A freelancer in Sofia billing EUR 18,000 a year gives up about 26% of it. One billing EUR 100,000 gives up about 14%. Both are taxed under the same flat 10%. What separates them is social security, which stops climbing once monthly insurable income hits EUR 2,300. That ceiling, not the tax rate, decides where you land.
Quick answer: Bulgaria taxes personal income at a flat 10% and dividends at 5%. You become a tax resident after 183 days, and residents are taxed on worldwide income. Counting mandatory contributions, most people hand over between 14% and 26% of gross, depending on how far above the contribution ceiling they earn.
Jump to: Are you a Bulgarian tax resident? · The rate for your kind of income · What 10% really costs · Taking money out of your company · Deductions people miss · VAT, property and inheritance · Deadlines and the 5% discount · What changed in 2026 · Which situation you're in · FAQ
Last reviewed: September 2026. Rates, thresholds and deadlines checked against the National Revenue Agency and the enacted 2026 budget.
Which claims about Bulgarian tax we threw out
Bulgarian tax figures published between November 2025 and August 2026 are unusually unreliable, so it's fair to say what we rejected and why.
Three categories went straight in the bin. First, anything quoting a dividend tax of 10%. That rise sat in the November 2025 draft budget. It was pulled after public pushback, and it never entered the Act parliament passed on 24 July 2026. The National Revenue Agency's own withholding tax page still states 5 per cent under Art. 194 of the Corporate Income Tax Act. Second, any contribution threshold dated before that July vote, because the country spent seven months running on carried-over 2025 figures. Third, any lev amount that doesn't reconcile at the fixed rate of 1.95583 BGN to 1 EUR.
What we kept: the National Revenue Agency for rates and filing rules, and the National Social Security Institute for insurable income. The State Gazette supplied promulgation dates. International tax summaries were used only where last reviewed on 2 August 2026, after the budget became law.
Two limits you should know about. Municipal taxes are set locally, so property and vehicle figures here are ranges, not the number your municipality will charge. And the effective-rate examples below are our own arithmetic on published rates. They are not filed returns, and they ignore reliefs you may qualify for, which means your real number is usually a little lower.
Are you a Bulgarian tax resident?
Everything else follows from this one question, so answer it first. Residents pay Bulgarian tax on worldwide income. Non-residents pay only on income sourced in Bulgaria.
You are a Bulgarian tax resident if any one of these is true:
- You spent more than 183 days in Bulgaria in any 12-month period. Residency then applies for the calendar year in which day 184 falls.
- You hold a permanent address in Bulgaria and your centre of vital interests is here too. Both halves have to be true, which is where a lot of people misread the rule.
- You were sent abroad by the Bulgarian state or by a Bulgarian company, along with your family.
Centre of vital interests means your personal and economic ties. Family, main home, employer, where your assets sit, where you're registered for social security. A permanent address on its own does not make you resident. An address here plus a family and a job in Germany points the other way.
If a double taxation treaty applies, it wins. Bulgaria has around 70 double taxation treaties in force. Each carries its own tie-breaker sequence for people who look resident in two countries at once. The treaty text beats the domestic 183-day test every time, so check it before you assume Bulgarian residency has attached.
One practical consequence catches out new arrivals. Residency is assessed per calendar year, not from the day you land. Arrive in Sofia in March and cross 183 days in September. Bulgaria then treats you as resident for that whole year, January and February included.
The rate that applies to your kind of income
Bulgaria is flat, not uniform. The 10% headline covers most income. Several categories are taxed on a reduced base or at a different rate, and one isn't taxed at all.
- Employment income: 10%, withheld monthly by your employer after contributions are deducted.
- Freelance and liberal professions: 10%, but only after a statutory expense deduction of 25% that you claim without receipts. Lawyers get 40%. Royalties get 40%. Registered agricultural producers get 60%.
- Rental income: 10%, after a statutory deduction of 10%. The effective rate on gross rent is therefore 9%.
- Sole trader (ET): 15%, not 10%, under Art. 48(2) of the Personal Income Tax Act. This surprises people who registered as an ET because it sounded simpler than a company.
- Dividends: 5% final tax, withheld at source. Nothing to declare afterwards.
