The corporate tax of 10% in Bulgaria is the only part of the system for which no one needs advice. Money seems to flow around it. The 5% tax on dividends is withheld from payments that a parent company from the EU could receive tax-free. Interest payments are deducted for the parent without the 10% withholding it owes. And transfer pricing files are due by March 31, three months before the tax return they correspond to.
Quick answer: A tax consultant is part of the tax work in Bulgaria that your accountant does not perform. It covers the structure you choose before incorporation and the relief from cross-border payments. It also encompasses group pricing, as well as any audits from the National Revenue Agency (NRA, the Bulgarian tax authority), which are conducted in Bulgarian. For foreign ownership, three points require this: incorporation, first payment abroad, and the first letter from the NRA. Each rate and deadline below reflects the changes from 2026, including the new tax formula and the transfer pricing regulation.
Jump to: How we derived this | Compliance vs. advice | Structuring before incorporation | Agreements and withholding | VAT in the EU and OSS | Transfer pricing | Tax audit | NRA audits | What assistance you need | FAQ
Rates, deadlines, and agreement data verified against the NRA pages, the European Central Bank, and the Law on the State Budget for 2026.
Where these figures come from and what we overlooked
The Bulgarian tax procedure changed in several places in 2026. Hence, we worked from the documents that establish each rule rather than summaries of them. The interest rate for overdue taxes comes from Government Decree No. 347 of the Council of Ministers dated December 29, 2025. We read it alongside the European Central Bank (ECB) rate table. The deadlines for transfer pricing come from the NRA's transfer pricing page, which now reflects the regulation effective January 1, 2026. The number of agreements comes from the NRA's list, counted by hand. Deadlines for audits and appeals come from the Tax and Social Security Procedure Code (TPC, the Bulgarian tax procedure law).
We removed three types of sources. The first links the local transfer pricing file to the annual tax return due on June 30, but the NRA establishes the deadline for March 31. The second cites the old tax interest formula for 2026: the base rate from the Bulgarian National Bank (BNB) plus 10 points. The third provides a dividend rate for 2026 different from 5%, even though 10% in the draft budget from November 2025 never became law.
Four limitations apply to what follows. We do not publish a fee schedule, as the scope affects the price more than anything else. We have not received a mandatory resolution for any company, so the examples here are general. Some fines were legislative in leva and appear here converted at the fixed rate of 1.95583 BGN for 1 EUR. Where this page impacts foreign rules, such as the German rules for controlled foreign corporations (CFCs), it directs you to a local advisor.
What the tax consultant does that your accountant does not
Compliance and advice are separate tasks, and foreign owners often purchase one expecting the other. Compliance is the repetitive work: monthly VAT returns, payroll statements, and the annual tax return due by June 30. Our accounting services cover this cycle. Advice is a one-time solution that changes how much tax you owe or who owes it.
In practice, advice focuses on five areas. They are the same five listed under Tax Consulting Services on our financial services page:
- Tax structuring before incorporation, so you start with the right tool rather than correcting it later.
- International and EU tax guidelines: treaties, dividends, and the One-Stop Shop (OSS) for VAT in the EU.
- Tax audit for a new business, with each obligation mapped before trading.
- Audits and correspondence with the NRA, handled in Bulgarian.
- Transfer pricing documentation for group structures.
Most of them depend on one decision made once, which shapes the tax bill for years. Therefore, they are worth paying separately from the monthly books. The sections below examine them in order, with the rules defining each.
Structuring before incorporation
Make this comparison before you incorporate, not afterward. Someone earning in Bulgaria has three common options, and the tax on the same income varies significantly between them.
- Freelancer (self-employed): 25% of gross income is withheld as legal expenses, and the remainder is taxed at 10%. This results in 7.5% of gross income before social contributions.
- Sole trader (ET): taxed at 15% on profits.
- Single-member limited liability company (OOD): 10% corporate tax on profits, then 5% on dividends paid to individuals.
Pass through 100 EUR profit via OOD and distribute it all. The corporate tax is 10 EUR, and the dividend tax is 5% of the remaining 90 EUR, or 4.50 EUR. The total is 14.5%, almost twice the freelancer’s 7.5% just for tax. This is a fair comparison for a consultant with few real expenses, where profit and gross income are close. Social contributions change this difference in ways depending on your income, so try both routes with your figures.
So why incorporate at all? Because a company does things a freelancer cannot. It limits your liability, hires staff, owns intellectual property, and can be sold. And the 5% tax only owes when you distribute. Profit remaining in the OOD to fund growth incurs 10% and nothing more until the day it’s paid out.
For a foreign owner, more risk lies in your home country than in Bulgaria. Two rules are damaging. Many countries tax based on where the company is managed, not merely where it is registered. A Bulgarian OOD, managed daily from Munich, can be treated as German. The other rule is CFC legislation. It allows one country to tax its residents on the under-taxed profits of a company they control abroad.
Germany shows how this impacts. It lowered the threshold for low taxation of CFCs from 25% to 15% starting in 2024, while Bulgaria’s 10% still remains below the new line. Thus, passive income, such as royalties or interest earned from a German-controlled OOD, can still be taxed in Germany. German legislation excludes European companies with substantial economic activities. This means qualified personnel and own resources performing work instead of outsourcing it. An OOD with no employees in Bulgaria will have difficulties meeting this test.
Establish three points before filing anything. Who is the director and where does he live? Where are decisions actually made? Will the Bulgarian unit hire anyone? These answers shape the tax outcome even more than the 10% rate. The registration steps stemming from them are outlined in our guide to company formation in Bulgaria.
Agreements, withholding tax, and dividends abroad
Start with the bad news. Bulgaria taxes dividends, interest, royalties, and several types of service fees at source when they leave the country. The Bulgarian company making the payment is the one that withholds. Here are the domestic rates before any contractual relief:
- Dividends and liquidation shares: 5%, or 0% for a company resident in the EU or EEA, except for hidden profit distributions.
- Interest, royalties, and service fees: 10%, which includes technical service fees and administrative fees.
- Interest and royalties in the EU: exempt between associated companies where one holds at least 25% of the other directly for at least two years.
- Declaration: declared and paid quarterly, by the end of the month following each quarter.
Agreements reduce these rates, and Bulgaria has many of them. The list of agreements from the NRA enumerates 71 treaty partners. These include the United Kingdom, effective December 15, 2015, and the United States, effective December 15, 2008. What the list misses matters just as much. There is no agreement with Australia, Brazil, New Zealand, or Mexico, so payments to residents there bear the full domestic rates.
Some of these agreements no longer read as they were signed. The OECD Multilateral Instrument (MLI, a convention that amends many agreements simultaneously) has changed several of them. For the affected agreements, including those with Austria, the United Kingdom, and Japan, the NRA publishes a consolidated "synthesized version." Work from that version. A consultant quoting the terms of the agreement with the United Kingdom from 2015 without it may reference provisions that are no longer valid.
Germany is another agreement that must be reviewed. Bulgaria and Germany amended their double taxation agreement with a protocol signed on July 21, 2022, effective December 13, 2023. Any structure owned by German companies planned under the older text must be checked against the amended one.
Simply having an agreement does not equate to obtaining its rate. Relief has a procedure and depends on one number. When the income of a recipient from abroad, originating from Bulgaria, remains within EUR 255,645.94 (BGN 500,000) yearly, the payer applies the agreement directly. The payer must keep the evidence on file. This means a tax residency certificate from the recipient's country and proof that the recipient is the beneficial owner. It also means confirmation that there is no Bulgarian permanent establishment behind the income. Above this sum, the treaty rate requires a formal application to the NRA.
Time is the weak point. A residency certificate is issued for each country and tax year. Pay first and gather the documentation later, and the payment is made at the treaty rate without documentation. The missing tax then becomes an issue for the Bulgarian company that made the payment. A management fee to the parent brings a second problem covered under transfer pricing below.
VAT in the EU and the One-Stop Shop
Are you selling online to consumers in other EU countries? Once these transactions exceed EUR 10,000 annually across the EU, VAT is due at the local rate of each customer. OSS allows you to declare everything in one Bulgarian declaration instead of registering in each country. The threshold is across the EU, not in each state, which catches sellers who track each market separately.
Two changes in 2026 are significant for cross-border planning. First, the new EU scheme for small enterprises allows VAT-exempt supplies within the EU for businesses with annual turnover within the EU up to 100,000 EUR. Second, Bulgaria repealed the reverse charge of tax basis for goods delivered with installation. A supplier from the EU installing equipment in Bulgaria must now register here and self-charge 20% VAT.
The local registration also changed. The mandatory threshold is 51,130 EUR, measured for the calendar year starting from 2026 instead of consecutive 12 months. You have seven days to file documents after surpassing it. This short window is where tax review merits its fee, as the trigger can easily be missed in a busy month.
Transfer pricing for group structures
Most Bulgarian subsidiaries are not obliged to prepare a transfer pricing file. Each may still be asked to prove its prices. This distinction between documentation and proof is where groups fall into a trap.
The rules themselves changed as of January 1, 2026, when Ordinance No. N-3 of November 7, 2025, replaced Ordinance No. N-9 of August 14, 2006. The new ordinance brings Bulgarian practice fully in line with the current OECD guidelines for transfer pricing. For a group, this means four changes:
- The essence matters more than form: the NRA looks at what companies actually do, not just what the contract states.
- No fixed arrangement of methods. You use the most suitable method and show why.
- Benefit test for services within the group, where management fees are generally not covered.
- Specific rules for group loans and other financial transactions, including limitations regarding dependence on the group’s credit rating.
The NRA can also reject an analysis prepared late or not corresponding to the facts. This makes a file written after the start of the audit nearly useless.
The documentation obligation only covers large enterprises. For them, the local file is due by March 31 of the following year. This is three months before the tax return that must be filed by June 30. A corrective tax return means updating the local file within 14 days, and no later than September 30. An empowered file, for the group’s main parent, must be provided within 12 months after the deadline for filing the tax return.
All others bear the burden of proof. Under Article 116 of the TPC, a taxpayer in an audit must demonstrate that transactions with related parties comply with the arm's length principle. Exemption from the file does not exempt you from the evidence. A small subsidiary...