Tax Planning in Bulgaria

There are several forms of taxation in Bulgaria. They can be grouped into two: direct and indirect tax. Direct taxation consists of withholding tax, income tax, and corporate tax. The indirect taxation deals with excise duty and VAT. Tax planning in Bulgaria is an effective tool to lower the tax rate.

The institution mandated with the management of taxes in Bulgaria is known as the National Revenue Agency.


When most people hear of tax planning, they often confuse it with tax evasion. Tax evasion is an illegal act done by a culprit knowingly for the purpose of evading taxes. Tax planning uses legal methods such as reliefs to pay the least amount of taxes possible. The reliefs, in this case, are all used for their intended purpose.

Practical bookkeeping requirements in Bulgaria

Efficient bookkeeping makes the difference in profits and losses from one company to another.

For practical accounting to be done, the following should be applied:Company success

  • Ensure proper setup of accounting software and systems
  • Perform adequate payroll duties and transaction
  • Enter proper transactions
  • Ensure your transactions and software is up to date and within the legislative requirements
  • Prepare and submit tax returns either as or under a registered tax agent
  • Perform reconciliations and checks during your end of year processes
  • Good record keeping

The importance of proper record keeping

Nothing can indicate the direction in which a company is heading quite as well as good record keeping. It can maximise a company’s profits, look out for losses and protect your business from legal trouble.

Record keeping can improve your business’s performance by doing the

  • Meeting legal and tax requirements on time
  • Protecting your rights
  • Generating meaningful reports
  • Managing potential risks
  • Working out profits and performance

Payroll accounting in Bulgaria

Payroll accounting in Bulgaria includes payroll taxes, payroll costs, salaries and overtime, wages and any bonuses or commissions paid out to employees.

Examples of some payroll costs include:Payroll money

  •   Health insurance
  •   Unemployment tax (federal)
  •   Employee compensation insurance
  •   Both federal income tax
  •   Social security contributions

Bulgaria and the EU / Schengen Zone

Bulgaria has changed and harmonized its laws in agreement with the acquis communautaire of the European nation. This is a requirement for all members after joining the EU. Bulgaria has been a member of the EU since 2007. Even though it is not a member of the Schengen zone as of yet, Bulgaria is intending to implement the EURO in 2019.

Please contact us to receive more information on starting a company in Bulgaria.

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