- Capital gains: 10%, with real exemptions listed below.
- Bank interest, EU or EEA: nothing. The EEA is the EU plus Iceland, Liechtenstein and Norway. Bulgaria repealed Art. 38(13) of its Personal Income Tax Act with effect from 1 April 2022, ending the 8% final tax on bank deposit interest. Guides still quoting that 8% are more than four years out of date.
- Bank interest, rest of world: 10%.
The capital gains exemptions are worth more than most people realise, and they stack in a way few guides spell out. Sell one residential property owned for more than three years and the gain is exempt, once per calendar year. Separately, up to two properties of any type held for more than five years are exempt. Agricultural and forest land doesn't count against that pair. Selling property you inherited is exempt too. Gains on securities traded on a regulated EU or EEA exchange are exempt. So are gains on SME growth market instruments, which covers BEAM, the Bulgarian Stock Exchange's market for smaller companies.
That last one changed status this year. Bulgaria ran the exemption as a pilot from 1 January 2021 to 31 December 2025. From 1 January 2026 Bulgaria made its growth market tax exemption permanent, and extended it to interest on bonds traded on those markets. If you were holding off on a BEAM position because the relief had an expiry date, the expiry date is gone.
What the 10% actually costs once contributions land
Here's the part the flat-tax pitch leaves out. Social security and health insurance are a bigger line than income tax for almost everyone, and they behave nothing like a flat tax.
For employees, total contributions run 32.7% to 33.4% of gross pay. The employee carries 13.78% of that and the employer carries 18.92% to 19.62%. The range exists because the accident-at-work fund charges between 0.4% and 1.1% depending on what the business does. Contributions come off before income tax is calculated, so you never pay 10% on the full gross.
Take a local contract at EUR 2,000 a month. Contributions take EUR 275.60. Income tax applies to the remaining EUR 1,724.40 and takes EUR 172.44. You keep EUR 1,551.96, having parted with 22.4% of gross. Your employer pays another EUR 378.40 to EUR 392.40 on top. The full cost of that job is close to EUR 2,392, and the combined wedge is about 35%.
Self-employed people pay 27.8%, or 31.3% if they opt into the sickness and maternity fund. Both rates apply to declared monthly insurable income, which sits between a floor and a ceiling. Those moved on 1 August 2026: the floor for self-insured persons went from EUR 550.66 to EUR 620.20, and the ceiling from EUR 2,111.64 to EUR 2,300.
Because the change landed mid-year, the maximum insurable income for the whole of 2026 is not twelve times either figure. It is seven months at EUR 2,111.64 plus five at EUR 2,300, which comes to EUR 26,281.48 for the year. Contributions stop there no matter what you earn, and that single fact is what makes Bulgaria's system regressive above roughly EUR 26,300 of taxable income.
Run it at two income levels and the gap is obvious. A freelancer grossing EUR 18,000 claims the 25% deduction and pays contributions on EUR 13,500. Tax and contributions together come to about EUR 4,728. That's 26.3% of gross. A freelancer grossing EUR 100,000 claims the same deduction but hits the annual ceiling, pays EUR 7,306 in contributions, then EUR 6,769 in tax. Total: about EUR 14,076, or 14.1% of gross.
Same country, same flat rate, nearly double the burden at the bottom. Whether that's a feature or a flaw depends on which end you're standing at.
Taking money out of your own company
Own a Bulgarian company and there are two taxes between the profit and your pocket, not one. Corporate income tax takes 10% of profit. Dividend tax takes 5% of what's left.
Work it through on EUR 100 of profit. Corporate tax leaves EUR 90. The 5% dividend tax on that takes EUR 4.50. You receive EUR 85.50, so the real rate on distributed profit is 14.5%, not 10%. It's still low by European standards. It just isn't the number on the brochure.
Two things change that arithmetic. Is the shareholder a company resident in an EU or EEA member state? Bulgarian withholding tax on the dividend then generally drops to zero. Group-level cost falls back to the 10% corporate layer alone. Pay yourself a salary instead, and the company deducts it as an expense, but contributions apply. That is usually worse below the ceiling and better above it.
