Public body: Ministry of Finance
Corporation tax (10%)
Corporation tax in Bulgaria is 10% on the company’s profit. There is an additional 5% tax on income from dividends.
This compares to 15% in Germany and 19% in the UK.
Licence tax (also referred to as patent tax)
The scope of taxation covers the following list of commercial activities: tourist accommodation of not more than 20 rooms, categorised with one or two stars or registered under the Tourism Act; mass-catering and entertainment establishments for example restaurants, cafes and patisseries and bars; services such as carpenter, tailor, cobbler, hairdresser, cosmetic, watchmaker, upholsterer, car repair and glazier. An annual licence tax is applied to the income generated from the above activities and provided that the sole trader turnover does not exceed 50,000 BGN for the 12 months prior and the person is not registered under the Value Added Tax Act.
A separate licence tax is paid for each type of activity. For example, if a business includes a hairdresser and a cosmetic saloon the total tax due for a year is the sum of the two 840 BGN and 1,540 BGN.
The amount of licence tax for each activity is defined by the municipality of each respective geographical area.
Tax on income from activity in sole-trader capacity (15%)
The taxable income accruing from activity in a sole-trader capacity shall be the taxable profit formed according to the procedure established by the Corporate Income Tax. Excluded from taxation here are any activities on which alternative taxes are levied such as licence tax.
The annual taxable amount in respect of income from economic activity in a sole-trader capacity shall be determined by reducing the taxable income for the tax year with the contributions which the self-insured person is obligated to make for the tax year for his or her own account according to the procedure established by the Social Insurance Code and of the Health Insurance Law. The tax rate is 15%.
Income tax and National insurance (a combined 22.4%)
Individuals employed in Bulgaria pay about 13.7% of national insurance contribution. This rate is applied to the gross salary and covers contributions towards state pension, job-seeker allowance and health insurance. In addition, there is an income tax of 10% on the gross salary less the national insurance contribution. The result is a total of circa 22.4% of tax and national insurance. For example, a gross salary of 2,000 BGN will result in net (take home) salary of 1,552 BGN.
Consider opening a Bulgarian bank account to receive your monthly salary.
For more info please contact us at hello(at)move2bulgaria.com or visit the National Revenue Agency website.