Bulgaria for Angel Investors & Carried Interest (2026)

A UK fund manager approaching vintage 2024-25 carry realisations is looking at a ~32% effective rate after the April 2026 UK carry reforms. A German GP on a similar vintage is looking at ~47% marginal on carry recognised as partial-income. A Bulgarian tax resident on the same carry, structured correctly, can be looking at 0-15%. This guide is the Bulgarian side of the carry conversation — how the rates work, what structures we see for fund managers moving to Sofia or split-residence between Sofia and Luxembourg/London, and where the limits are.

Bulgaria does not have a dedicated "carried interest" statute — carry is taxed according to its legal form (capital gains, dividends, or service fees). This sounds like a gap; in practice it's a feature. The general Bulgarian rates are already lower than the carry-specific regimes in most EU countries, so an explicit carve-out would be academic.

The Angel Portfolio — Personal or EOOD

An individual Bulgarian tax resident building an angel portfolio faces one structural question: hold directly, or through a Bulgarian EOOD?

Personal angel holding — when it works

• Listed exits (IPO on EU/EEA regulated market or equivalent MiFID II third-country market): 0% capital gains under Art. 13(1)(3) ЗДДФЛ.
• Private trade sales: 10% flat on the gain — materially lower than UK 24% post-Oct 2024, French 30% PFU, German capital gains in partial-income regime.
• Dividends: 5% from portfolio companies to individual (subject to any foreign withholding, creditable under treaty).
• Simplicity: no corporate bookkeeping, annual return via Art. 50 ЗДДФЛ.

Best for: solo angel with 3-12 positions, limited operational complexity, personal capital.

EOOD angel holding — when it adds value

• Larger portfolios (15+ positions) with regular cadence of new investments.
• Mixed instruments — equity, SAFEs, convertibles, warrants, secondaries.
• Syndicate vehicles — acting as syndicate lead, collecting SPV carry on behalf of co-investors.
• Operational staff — analyst, investment associate, administrative support, all deductible at EOOD level.
• Family office context — angel portfolio as part of broader wealth structure (see our Post-Exit Founders Nest Egg guide).
• Liability and asset separation — sensible for active angels with EUR 2M+ deployed.

Combined effective rate via EOOD: 10% corporate on realised gains + 5% dividend on distribution = 15%. Listed exits still 0% at EOOD level on EU/EEA regulated market shares. The 5-percentage-point delta vs personal (10% private) is the cost of the structure's benefits.

SAFE, Convertible Notes, and Warrants

These instruments do not have instrument-specific Bulgarian tax rules. They are taxed by reference to economic substance at the moment of disposal or conversion:

• SAFE converts to equity at a priced round → the resulting shares take the SAFE purchase price as cost basis. Subsequent disposal of those shares is taxed under the standard capital gains rules (0% listed / 10% private).
• SAFE repaid without conversion (rare, e.g. in the Cayman SAFE or MFN scenarios) → gain over original purchase taxed as ordinary income or as gain from financial asset disposal, depending on facts.
• Convertible note converts → same as SAFE conversion; interest accrued before conversion is typically taxed as ordinary interest income (10%).
• Warrants — on exercise, the shares received take combined cost basis (exercise price + any premium paid for the warrant). Disposal follows equity rules.
• Bad debt / note default — may be deductible against gains in the same year for individuals operating as traders (Art. 33 ЗДДФЛ rules apply).

Carried Interest — The Core Question

"Carried interest" is shorthand for the GP's share of fund profits (typically 20% of gains after a hurdle rate is met). The tax question in every jurisdiction is: what is the legal form of the carry distribution to the individual manager?

Three legal forms of carry

The optimal structure depends on fund documents and what the GP can negotiate. In most modern EU fund structures, carry flows through an equity participation in a separate "Founder Partner" or "Special LP" vehicle — taxed as capital gains on disposal. That's the Bulgarian-friendly path.