This is also where the sole trader question settles. An ET pays 15% on business profit. An EOOD owner pays 14.5% across the two layers and gets limited liability into the bargain, while the ET is personally liable for business debts. The ET form makes sense for genuinely small, low-risk activity where you want to avoid company filings. For anything else, the numbers point at the company. If you're at that decision now, our company formation in Bulgaria page covers what each form actually requires.
One more figure changed this year and it removes an old objection. Since 1 January 2026 the minimum registered capital for an OOD or EOOD, the multi-member and single-member Bulgarian limited company, is EUR 1. The minimum share value is one eurocent. An AD, the joint-stock form, needs EUR 25,000. Any guide still saying a Bulgarian limited company needs BGN 5,000 of capital is quoting a rule that died long before the euro arrived.
Deductions and reliefs most people never claim
Bulgaria has few reliefs compared with Western European systems. The handful it does have are worth real money, and people leave them on the table all the time.
- Children: the annual tax base drops by EUR 3,067.75 for one child, EUR 6,135.50 for two, and up to EUR 9,203.25 for three or more. Disability of 50% or more adds EUR 6,135.50 for that child.
- Monthly instead of annually: your employer can apply EUR 255.65 a month per child, or EUR 511.29 for a disabled child, so you don't wait for a refund.
- Non-cash payments: 1% of the tax on your general annual tax base, capped at EUR 255.65. You need all your money income paid in by bank transfer, and at least 80% of your payments made without cash.
- Home repairs and improvements: up to EUR 1,022.58 of documented labour costs on your own home.
- Young married couples: mortgage interest on the first EUR 51,129.19 of a home loan. One spouse has to have been under 35 when it was signed, and it must be the family's only home.
- Donations: 5% of the annual tax base for most approved recipients, 15% for culture, 50% for the designated state health funds. The 65% you'll see quoted is the ceiling for combining categories, not a rate anyone gets on its own.
- Mandatory contributions: fully deductible, including contributions paid in another EU or EEA state.
Now the mistake. People read "EUR 9,203.25 for three children" and expect that much back. The relief cuts your tax base, not your tax bill. At 10%, three children are worth EUR 920.33 in actual tax. Still the largest relief in the system, and still nine times smaller than the number people quote at each other. Only one parent can claim it, and you need the other parent's declaration to say they haven't.
The taxes that aren't income tax
Income tax is the part everyone asks about first. It's rarely the part that catches them out.
VAT runs at 20%. A reduced 9% rate survives on baby food, hygiene products, books, periodicals and newspapers, and that list is shorter than it was two years ago. Registration is mandatory once taxable turnover passes EUR 51,130 in a calendar year. You then have 7 days to apply.
A second registration route catches freelancers who never go near that threshold. Supply a service to a business client in another EU country and the place of supply is their country, not Bulgaria. That income therefore doesn't count towards the EUR 51,130. It does oblige you to register under Art. 97a of the VAT Act, at least 7 days before the VAT becomes chargeable. No turnover test, no grace period. And the registration carries no right to deduct input VAT, so treat it as paperwork rather than a win.
Property tax is municipal, running from 0.01% to 0.45% of the tax value of the property each year. Buying costs a transfer tax of 0.1% to 3%. Your municipality picks both, so a Sofia flat and an identical flat in a small town are taxed differently.
Inheritance tax reads worse than it works out. A surviving spouse and heirs in the direct line pay nothing, whatever the estate is worth. Siblings and their children pay 0.4% to 0.8% on shares above roughly EUR 127,800, and everyone else pays 3.3% to 6.6% above the same point. Gifts between spouses and direct relatives are exempt too.
Deadlines, forms and the discount for filing early
Three different filing deadlines circulate for Bulgaria, and the annoying part is that all three are right for somebody. Which one binds you depends on what you are.
- Individuals: annual return due 30 April, tax payable the same day.
- Sole traders and registered farmers: 1 March to 30 June.
- Companies: corporate tax return 1 March to 30 June, with the balance of tax due on the filing deadline.
- Annual financial statements: published in the Commercial Register by 30 September.
- Corrective returns: one free correction, available until 30 September.
If your only income is a salary from a single Bulgarian employer who withheld correctly all year, you generally don't file at all. That covers a lot of people who spend April worrying about it unnecessarily (and a few who file anyway, out of habit).
