Taxes in Bulgaria
The Bulgarian taxation system is based on the common European recommended schemes, taking into account the loyal policy of the local tax department. Therefore, today, when registering a company in this jurisdiction, you should remember about such features of local taxation as:
- The fixed corporate income tax rate for all types of companies, which is 10%.
- The usual form of a business pays taxes on its general income. If we are talking about a branch, then this form of an organization pays taxes only on its profit, not including the profit of the parent company.
- The tax base for legal entities does not include dividend income paid by the company.
- The withholding tax rate does not exceed 5%. However, for non-resident persons, this figure can be 10% when receiving income from certain sources.
- The existence of two VAT rates. One of them is 20% and applies to all major categories of income sources. However, when exporting, as well as when conducting those types of activities that are specified in one of the international agreements, the VAT rate may be zero.
What are the taxes
Taxes in Bulgaria are balanced to ensure a combination of high living standards and social responsibility. The tax policy of the state is very effective in covering the main items of expenses, as well as the ability to provide favorable conditions for the development of entrepreneurship and attracting foreign capital to the country.
Corporate income tax
The income tax rate in Bulgaria is 10%. This is one of the lowest rates in Europe. Residents of Bulgaria are subject to taxation on income earned both in Bulgaria and abroad. Non-residents of Bulgaria are subject to income tax only on income earned in Bulgaria.
Withholding tax
Income from dividends paid by Bulgarian companies to non-residents of Bulgaria is taxed at the rate of 5% at the source of payment. Residents of Bulgaria pay tax on income from dividends received domestically and abroad at the rate of 5%, reflecting the income in the tax return.
Personal income tax
Local income worldwide is taxed. Others are taxed on their sources of income from Bulgaria, subject to the terms of any relevant double taxation agreement.
Request bookkeeping solution
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Tax system
There are direct taxes, indirect taxes, and fees in Luxembourg jurisdiction. Each group has Its own rules and conditions.
Value-added tax
The value-added tax rate in Bulgaria is 20%. The reduced rate is set for hotels and owners who rent out their properties at 9%. Zero VAT rate applies to Bulgarian exports and international transport services.
Social and medical contributions
Social security contributions and health care contributions are paid by the employer and employees on a gross salary basis. Taking into account the minimum and maximum payout level between 420 BGN and 2400 BGN. The employer pays 17.4% and the employee pays 12.9%.
Real estate taxes
Municipalities impose annual taxes on the value of land and buildings, which vary depending on where the property is located. The tax is calculated at 2% of the sales price.
Patent tax
For some business activities (retail, craftsmen, etc.) provided by small companies with an annual turnover of up to 50,000 BGN (about 25,540 EUR), there is a patent tax for them. The tax rate is fixed and not related to income. Such companies are not subject to corporate tax.
Business in Bulgaria
Our company provides services for setting up a company in Bulgaria. The specialists of our company have the necessary knowledge, experience and qualifications. We can offer a consultation with taxes in Bulgaria. In addition, we also provide business support, accounting and other services necessary for your business. Our specialists have vast experience in this field of activity. We will be happy to help you successfully open a business in Bulgaria.
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