International comparison — why carry-heavy managers are moving

For a fund manager with EUR 5-20 million in expected carry realisations over the next 5 years, the difference between a 30-45% home-country rate and a 0-15% Bulgarian rate is substantial. That's why carry-heavy managers are increasingly considering Bulgaria as a residence base for the carry-realisation years — while keeping the operational GP entity in Luxembourg / London / Dublin.

Exit Tax from the Old Country

Carry interests and angel portfolios can be caught by the same exit-tax regimes that apply to founder equity:

• Germany §6 AStG: applies to ≥1% shareholdings in corporations — can include equity in a GP or founder-partner vehicle depending on structure. 7-of-last-12 years test.
• Netherlands conserverende aanslag: ≥5% substantial interest, including GP entities structured as BVs.
• France Art. 167 bis CGI: 6-of-last-10 years, ≥50% of profits or >EUR 800K in value.
• Belgium 2025 Program Law: shareholders of Belgian companies transferring seat abroad.
• UK temporary non-residence rule: 5-year clock on gains realised abroad.

Full framework is in our Relocating Before Selling Your Company guide — the same mechanics apply to GP carry interests and angel positions. Timing, home-country deferral rules, and Bulgarian arrival substance all have to be coordinated.

Structures We See in Practice

Structure A — Solo Angel on Personal Book

• Founder / exited operator relocates to Bulgaria.
• Personal brokerage holds public equities + direct angel cheques (typically EUR 25-250K each, 5-15 positions).
• Exits: trade sale → 10% personal CGT; IPO on EU market → 0%.
• Minimal overhead. Single Bulgarian annual return.

Structure B — Active Angel via EOOD

• Bulgarian EOOD as the investment vehicle.
• 20-60 angel positions + SAFE / convertible pipeline + occasional syndicate SPV.
• 1-2 analysts + admin employed by the EOOD (deductible).
• Combined effective rate 15% on distributed gains.
• Supports clean family-office governance.

Structure C — VC / PE Fund Manager with Bulgarian Residence

• Fund (Luxembourg / Irish AIF / Dutch CV) — unchanged.
• GP entity in the fund's home jurisdiction — with real substance there (employees, office, board).
• Individual manager — Bulgarian tax resident with genuine Bulgarian life.
• Carry to the individual held through a carry-vehicle equity participation — capital gains treatment on disposal.
• Coordination between Bulgarian and Luxembourg / UK / Dutch counsel mandatory.

Common Mistakes

1. Moving to Bulgaria but keeping the operational GP in the old country under your sole control

Creates "management and control" issues — the old country's revenue may argue the GP is effectively resident there. Substance in the GP's home jurisdiction must be real (not just the manager visiting once a quarter).

2. Treating SAFE conversion as a taxable event

SAFE conversion to equity is typically tax-neutral in Bulgaria — just a change in form with cost-basis rollover. Don't create an early realisation that isn't required.

3. Overlooking exit tax on carry interests when moving

German §6 AStG, Dutch conserverende aanslag, French Art. 167 bis, etc. can all catch carry vehicle equity depending on structure. Plan the move 6-18 months in advance, coordinate with the fund's counsel.

4. Relying on Bulgaria's rate without real residence

A Bulgarian BULSTAT + a few hotel stays do not make you Bulgarian resident. Home-country revenue will challenge and typically win without substance. The 10%/0% Bulgarian rates only apply to a real Bulgarian resident.

5. Structuring carry as service fee when it could be capital gains

If your fund documents leave the choice open, equity-form carry is usually more tax-efficient in Bulgaria (0% listed / 10% private individual / 15% EOOD distributed) than service-fee form (7.5% freelancer or 15% EOOD combined). Negotiate the form during fund close, not later.

Frequently Asked Questions

Disclaimer: This article provides general information on Bulgarian tax treatment of angel portfolios and carried interest. It does not constitute legal, tax, or investment advice. Fund and carry structuring requires multi-jurisdictional counsel. Last updated: April 20, 2026.