File early and you get paid for it. Submit electronically through the NRA portal by 31 March, pay by 31 March, and carry no outstanding public liabilities. You then take 5% off the tax due, capped at EUR 255.65. All three conditions have to hold at once. Miss the payment and the discount goes, even if you filed on time.
Advance payments work differently for each group. Employees have tax withheld monthly. Freelancers and landlords make quarterly advance payments. Companies pay monthly if prior-year net sales revenue topped EUR 1,533,875.64, quarterly between EUR 153,387.56 and that figure, and nothing at all below EUR 153,387.56. Newly incorporated companies make no advance payments in their first year or the one after, which is the opposite of what several English-language guides claim.
Late payment costs the statutory rate. Bulgarian Council of Ministers Decree No. 347 of 29 December 2025, promulgated in State Gazette No. 115 of 30 December 2025, replaced the old formula from 1 January 2026: it is now the European Central Bank's main refinancing rate plus 8 points, reset each 1 January and 1 July. That put the rate at 10.15% for the first half of 2026 and 10.40% from 1 July. The National Revenue Agency can also go back five years, extendable to ten.
Keeping this calendar without help is possible but rarely worth the attention it costs. Our accountancy services page sets out what monthly bookkeeping and annual filings involve for a foreign-owned company.
What changed in 2026, with dates
2026 moved more than any Bulgarian tax year in a decade, and the changes landed out of order because the budget was seven months late.
The euro arrived first. Bulgaria adopted it on 1 January 2026 at a fixed EUR 1 = BGN 1.95583, set by Council Regulation (EU) 2025/1409. Every tax return, payment and set of accounts is now denominated in euro. Nothing about the rates changed. The numbers just got smaller by a factor of 1.95583. That is why so much stale content reads as though Bulgaria halved its thresholds.
VAT registration changed shape on the same date. The mandatory threshold is EUR 51,130, and from 2026 it's measured across the calendar year rather than a rolling 12 months. Cross it and you have 7 days to apply, down from the old month-end rule. A separate EU-wide scheme lets small businesses stay VAT-exempt in other member states if total EU turnover stays under EUR 100,000.
SAF-T reporting started for the largest enterprises. SAF-T (Standard Audit File for Tax) is a machine-readable dump of your ledgers in a format the NRA dictates. The 2026 wave covers companies above BGN 300 million of 2023 net sales, or BGN 3.5 million of taxes and contributions collected. Those criteria were written before the changeover, which is why they're still in lev. Call it EUR 153 million and EUR 1.8 million. Monthly files are due by the 14th, with a six-month grace period on penalties. Smaller companies get pulled in year by year through to 2030, so this is a deadline to diary rather than ignore.
Then the social insurance side. Parliament adopted the 2026 social insurance budget in July. Bulgaria's maximum monthly insurable income then rose from EUR 2,111.64 to EUR 2,300 on 1 August 2026. The floor for self-insured persons rose from EUR 550.66 to EUR 620.20 on the same date. For anyone paid above the ceiling, the employee's own contributions went up by EUR 25.96 a month. The employer's rose by EUR 35.64 to EUR 36.96.
And one change that didn't happen. The dividend tax stayed at 5%. The two-point pension contribution rise that circulated all year didn't happen either. Both were in the draft that fell with the government in December 2025, and neither returned in the enacted Act.
Which situation you're in
Rates matter less than which set of them applies to you. Find yourself below.
Employed locally on EUR 2,000 a month
One employer, no other income. You pay EUR 275.60 in contributions and EUR 172.44 in tax, keeping EUR 1,551.96. You almost certainly file nothing in April. Your one job is to tell payroll about any children. The EUR 255.65 monthly relief then applies at source, instead of sitting with the NRA until spring. Employer-side mechanics are on our payroll services page.
Freelancing for foreign clients on EUR 60,000
You live in Sofia most of the year, so you're resident and Bulgaria taxes the lot. Claim the 25% statutory deduction, register as a self-insured person, and expect to pay around EUR 7,306 in contributions and EUR 3,769 in tax. That's roughly 18.5% all in. Advance tax is quarterly, and the annual return is due 30 April. Foreign clients change the VAT picture rather than the tax one, for reasons the VAT section above sets out.
