Bulgaria must collect and remit VAT on their sales. The standard VAT rate in Bulgaria is 20%, with reduced rates of 9% and 0% for certain goods and services. Businesses that have an annual turnover of less than BGN 50,000 are exempt from VAT registration.

Personal Income Tax

Individuals who are employed in Bulgaria are subject to personal income tax on their earnings. The tax rate is a flat 10% for all income levels. Non-residents who earn income in Bulgaria are also subject to personal income tax on their earnings, with the rate varying depending on the type of income and the applicable tax treaty.

Social Security Contributions

Employers in Bulgaria are required to contribute to the country’s social security system. The total social security contribution rate is 34.8%, with the employer responsible for 17.9% and the employee responsible for 16.8%. The contributions are based on the employee’s gross salary.

Property Tax

Property tax is payable on real estate owned by individuals and legal entities in Bulgaria. The tax rate varies depending on the location and value of the property, with rates ranging from 0.1% to 0.45%.

Other Taxes

Other taxes that businesses may be subject to in Bulgaria include excise taxes, gambling taxes, and environmental taxes. The rates and rules for these taxes vary depending on the type of business and the products or services being offered.

Tax Incentives

Bulgaria offers several tax incentives to businesses that invest in the country. These include a reduced corporate income tax rate of 5% for certain types of businesses operating in designated investment zones, as well as exemptions from property tax, local taxes, and customs duties for certain types of investments.

Conclusion

Bulgaria has a favorable tax regime for businesses, with low corporate income tax rates and a simple VAT system. By understanding the tax laws and regulations in Bulgaria, businesses can optimize their tax position and take advantage of the many opportunities available in this growing economy.

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