Taxes in Bulgaria 2026: flat 10% for individuals and businesses

Brief information about the Bulgarian tax system

The Bulgarian tax system is designed so that it is easy to understand for both entrepreneurs and ordinary people. It is based on the principle of a flat rate: income tax for individuals is 10%, regardless of the amount of income, and companies pay exactly the same amount on profits. There are no complicated staircases with increasing interest rates, as in France or Germany.

Bulgaria is a full member of the European Union (since 2007) and the Schengen area. At the same time, in terms of tax levels, it remains one of the softest jurisdictions in the EU: the average corporate tax rate in the union is around 20-30%, but here it is only 10%. It is this combination - European jurisdiction plus low rates - that attracts entrepreneurs, remote specialists and investors here.

Key taxes that are worth knowing in advance: income (10%), corporate (10%), dividends (approximately 5%) and value added tax (VAT) (20%). Below we will analyze each separately and show a summary table.

Income tax in Bulgaria: flat 10%

Income tax in Bulgaria is the very calling card of the country. The rate is flat: 10% on all types of income of an individual, be it salary, rental income, freelancer fees or profit from the sale of assets. There is no progressive scale: both those who earn modestly and those who receive large sums pay the same percentage.

For comparison: in most countries of Western Europe, the top income tax rates have long exceeded 40%, and in some places they are approaching 50%. Against this background, the Bulgarian 10% looks almost symbolic - this is one of the lowest rates in the entire European Union (comparable only with Romania).

There are also pleasant nuances for those who work for themselves. Registered freelancers can take the standard expense deduction (estimated at about 25%), which reduces the effective burden even further—in fact, to about 7-8%. This is why remote professionals and owners of small online businesses are increasingly choosing Bulgaria.

Corporation tax: 10% for business

If you open a company in Bulgaria, profits are taxed at the same flat rate - 10%. This is one of the lowest corporate taxes in the European Union, and it is this that makes the country a convenient point for registering a business within the EU.

What does this give in practice? A Bulgarian company is a full-fledged European legal entity: with a VAT number (EU VAT), access to the single market and the EU banking system. Moreover, the income tax here is two to three times lower than the union average. For IT companies, trading and service companies, and holding companies, this is a significant saving.

It is worth keeping the global context in mind: very large international groups with consolidated revenues over €750 million are subject to a pan-European minimum tax of 15%. But for the vast majority of small and medium-sized businesses, the base rate remains the same - 10%. We talk in detail about how to open and run a company in the article about business in Bulgaria.

Tax on dividends

When a company distributes profits to owners, dividend taxes are withheld. For a long time, Bulgaria has had a preferential rate of 5%, which is one of the lowest rates in the EU. For an entrepreneur, this means a simple and profitable scheme: the company pays 10% of profits, and the owner pays another 5% when paying dividends.

In total, the total burden on distributed profits is approximately 15% - noticeably less than in most European countries, where this figure easily reaches 25-35%.

An important disclaimer: the tax rate on dividends periodically becomes a subject of debate. In the draft budgets, there were proposals to raise it from 5% to 10%. At the time of preparation of the material, the preferential 5% is retained, but we recommend checking the current rate before planning payments - this is the figure that can change faster than others.

VAT in Bulgaria: 20%

VAT (Value Added Tax, Bulgarian VDS) is the main indirect tax that is paid by the end consumer, and the business acts as its collector. The standard VAT rate in Bulgaria is 20%, which is close to the average European level.

For certain categories, reduced rates apply: for example, for hotel accommodation, a number of books and some other goods and services, the rate is lower than the standard one. The exact list and percentages should be clarified separately, as it is periodically adjusted.

VAT registration is required when the company's taxable turnover exceeds the established threshold for the calendar year (after the transition to the euro, the threshold is expressed in euros, approximately about 51,000 euros - check the current value). Before the threshold is reached, VAT registration is usually voluntary. For companies working with counterparties throughout the EU, the Bulgarian VAT number is a working tool for cross-border trade within the single market.

Table: main taxes and rates

To keep the whole picture before our eyes, let’s summarize the key taxes in Bulgaria into one table. Rates are given approximately as of 2026; Individual values ​​(especially for dividends and the VAT threshold) should be checked before making decisions.

As you can see, the flat ten is the end-to-end principle of the system: both individuals and companies pay the same base percentage. This is what makes Bulgarian taxes so predictable.

Bulgarian tax residence: 183 days rule

Who exactly pays Bulgarian taxes at local rates? This is where the concept of tax residency comes into play. A Bulgarian tax resident is required to declare his worldwide income in the country, a non-resident - only income received from Bulgarian sources.

The main criterion is the 183-day rule: if a person spends more than 183 days in Bulgaria in any 12-month period, he will generally be considered a tax resident for the calendar year in which that period expires. This is the most understandable and verifiable indicator.

But days are not the only criterion. Residence can also be determined by the center of vital interests: where the family, main home, business, bank accounts and economic ties are located. A person can formally spend less than six months in the country, but still have a center of interest here - and then the issue of residency is decided based on the totality of the circumstances. It is useful to read about the everyday side of moving in the material about cost of living in Bulgaria.

Citizenship is not tax residence

A very common misconception: if you received a Bulgarian passport, you automatically became a Bulgarian taxpayer. This is wrong. Citizenship and tax residency are two different things that may not be the same.