Under EUR 30,000 of profit, choosing between ET and EOOD
Take the EOOD. The sole trader rate is 15% against a combined 14.5% through a company, and the ET leaves you personally liable for business debts. The only case for an ET is activity small enough that annual financial statements feel like the bigger cost.
Non-resident letting a Sofia apartment at EUR 1,000 a month
Only the Bulgarian rent is taxed. After the 10% statutory deduction you pay 10% on EUR 10,800, so EUR 1,080 a year, an effective 9% on gross rent. Nothing else of yours is in scope, and a treaty may give your home country a credit for what you paid here.
Distributing more than EUR 100,000 of company profit
The route matters more than the amount. A dividend to you personally costs 14.5% across the two layers. The same dividend to an EU or EEA parent company usually carries no Bulgarian withholding tax at all, leaving only the 10% corporate layer. That difference is worth 4.5 points of the distribution, and it's decided by how you held the shares, not by what you file afterwards. Tax advisory is the right stage for this, and the right time is before incorporation.
Frequently asked questions
How much tax do you actually pay on company profits in Bulgaria?
14.5% if you take the profit out as a dividend to yourself. Corporate tax takes 10%, then the 5% dividend tax applies to the remaining 90%, which works out at another 4.5 points. If the shareholder is a company resident in the EU or EEA, the dividend withholding generally falls away and the total stays at 10%.
Is the Bulgarian dividend tax 5% or 10% in 2026?
It is 5%. The doubling to 10% appeared in the draft state budget of November 2025. It was removed before the budget was enacted on 24 July 2026. The National Revenue Agency's withholding tax page states 5 per cent under Art. 194 of the Corporate Income Tax Act. Any 2026 guide quoting 10% is reporting a proposal that never became law.
Do I have to file a Bulgarian tax return if I only have a salary?
Usually no. If your only income for the year is employment income from one Bulgarian employer who withheld tax correctly each month, no annual return is required. You do need to file if you had a second employer, foreign income, rental income or freelance work. The same applies if you want a relief your payroll didn't give you.
How much social security does a freelancer pay in Bulgaria?
27.8% of declared insurable income, or 31.3% with sickness and maternity cover included. Since 1 August 2026 the declared amount sits between EUR 620.20 and EUR 2,300 a month. Because the ceiling moved mid-year, the 2026 annual maximum is EUR 26,281.48. Contributions top out at about EUR 7,306 for the year, even on a six-figure income.
When is the deadline to file your Bulgarian tax return?
30 April for individuals, and 30 June for sole traders, registered farmers and companies. File electronically and pay by 31 March and you get 5% off the tax due, capped at EUR 255.65. One corrective return can be filed without penalty up to 30 September.
Did adopting the euro change how much tax you pay in Bulgaria?
No. Rates and thresholds were converted at the fixed rate of EUR 1 = BGN 1.95583 on 1 January 2026. The VAT registration threshold of BGN 100,000 became EUR 51,130, and nothing about the burden moved. What did change is the unit: returns, payments and accounts are all in euro now, and lev figures republished without conversion are the most common error in current guides.
Where this leaves you
Bulgaria's tax system is cheap and simple, and both of those are true in a narrower way than the marketing suggests. Cheap holds best at higher incomes, where the contribution ceiling caps your exposure and the all-in rate falls towards 14%. It holds least at the bottom, where contributions on a small base push the effective rate past 26%. Simple holds until you own a company. After that, the 10% corporate layer, the 5% dividend layer and the EU parent exemption interact, and several points ride on it.
Three numbers are worth committing to memory: 14.5% on distributed company profit, EUR 2,300 as the monthly contribution ceiling, and 30 April for the personal return. Almost every planning question in Bulgarian personal tax comes back to one of them.
Still deciding how to set up here? Entity choice comes before everything else, and the company formation page linked above covers the forms and the steps. Once a company exists, the accountancy services page covers the monthly obligations. Payroll services covers the employer-side maths, and tax advisory covers structuring. For anything that depends on your own figures rather than the general rules, get in touch and we'll look at the actual numbers.