Bulgaria

Become a permanent resident or citizen of Bulgaria does not automatically make you a tax resident. To be a tax resident an individual must reside 183 days in Bulgarian territory in a tax year, or have a permanent address in Bulgaria, or have its center of vital interests in Bulgaria. The criterion of center of vital interests prevails for the one of permanent address. That is, someone who has a permanent address in Bulgaria, but whose vital interest center is in another country, may not be considered a resident for tax purposes.

Bulgaria has one of the lowest tax burden in the European Union. Tax residents are subject to tax on their worldwide income at a flat rate of 10%. A tax credit for foreign tax paid is usually available. Dividends and interest are subject to a final tax of 5% and 8%, respectively. Capital Gains are taxed at the standard PIT rate. Being exempted those gains derived from companies listed in the Bulgarian or a European regulated stock exchange, and those from properties held 3 years (1 property) or five years (other 2 properties).

Bulgaria does not have Controlled Foreign Company rules (CFC), which means that profits retained in foreign companies owned by tax-residents may not be subject to taxation.

Bulgaria levies a real property tax of between 0.01% and 0.45% on the tax value of the property. There is an inheritance and gift tax of between 0.4% and 6.6%, depending on the relationship of the beneficiary. There are no net worth and transfer taxes.

On corporate taxation, resident companies are subject to a 10% flat tax on their worldwide income. Dividends received from a Bulgarian resident entity or an EU/EEA company are not taxable. Dividends received from a non-EU/EEA resident are included as taxable income. A tax credit or exemption may apply under a tax treaty or a domestic tax credit if there is no tax treaty available. Capital Gains are considered ordinary income and therefore subject to CIT. However, capital gains from the disposal of shares listed in the Bulgaria Stock Exchange or in any EU Stock Exchange are fully exempted. If there is no tax treaty available, payments to non-residents are usually subject to a 10% withholding tax. Learn more about Bulgaria’s corporate taxation, legal framework and tax treaties at incorporations.io/bulgaria.

This should not be construed as tax advice. Flag Theory | Passports.IO has access to a global network of qualified attorneys and accountants who can give you the proper advice for your particular circumstances. Contact us for further information.