You can be a citizen of Bulgaria (for example, by descent, restoring the roots of your Bulgarian ancestors) and at the same time remain a tax resident of another country if you live there and have a center of interests. And vice versa - a person without a Bulgarian passport who moves and spends most of the year in the country becomes its tax resident.

Tax status is determined by the facts of residence and connections, and not by an entry in the passport. Therefore, when planning a move or obtaining citizenship, the tax side should be calculated separately. We talk about exactly how to obtain resident status legally in the guide about Residence permit in Bulgaria.

Double taxation agreements

A logical question when moving: won’t you have to pay tax twice - both in Bulgaria and in the country of your previous residence? To prevent this from happening, there are double taxation agreements (DTTs). Bulgaria has concluded them with dozens of states, including the UK and many CIS countries.

The essence is simple: the agreement distributes the right to tax a particular income between two countries and establishes a mechanism for offsetting tax already paid. For example, tax withheld on dividends or interest in one country can be offset when calculating liabilities in another - so that the final burden is not doubled.

In practice, the use of DTTs requires caution: it is important to correctly determine where you are a tax resident, what documents and certificates will be needed, and how to apply for the offset. The list of existing agreements and their terms change over time, so it is always worth checking the specific situation using the current text of the agreement between the desired countries.

Taxes on real estate ownership

Many people choose Bulgaria for the affordable real estate on the Black Sea coast or in the mountains - and here too there is a tax side, separate from income tax. When purchasing a property, you must pay a local acquisition tax (its rate depends on the municipality), plus notary and registration fees.

When owning real estate, the owner annually pays a small property tax and a fee for the removal of household waste - modest amounts by European standards. Income from rental housing is subject to the same flat income tax of 10%.

Let us separately note an important point: the purchase of real estate in itself does not provide a residence permit in Bulgaria - a residence permit requires a separate legal basis. We have collected a detailed analysis of property payments in the material about property taxes in Bulgaria.

Why Bulgaria is beneficial for business and remote workers

Put it all together and it becomes clear why the country is so often considered by entrepreneurs and remote specialists. Firstly, a flat 10% for both individuals and companies: the load is predictable and easy to calculate in advance. Secondly, the preferential 5% on dividends provides a convenient and profitable scheme for withdrawing profits.

Thirdly, this is a jurisdiction within the European Union: a Bulgarian company operates in the EU single market, has a European VAT number and access to the union’s banking infrastructure. For those for whom it is important to conduct business specifically from the EU, but without the high Western European rates, this is a rare combination.

Add to this the low cost of living, mild climate and affordable real estate, and you have an attractive base for online businesses, freelancers and small companies. It is no coincidence that Bulgaria is on the list of countries that actively attract digital nomads. Read about the practical side of registering a company and working from the country in the guide about business in Bulgaria.

What changes the transition to the euro from 2026

The main currency event for Bulgaria is joining the eurozone. On January 1, 2026, the country switched to the euro (EUR), replacing the national lev (BGN). The conversion rate was fixed in advance and is approximately 1.95583 leva per euro - it was at this rate that bills, salaries and prices were converted.

For a taxpayer, changing currency is primarily a technical matter. The rates themselves remained the same: income and corporate taxes - the same 10%, VAT - 20%. What has changed is that declarations, calculations and thresholds (for example, the VAT registration threshold) are now expressed in euros rather than in leva.

The transition to the euro eliminates currency risks within the EU and simplifies settlements with European counterparties - this is rather a plus for business. During the transition period, the lev and the euro ran parallel for some time, after which the euro became the only legal currency. If you are planning business in Bulgaria, it is now logical to calculate the amounts in euros.

Common mistakes and misconceptions about taxes

Low rates create a false impression that everything is very simple with Bulgarian taxes and you don’t have to understand anything. In practice, it is on simple things that people stumble. Let's collect typical misconceptions.

The first is already mentioned: consider that a passport automatically makes you a tax resident. No: status is determined by residence and center of interest. The second is to think that buying an apartment gives you a residence permit. Does not: a separate legal basis for the status is needed. Third, forget about global income: a Bulgarian tax resident generally declares income from all over the world, not just Bulgarian income.

Fourth, ignore double taxation agreements and overpay or, conversely, fail to declare what is needed. Fifth, focus on outdated figures (especially for dividends and the VAT threshold), which may change. Tax planning loves accuracy and up-to-date data—and sound calculation up front is almost always cheaper than correcting mistakes later.

How we help you deal with relocation and status

Taxes are just one facet of moving to Bulgaria. For low rates to really work for you, it is important to correctly build the entire path: the basis for a residence permit, tax status, business structure, real estate ownership. All this is interconnected, and an error in one link affects the rest.

The BRIDGES GLOBAL team supports clients in the Bulgarian direction in a comprehensive manner - from selecting a suitable basis for residence to obtaining EU citizenship by origin, if you have Bulgarian roots. We help you collect documents, build a legal and transparent structure, and pass enhanced compliance without surprises. The main product of the direction is Bulgarian citizenship by descent: EU passport with the right to live, work and study in any country of the union.

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Expert commentary

Below is our specialist's view on how to approach Bulgarian taxes without common mistakes.