Bulgaria for Prop Firm Traders: FTMO, Topstep, The5ers & the Tax Playbook (2026)

Prop firm traders generate a very specific kind of income. It is not capital gains. It is not investment income. It is service income paid against an invoice for trading performance delivered to the firm. That classification, combined with Bulgaria's 7.5% effective freelancer regime and 10% flat corporate tax, is the reason funded traders from Germany, the UK, France, the Netherlands, Poland, Romania, and the Balkans are relocating to Sofia and Plovdiv in 2026 — not to exotic offshore jurisdictions.

This guide is written for funded traders operating with the major prop firms — FTMO, Topstep, The5ers, FundedNext, MyFundedFutures, Apex Trader Funding, Tradeify, Funding Pips, and their peers — who are ready to treat their trading as a real business with a real jurisdiction, a real invoice trail, and a real tax file. It also covers the minority of cases where the EOOD structure makes more sense than freelancer status.

What You Are Actually Selling to the Prop Firm

Get the classification right and everything else follows. Get it wrong and you spend the next audit explaining why you filed capital gains when you should have filed service income.

Under the standard account agreement used by FTMO (FTMO Trading Global s.r.o., registered in Prague), Topstep, The5ers, FundedNext, and most other major prop firms, the economic reality is:

• The firm owns the capital. You trade on the firm's book, not your own account.
• You receive a reward / profit-split / payout calculated by reference to the firm's trading result on the account assigned to you. Typical splits are 80/20 default and up to 90/10 after scaling.
• You have no ownership interest in the firm's book — no underlying security, no claim against counterparties, no custodial relationship.
• You invoice the firm for your reward. The firm is the payer; you are the service provider.

For Bulgarian tax purposes, that fact pattern produces service income, not capital gains. The critical consequence: the income sits in the general Bulgarian income regime (ЗДДФЛ for individuals, ЗКПО for EOODs), not in the capital gains regime. Capital gains exemptions (Art. 13 ЗДДФЛ) do not apply. Service-income regimes (including the 25% automatic deduction under Art. 29(1)(3) ЗДДФЛ) do.

Freelancer or EOOD — Which Fits a Funded Trader?

Once the classification is clear, the real choice is structural.

Freelancer (свободна професия)

Bulgaria treats an independent professional as a "свободна професия" for PIT purposes. Under Art. 29(1)(3) ЗДДФЛ, freelancers benefit from an automatic 25% expense deduction — no invoices required, no receipts — and 10% personal income tax on the remaining 75%. Effective rate: 7.5% of gross.

• Registration: БУЛСТАТ at the Registry Agency (electronic fee around EUR 5).
• Social security: on a chosen insurable base between the minimum self-insured income (approximately EUR 550.66 monthly for 2026) and the cap (approximately EUR 2,111.64).
• VAT: if your annual prop firm payouts exceed the current Bulgarian VAT threshold, registration is mandatory. Many high-volume traders register voluntarily from day one because the reverse-charge mechanism on EU supplies is administratively cleaner.
• Annual return: single Art. 50 ЗДДФЛ declaration, due 30 April of the following year.

Best for: solo traders with prop firm payouts below roughly EUR 100,000-150,000 per year, no employees, simple life, no external investor plans.

EOOD (еднолично ООД)

An EOOD is a single-shareholder limited liability company. The funded trader becomes both the owner and the manager of the EOOD, and the EOOD contracts with the prop firm:

• 10% corporate income tax on profits after deductible expenses (trading software, VPS, training courses, accountant, office, travel to broker conferences, hardware, etc.).
• 5% dividend tax on distributions to the founder.
• Combined effective rate: 15%.
• Limited liability — personal assets separated from business claims.
• Minimum capital: EUR 1.
• Annual financial statements filed with the Commercial Registry.

Best for: high-volume traders (above roughly EUR 150,000-200,000/year), traders running a team or copy-trading desk, traders planning to later apply for a Bulgarian MiFID licence, or anyone who wants maximum liability separation.

The Invoice Flow Prop Firms Actually Want

FTMO, Topstep, The5ers, FundedNext and the other firms pay against an invoice. Your Bulgarian file must produce compliant invoices that match the firm's payout portal — otherwise the payout stalls.

Required elements on a Bulgarian invoice to an EU prop firm (e.g. FTMO)

• Your BULSTAT (freelancer) or EOOD UIC + Bulgarian VAT number if registered.
• Customer's full legal name, registered address, and VAT number (for FTMO: FTMO Trading Global s.r.o., Prague, valid EU VAT number).
• Service description: "Trading services provided under the [FTMO Trader / Account] Agreement for the period …".
• Amount (EUR / USD), exchange rate, invoice date, payment terms.
• If VAT-registered: reverse-charge legend ("VAT reverse-charged — Art. 196 Directive 2006/112/EC" or the Bulgarian equivalent).

