How to Distribute Dividends from Your Bulgarian EOOD: Step-by-Step

Getting Money Out of Your EOOD

Your Bulgarian EOOD earned a profit. Now you want that money in your personal bank account. The mechanism is straightforward: you distribute dividends. But there is a specific legal process to follow, a 5% withholding tax to pay, quarterly declarations to file, and several mistakes that can trigger penalties.

This guide walks through the entire process from start to finish. Every step, every deadline, every document you need. If you already understand how salary and dividends compare, this article covers the practical execution of the dividend side.

When Can You Distribute Dividends?

Dividends can only be distributed from net profit after corporate income tax. This is not optional guidance — it is a requirement under the Bulgarian Commercial Act. Before any distribution, two conditions must be met:

1. The annual financial statements (ГФО) must be approved. Your accountant prepares the balance sheet, income statement, and notes. As the sole owner of the EOOD, you approve these by adopting a written sole owner decision (решение на едноличния собственик на капитала). The annual CIT return is filed between March 1 and June 30. The financial statements must be published in the Commercial Register by September 30.
2. The company must show a distributable profit. This means net profit after 10% corporate income tax, minus any accumulated losses from prior years that have not been offset. The net asset value of the company (total assets minus total liabilities), after deducting the proposed dividend, must exceed the registered capital.

Once the financial statements are approved and retained earnings exist, the sole owner adopts a decision to distribute all or part of the profit as dividends. This decision is the legal trigger for the distribution.

Step-by-Step Process

Here is the exact sequence from annual accounts to money in your personal account:

1. Prepare and approve the annual financial statements (ГФО). Your accountant prepares the annual accounts for the previous financial year. As the sole owner, you adopt a written decision approving the financial statements. This typically happens between March and June, alongside the CIT return filing.
2. Adopt a sole owner decision to distribute dividends. This is a separate written document (решение на едноличния собственик на капитала) stating the amount of profit to be distributed as a dividend. It should reference the approved ГФО and specify the exact EUR amount. Keep this document in the company's corporate file — the NRA may request it during an audit.
3. Calculate the 5% withholding tax. The tax base is the gross amount of the dividend distributed. If you distribute EUR 90,000 in dividends, the withholding tax is EUR 4,500. The EOOD is the entity responsible for withholding and remitting this tax — not you as an individual.
4. File the quarterly withholding tax declaration. The EOOD files a declaration under Art. 55(1) of the Personal Income Tax Act (ЗДДФЛ) with the NRA. This declaration covers the quarter in which the dividend distribution decision was made. It must be filed by the end of the month following the quarter. The tax is paid by the same deadline.
5. Transfer the net dividend to your personal account. Transfer the dividend amount minus the withheld 5% tax from the company bank account to your personal bank account. Always use a bank transfer — never cash. The transfer should reference the sole owner decision.
6. Record the accounting entries. Your accountant records: (a) debit retained earnings, credit payable to owner for the gross dividend; (b) debit payable to owner, credit tax payable for the 5% withholding; (c) debit payable to owner, credit bank account for the net payment; (d) debit tax payable, credit bank account when the withholding tax is remitted to the NRA.

The 5% Withholding Tax

The dividend withholding tax is 5% of the gross dividend amount, regulated by Art. 194 of the Corporate Income Tax Act (ЗКПО) for distributions to individuals. Here is what you need to know:

• Who pays it: The EOOD withholds and remits the tax. As the sole owner, you receive the net amount (dividend minus 5%).
• Combined rate: Company profit is taxed at 10% CIT, then distributed profit is taxed at 5% dividend withholding. The combined rate is 15% (10% CIT + 5% dividend).
• No social security: Unlike salary income, dividends are not subject to social security contributions. No pension, no health insurance, no unemployment fund contributions. This is confirmed by the Bulgarian Social Security Code — dividend income falls outside the definition of insurable income.
• КЕП required: The quarterly declaration must be filed electronically through the NRA portal using a qualified electronic signature (КЕП). Your accountant typically handles this with a power of attorney.

