Starting A Business In Bulgaria

For most people choosing where to do business is determined by the taxes enforced on corporations for foreigners in
their country. In Bulgaria, the cooperate tax is as low as 10 %. The 10% tax is for personal income while the tax on dividends is 5%. If a company’s profits are distributed in the European Union to its parent companies, the tax is 0%.

About BulgariaBulgaria Flag

Bulgaria is a country located on the south-eastern side of Europe. The country has a population of almost 7.38 million people. Its neighbours are Romania to the north, Macedonia to the west, the Black Sea located to its east and the country of Turkey to the south.  The country’s area is roughly 110,994 square kilometres. The currency in Bulgaria is the Lev. The official script is Cyrillic, and the language is Bulgarian.

Why Bulgaria?

Bulgaria is a parliamentary republic with political stability. Its membership to the Organization for Security and Cooperation in Europe, NATO, and the EU encourages better trade relations.

Bulgaria is favourable due to the principle of freedom of movement created by the EU. The court decided that a company can move a part of itself to another state purely for tax purposes. The state must be a member of the EU. This makes the financial environment in Bulgaria friendly and investing becomes a lot easier. The low taxation offers an opportunity to increase profits for companies in the EU.

Initiative to increase the number of foreign investors

The Bulgarian government has taken an initiative to increase Sofia Bulgariathe number of foreign investors in the country by:

  • Reducing monopoly actions
  • Reducing the taxes on foreign companies
  • Reducing restrictions and administrative procedures.

The policies are said to be set to go on for the next four years according to the newly elected government.

Taxes in Bulgaria

There are several taxes enforced on companies in Bulgaria.

Corporate income tax

What is taxable profit? This is the profit that is adjusted annually for Bulgarian tax purposes.

This tax is applied to partnerships or companies that are formed under the law of Bulgaria. It also applies to permanent establishments in Bulgaria even if they are non-resident entities

For a non-resident entity, there are seven types of income on which withholding tax can be applied:

  • Remuneration for the use of rights and service fees.
  • Factoring, interest, royalties and factory fees.
  • Management and technical service charges.
  • Gains in capital from transactions in real estate.
  • Gains in capital from the disposal of some financial assets. The assets must have been acquired from state municipalities or resident entities. *exception is made for disposal of assets traded on a Bulgarian or EU regulated market.
  • Any dividends gained from liquidation quotas.
  • Income from any rented real estate or movable asset.

The rates for the above taxes are as follows:

  • 10% of all income taxes except:
  • 5% of all gross liquidation quotas or dividends
  • 5% of all royalties and interests.
  • 0% of all fees and interests paid to a company in one of the other EU member states.

Taxes are reduced if the country has an agreement with Bulgaria.

The list of nations Bulgaria has double taxation treaties with:

Algeria, Albania, Austria, Armenia,  Azerbaijan, Bahrain, Belarus, Belgium, China, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Egypt, Finland, France, Germany, Greece, Georgia, Hungary, India, Indonesia, Iran, Ireland, Israel, Italy, Japan, Jordan, Kazakhstan, , the Republic of Korea,  Democratic People’s Republic of Korea Kuwait, Latvia, Lebanon, Lithuania, United Kingdom, United States of America, Luxembourg, Macedonia, Malta, Morocco, Qatar, Moldova, Mongolia, South Africa, Netherlands, Norway, Poland, Portugal, Romania, Russian Federation, Spain, Singapore, Slovakia, Slovenia, Sweden, Switzerland, Syria, Thailand, Turkey, Ukraine, United Arab Emirates, Uzbekistan, Vietnam, Yugoslavia, Zimbabwe.

Some of the companies that run in Bulgaria have special tax regime such as:

  • Gambling entities.contact an expert button
  • Government institutions
  • Commercial shopping companies (maritime).
  • Tax exemptions