Tax Optimization Is an Art

Personal Income Tax

Personal income tax rate
Personal income tax rate is set at 10% flat on the taxable income. No income brackets with different tax rates are applicable.

Tax residency
Individuals are considered Bulgarian tax residents if:

They have stayed in Bulgaria for more than 183 days in any 12- month period or

The centre of their essential lifelong interests is in Bulgaria, determined in view of their personal and economic ties to the country, such as permanent address in Bulgaria, family, employment, possession of property, investments etc.

Taxable income
Taxable income includes monetary income, as well as benefits received in-kind. Non-taxable items and “in kind social benefits” may be excluded. Bulgarian tax residents are taxed on their worldwide income. Non-residents are taxed only on their Bulgarian-sourced income at source.

Exempt income
Certain types of income are exempt from taxation, including capital gains from the disposal of shares on a regulated Bulgarian / EU / EEA market, interest on deposits in EU/EEA based banks or branches of non-EU banks, income from sale of certain real estate, etc.

Tax deductions apply in some cases, including:

Mandatory social security and health insurance contributions

Statutory deductions for freelancers, for rental income, etc.

Voluntary personal insurance up to certain limits

Certain donations

Other specific situations (disability, mortgage, etc.)

Tax returns and payment
The annual personal income tax return has to be submitted by 30 April of the following year. The tax has to be paid by the same deadline. A 5% reduction of the outstanding tax can be applied if:

The annual tax return is filed and the tax is paid before 10 February of the following year or

The annual tax return is submitted electronically.

Individuals do not have to file annual tax returns if they have received only employment income for which an annual reconciliation of the tax liability was made by the employer, non-taxable income and/or income subject to one-off taxation.

Further Information

For more information on Bulgarian Taxes visit our Downloads page where you will find our Quick Reference Guide on Bulgarian Tax Framework.

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