Quarterly Declaration Deadlines

Interim Dividends

Can you distribute dividends before the annual accounts are finalized? Yes — but with an important limitation.

Interim (advance) dividends are permitted only from accumulated profits of prior financial years — not from the current year's unrealized profit. If your EOOD has retained earnings from 2024, you can distribute from those reserves at any point in 2026 without waiting for the 2025 accounts to be approved.

This was clarified by a 2022 NRA ruling and confirmed by the Supreme Administrative Court. The key points:

• Advance dividends from prior-year retained earnings are not considered hidden profit distribution (скрито разпределение на печалбата).
• The sole owner must still adopt a written decision for each interim distribution.
• The 5% withholding tax applies on each distribution and must be declared in the quarterly filing for the relevant quarter.
• You cannot distribute from current-year profit before the annual accounts are prepared — doing so risks reclassification as hidden profit distribution, which carries a 20% penalty tax under Art. 267 ЗКПО, on top of the standard 5% withholding tax.

What About Losses?

If your EOOD has accumulated losses from prior years, those losses must be offset against current-year profit before any dividends can be distributed.

Here is a concrete example:

In this scenario, the distributable profit after the 2025 accounts are approved is EUR 30,000 — not EUR 40,000. The EUR 10,000 loss from 2024 reduces the available retained earnings. You pay 5% withholding tax only on what you actually distribute.

This is an accounting requirement, not a tax law quirk. The balance sheet must show positive retained earnings for any distribution to be lawful. If cumulative retained earnings are negative (the company has more losses than profits over its lifetime), no dividends can be distributed regardless of the current year's profit.

Common Mistakes

These are the errors we see most frequently among foreign EOOD owners distributing dividends for the first time:

• Distributing before the ГФО is approved. The sole owner decision to distribute dividends must come after — not before — the annual financial statements are adopted. Distributing from "expected" profit before the accounts are finalized has no legal basis and can be reclassified as a loan to the owner or hidden profit distribution.
• Forgetting the quarterly declaration. The 5% withholding tax does not file itself. Missing the quarterly deadline results in interest and penalties. Many EOOD owners distribute dividends and assume their accountant will handle it — confirm explicitly that the declaration was filed.
• Distributing from current-year unrealized profit. You can distribute interim dividends from prior-year accumulated profits. You cannot distribute from the current financial year's profit before the annual accounts are prepared. The distinction matters: one is legal, the other triggers a 20% penalty tax.
• No written sole owner decision. Every distribution needs a formal written resolution. "I just transferred money to myself" is not a valid approach. The NRA expects to see a dated, signed decision referencing the approved financial statements and specifying the dividend amount.
• Using cash instead of bank transfer. Always transfer dividends via bank. Cash withdrawals for dividend purposes create documentation gaps and raise red flags during audits. The bank transfer provides a clear paper trail linking the sole owner decision to the actual payment.
• Distributing more than retained earnings. If you withdraw more than the company's accumulated after-tax profit, the excess is treated as a loan from the company to you — which has separate tax and accounting implications. Keep distributions within the balance of retained earnings shown on the approved financial statements.

Can You Distribute All Profit?

Yes. Unlike joint-stock companies (AD/EAD), which are required by Art. 246 of the Commercial Act to allocate one-tenth of annual profit to a statutory reserve fund until it reaches one-tenth of registered capital, limited liability companies (OOD/EOOD) have no mandatory reserve requirement.

This means you can distribute 100% of net profit as dividends — provided:

• The annual financial statements are approved.
• There are no accumulated losses from prior years reducing retained earnings.
• The net asset value after distribution still exceeds the registered capital.
• Your articles of association do not impose a voluntary reserve requirement (rare, but check).

Most EOOD owners registered with the standard EUR 1 (BGN 2) minimum capital have no practical constraint here. The net asset test is almost always met after a profitable year.

Frequently Asked Questions

Disclaimer: This article provides general information and does not constitute legal or tax advice. Dividend distribution requirements depend on your company's specific financial position and corporate documents. Consult our team for personalized guidance. Last updated: April 9, 2026.