Invoice to a non-EU prop firm (e.g. Topstep, Apex)

The same structure applies, without the EU VAT legend. B2B services to a non-EU business customer are outside the scope of Bulgarian VAT under the place-of-supply rules, so no VAT is charged. You still issue the invoice in EUR (or USD) as the prop firm requires, and you still record the revenue in your Bulgarian books.

VAT: When Do You Need to Register?

• Mandatory registration: once your taxable annual turnover exceeds the Bulgarian VAT threshold (set in BGN, recalibrated annually; confirm the current figure with your accountant when you register).
• Voluntary registration: any trader can register voluntarily from day one. Most professionals we work with do, because the reverse-charge mechanism on EU supplies is cleaner and you can recover VAT on Bulgarian input costs (office, hardware, software subscriptions billed with Bulgarian VAT).
• No VAT charged on B2B services to EU customers under the general place-of-supply rule; the customer self-accounts through reverse charge.
• No VAT charged on B2B services to non-EU customers either — outside the scope of Bulgarian VAT.

For a funded trader invoicing FTMO Trading Global s.r.o. (EU) and Topstep (US), monthly Bulgarian VAT returns are essentially empty on the output side and relevant only on the input (expense) side — a small administrative burden for a clean file.

Substance and Bulgarian Tax Residency

This is where plans go wrong when they are not taken seriously. A Bulgarian freelancer or EOOD only delivers the 7.5% / 15% rate if the underlying individual is actually a Bulgarian tax resident under Art. 4 ЗДДФЛ. The ingredients are well known:

• More than 183 days of physical presence in Bulgaria in any 12-month period, or
• Permanent address in Bulgaria plus centre of vital interests in Bulgaria.

For a funded trader moving from Germany, France, or the Netherlands, the departure country is rarely passive about the move. Expect scrutiny of where you actually sleep, where your family lives, where your children go to school, where your dentist is, and where your Amazon deliveries land. See our full guide on Bulgarian tax residency and the 183-day rule for the practical detail.

The Major Prop Firms at a Glance (2026)

For a Bulgarian freelancer, jurisdiction of the prop firm matters only for VAT (EU vs non-EU) and for identifying the counterparty on the invoice. The income tax treatment on the Bulgarian side is the same: service income, taxed under the freelancer regime (7.5% effective) or the EOOD regime (15% combined), regardless of where the prop firm sits.

Setup Timeline for a Funded Trader

1. Week 0 — Diagnostic. Projected annual payouts, current jurisdiction, family status. Decision: freelancer or EOOD.
2. Week 1 — Residency setup. EU residence at the Migration Directorate for EU citizens, D-visa route for non-EU. Rental contract for a real home in Sofia / Plovdiv / Varna.
3. Week 1-2 — Registration. Freelancer: BULSTAT at the Registry Agency, NRA registration. EOOD: articles of association, capital account, Commercial Registry filing, NRA and NHIF registration.
4. Week 2-3 — Bank. Personal + business bank account (DSK Bank, UniCredit Bulbank, or Postbank are the typical choices). SWIFT- and Wise / Revolut Business-compatible for prop firm payouts.
5. Week 3 — Prop firm update. Update FTMO / Topstep / The5ers / FundedNext account with new Bulgarian address, tax ID, and invoice details. Re-execute any trader agreement as the new entity if required.
6. Week 4 — First invoice. First compliant invoice issued to the prop firm. Payment received to the Bulgarian account. Revenue recorded in the books.
7. Ongoing — Monthly bookkeeping. Freelancer: minimal, because the 25% deduction is automatic. EOOD: monthly accountant (EUR 100-300 typical).

Common Mistakes

1. Not registering at all and hoping the payouts stay invisible

SWIFTs of EUR 5,000 to EUR 50,000 from FTMO Trading Global s.r.o. hitting a Bulgarian personal account are visible. Banks report. The NRA cross-checks. Formalise the file before the first payout, not after.

2. Treating the payout as capital gains

Prop firm payouts are service income. The capital belongs to the firm. There is no trade in your own securities to generate capital gains.

3. Registering an EOOD for a solo trader earning EUR 30,000/year

At that volume, the freelancer regime beats the EOOD on both tax and administration. Save the EOOD for when the volume justifies it.

4. Ignoring VAT registration timing

Crossing the VAT threshold mid-year without registering is a compliance mistake that triggers back-VAT, penalties, and interest. Track turnover monthly and register before the trigger event.

5. Not breaking residence in the departure country

Formalising a Bulgarian freelancer ID does nothing if Germany, the Netherlands, or France still regards you as its tax resident. Break residence properly, establish Bulgarian substance, and prepare for any treaty tie-breaker dispute.

Frequently Asked Questions

Disclaimer: This article is general information about Bulgarian tax treatment for prop firm traders and does not constitute legal or tax advice. Prop firm contractual terms vary and change; the Bulgarian tax treatment depends on the specific agreement and your actual activity. Consult our team for a situation-specific review. Last updated: April 16, 2026.