Taxation in Bulgaria

Bulgaria as a member of the European union applies a worldwide income tax system and residents are taxable on their worldwide income. Bulgarian companies are subject to a flat tax rate of 10% and the taxable profit is the annual financial result adjusted for tax purposes. Bulgaria also offers a flat personal income tax rate of 10%. Bulgaria’s taxation framework is exceptional from an EU and other non-EU on shore zones perspective.

Corporate profit tax 10% withholding tax on interest, royalties, service expenses, capital gains and certain other income payable to non-resident entities and individuals 5% withholding tax on dividends and liquidation quotas payable to non-EU entities and residents 10% one-off tax on certain expenses deemed discretionary by the tax authorities	10%
Personal income tax up to 29.7% mandatory insurance contributions on a capped base of BGN 2,000 per month 10% one-off tax on interest, royalties, service fees, capital gains and certain other income payable to non-resident individuals 5% one-off tax on dividends and liquidation quotas	10%
Value added tax reduced rate of 7% for certain tourist services 0% for exports and certain other activities refund of input VAT within three months (regular term) faster refund within one month if certain conditions are met	20%
Other tax, duties and fees 0.01% – 0.25% annual real estate and property tax 0.1% – 3% transfer tax for real estate and vehicles tax and fees on vehicles, donations, inheritance, etc. excise duties on energy, fuel, alcohol and tobacco customs duties on imports of goods from outside the EU

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VAT returns and payment

Monthly VAT returns are filed and the tax is due by the 14th of the following month. The VAT tax period is a calendar month.

European sales list (VIES) returns have to be filed monthly by the same deadline if intra-community supplies of goods or certain services have been performed during the respective month.

VAT refund

VAT can be refunded through the VAT returns within:

2 months (period for carrying forward and offsetting of the claimable VAT against VAT payable) and 30 days of filing the last VAT return (period for effective refund)
30 days of filing the VAT return for entities that have performed exempt supplies with the right to deduction exceeding 30% of the total turnover from taxable supplies for the last 12 months

An investor in a large investment project which has received authorization by the Ministry of Finance can receive a refund within 30 days. The investor can also apply a reverse charge for VAT on the import of goods (without effective cash outflow).

EU registered entities which are not registered and established for VAT purposes in Bulgaria can receive a refund of the local input VAT incurred for goods and services used for supplies with a place of supply outside Bulgaria. A specific procedure with the authorities of the EU member state of registration has to be followed.

Non-EU registered entities may be entitled to a refund on a reciprocal basis (i.e., if their country of tax residence provides the right to VAT refund to Bulgarian entities). A specific procedure involving the Bulgarian revenue authorities has to be followed.

In case you need more information about value-added tax in Bulgaria, check our article here.

Intrastat is a system for collecting statistical data about intra-EU movement of goods between all EU member states.

All entities VAT-registered in Bulgaria have to file Intrastat returns if the thresholds for incoming (“arrival”) and outgoing (“dispatch”) intra-EU movement of goods between Bulgaria and the other EU member states are exceeded.

The thresholds triggering the obligation to file Intrastat returns for 2017 are:

BGN 410 000 BGN thousand (approximately EUR 200 000 thousand) for arrival of goods; or
BGN 240 thousand (approximately EUR 120 thousand) for dispatch of goods.

The thresholds are updated annually.

The deadline for filing Intrastat returns is the 10th day of the month following the month of arrival or dispatch of the goods.

Taxation in Bulgaria

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