Taxation in Bulgaria

On 10 November 1989 the communist regime in Bulgaria toppled down and the country embarked on the painful road of transformation from a state-owned mutilated society to a free market economy. The changes were abrupt and unprepared and virtually caught the country without any taxation system whatsoever. The first modern taxation laws appeared only in the middle of the 90-ies of the XX-th century. VAT taxation was swiftly introduced in 1994 and the first decent corporate income tax law appeared in 1996. Since then, the changes in the tax legislation of the Republic of Bulgaria have been fundamental. Bulgaria’s EU accession on 1 January 2007 brought about further developments to the Bulgarian taxation system in terms of VAT harmonization and alignment of Bulgarian domestic tax provisions with common EU rules. Compared to any other legislative area, Bulgarian taxation laws are literally in a status of constant evolution.

In terms of tax rates Bulgarian tax environment is very attractive. The overall tax burden on almost any type of income is very low. At present the tax rates in Bulgaria are as follows:

  • Bulgarian corporate income tax – 10%;
  • Bulgarian withholding tax on dividends  – 5% (no withholding tax on dividends paid to EU parent companies);
  • Bulgarian withholding tax on interest, royalties, capital gains – 10%;
  • Bulgarian VAT – 20%;
  • Personal Income Tax in Bulgaria – flat rate of 10%.

In addition to having low tax rates, Bulgaria has developed a broad network of double tax treaties that may further reduce the tax burden on any cross-border income derived by foreign investors from Bulgarian sources.

Our Bulgarian tax consultants at Delchev & Partners view taxation as a key practice area. We believe that our clients should receive the best tax advice and we are competent and committed to provide it.

We help our clients keep up with all developments in the taxation area not only as regards Bulgarian domestic taxation law, Bulgarian administrative practice and case-law but also in terms of changes introduced by the EU tax legislation and ECJ judgments.

The Bulgarian tax lawyers at Delchev & Partners law firm cover all aspects of  Bulgarian tax laws including among others: