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Tax Advisory Services in Sofia, Bulgaria: Structuring, Treaties and NRA Audits

Bulgaria's 10% corporate tax is the one part of the system nobody needs advice on. The money leaks out around it. A 5% dividend tax gets withheld on a payout an EU parent company could have received tax-free. An interest payment leaves for the parent without the 10% withholding it owed. And the transfer pricing file falls due on 31 March, three months before the tax return it supports.

Quick answer: Tax advisory is the part of Bulgarian tax work your bookkeeper doesn't do. It covers the structure you choose before incorporating and the treaty relief on payments abroad. It also covers intra-group pricing, and any audit by the National Revenue Agency (NRA, the Bulgarian tax authority), which runs in Bulgarian. For a foreign-owned company, three moments call for it: setup, the first payment abroad, and the first NRA letter. Every rate and deadline below reflects the 2026 changes, including the new tax interest formula and transfer pricing ordinance.

Rates, deadlines and treaty data checked against NRA pages, the European Central Bank and the 2026 State Budget Act.

Where these figures come from, and what we left out

Bulgarian tax procedure moved in several places during 2026. So we worked from the documents that set each rule, not from summaries of them. The interest rate on overdue tax comes from Council of Ministers Decree No. 347 of 29 December 2025. We read it with the rate table of the European Central Bank (ECB). Transfer pricing deadlines come from the NRA's transfer pricing page, which now reflects the ordinance that took effect on 1 January 2026. The treaty count comes from the NRA's treaty list, counted by hand. Audit and appeal deadlines come from the Tax and Social Security Procedure Code (DOPK, Bulgaria's tax procedure law).

We threw out three kinds of source. The first ties the transfer pricing local file to the 30 June tax return, but the NRA puts it at 31 March. The second quotes the old tax interest formula for 2026: the Bulgarian National Bank (BNB) base rate plus 10 points. The third gives a 2026 dividend rate other than 5%, although the 10% in the November 2025 draft budget never became law.

Four limits apply to what follows. We don't publish a fee list, because scope drives the price more than anything else. We haven't obtained a binding ruling for any company, so the examples here are general. Some penalties were legislated in lev and appear here converted at the fixed rate of 1.95583 BGN to 1 EUR. Where this page touches foreign rules, such as Germany's controlled foreign company (CFC) rules, it points you to a home-country adviser.

What a tax adviser does that your accountant doesn't

Compliance and advice are different jobs, and foreign owners often buy one expecting the other. Compliance is the recurring work: monthly VAT returns, payroll declarations, and the annual corporate tax return due by 30 June. Our accountancy services cover that loop. Advice is the one-off decision that changes how much tax is due, or who owes it.

In practice, advice clusters around five areas. They're the same five listed under Tax Advisory on our financial services page:

Tax structuring before incorporation, so you start with the right vehicle rather than fixing it later.
Cross-border and EU tax guidance: treaties, dividends, and the One-Stop Shop (OSS) for EU VAT.
Tax due diligence for a new business, with every obligation mapped before you trade.
NRA audits and correspondence, handled in Bulgarian.
Transfer pricing documentation for group structures.

Most of them turn on a decision made once that shapes the tax bill for years. That's why they're worth paying for separately from the monthly books. The sections below take them in order, with the rules that decide each one.

Structuring before you incorporate

Run this comparison before you incorporate, not after. Someone earning in Bulgaria has three common options, and the tax on the same income differs a lot between them.

Freelancer (free profession): 25% of gross income is deducted as statutory expenses, and the rest is taxed at 10%. That's 7.5% of gross, before social contributions.
Sole trader (ET): taxed at 15% on profit.
Single-member company (EOOD): 10% corporate tax on profit, then 5% on dividends paid to an individual.

Run EUR 100 of profit through the EOOD and pay it all out. Corporate tax takes EUR 10, and the dividend tax takes 5% of the remaining EUR 90, which is EUR 4.50. The total is 14.5%, nearly double the freelancer's 7.5% on tax alone. That's a fair comparison for a consultant with few real costs, where profit and gross income are close. Social contributions change that gap in ways that depend on your income, so run both routes on your own figures.

So why incorporate at all? Because the company does things a freelancer can't. It limits your liability, hires staff, holds intellectual property, and can be sold. And the 5% only falls due when you distribute. Profit left in the EOOD to fund growth carries the 10% and nothing more, until the day it's paid out.

For a foreign owner, the bigger risk sits in your home country, not in Bulgaria. Two rules do the damage. Many countries tax a company where it is managed, not only where it is registered. A Bulgarian EOOD run day to day from Munich can end up treated as German. The other rule is CFC legislation. It lets a country tax its residents on the low-taxed profits of a company they control abroad.

Germany shows how that bites. It cut its CFC low-tax threshold from 25% to 15% from 2024, and Bulgaria's 10% still sits under the new line. So passive income, such as licensing fees or interest, earned by a German-controlled EOOD can be taxed in Germany anyway. German law does carve out EU companies with a substantial economic activity. That means qualified staff and resources of their own, doing the work rather than outsourcing it. An EOOD with no employees in Bulgaria will struggle to meet that test.

Settle three points before you file anything. Who is the manager, and where do they live? Where do decisions actually get made? Will the Bulgarian entity employ anyone? Those answers shape the tax result more than the 10% rate does. The registration steps that follow from them are set out in our guide to forming a company in Bulgaria.

Treaties, withholding tax and dividends going abroad

Start with the bad news. Bulgaria taxes dividends, interest, royalties and several kinds of service fee at source when they leave the country. The Bulgarian company making the payment is the one that withholds. These are the domestic rates before any treaty relief:

Dividends and liquidation shares: 5%, or 0% to a company resident in the EU or EEA, except for hidden profit distributions.
Interest, royalties and service fees: 10%, which covers technical service fees and management fees.
EU interest and royalties: exempt between associated companies, where one holds at least 25% of the other directly for at least two years.
Filing: declared and paid quarterly, by the end of the month after each quarter.

Treaties cut those rates, and Bulgaria has plenty of them. The NRA's treaty list names 71 treaty partners. They include the UK, in force since 15 December 2015, and the United States, in force since 15 December 2008. What the list leaves out matters just as much. There's no treaty with Australia, Brazil, New Zealand or Mexico, so payments to residents there carry the full domestic rates.

Some of those treaties no longer read the way they were signed. The OECD's Multilateral Instrument (MLI, one convention that amends many treaties at once) has changed a number of them. For the affected treaties, including those with Austria, the UK and Japan, the NRA publishes a consolidated "synthesised text". Work from that version. An adviser quoting the 2015 UK treaty without it may be quoting rules that no longer apply.

Germany is the other treaty to re-read. Bulgaria and Germany amended their double tax treaty by a protocol signed on 21 July 2022, which entered into force on 13 December 2023. Any German-owned structure planned against the older text should be checked against the amended one.

Having a treaty isn't the same as getting its rate. The relief has a procedure, and it turns on one number. Where a foreign recipient's Bulgarian-source income stays within EUR 255,645.94 (BGN 500,000) a year, the payer applies the treaty directly. The payer must hold the evidence on file. That means a tax residence certificate from the recipient's country and proof that the recipient is the beneficial owner. It also means confirmation that no Bulgarian permanent establishment stands behind the income. Above that amount, the treaty rate needs a formal application to the NRA.

Timing is the weak spot. A residence certificate is issued per country and per tax year. Pay first and collect the paperwork later, and the payment has gone out at the treaty rate with no evidence behind it. The missing tax then becomes a question for the Bulgarian company that paid. A management fee to a parent adds a second problem, covered under transfer pricing below.

EU VAT and the One-Stop Shop

Selling online to consumers in other EU countries? Once those cross-border sales pass EUR 10,000 a year across the whole EU, VAT is due at each customer's local rate. The OSS lets you report all of it in one Bulgarian return instead of registering in each country. The threshold is EU-wide, not per country, which catches sellers who track each market separately.

Two 2026 changes matter for cross-border planning. First, a new EU scheme for small enterprises allows VAT-exempt supplies across the EU for businesses with annual EU-wide turnover up to EUR 100,000. Second, Bulgaria abolished reverse charge for goods supplied with installation. An EU supplier that installs equipment in Bulgaria must now register here and charge 20% VAT itself.

Domestic registration moved too. The mandatory threshold is EUR 51,130, measured over the calendar year from 2026 instead of a rolling 12 months. You have seven days to apply after crossing it. That short window is where a tax review earns its fee, because the trigger is easy to miss in a busy month.

Transfer pricing for group structures

Most Bulgarian subsidiaries have no duty to prepare a transfer pricing file. Every one of them can still be asked to prove its prices. That gap between documentation and proof is where groups get caught.

The rules themselves changed on 1 January 2026, when Ordinance No. N-3 of 7 November 2025 replaced Ordinance No. N-9 of 14 August 2006. The new ordinance brings Bulgarian practice fully into line with the current OECD Transfer Pricing Guidelines. For a group, that means four shifts:

Substance over form: the NRA looks at what the companies do in practice, not only what the contract says.
No fixed ranking of methods. You use the most appropriate one and show why.
A benefit test for intra-group services, which is where management fees tend to fail.
Specific rules for group loans and other financial transactions, including limits on relying on the group's credit rating.

The NRA can also set aside an analysis that was prepared late or doesn't match the facts. That makes a file written after the audit starts worth very little.

The documentation duty applies to large enterprises only. For them, the local file is due by 31 March of the following year. That's three months before the corporate tax return, which is due by 30 June. A corrective tax return means updating the local file within 14 days, and no later than 30 September. The master file, for the group's ultimate parent, is due within 12 months after the tax return deadline.

Everyone else carries the burden of proof. Under Article 116 of the DOPK, a taxpayer in an audit has to show that its related-party transactions meet the arm's length principle. Being exempt from the file doesn't exempt you from the proof. A small subsidiary with no benefit file for its management fee is arguing from memory.

What does losing that argument cost? A payment that isn't at arm's length counts as a hidden profit distribution. That draws a sanction of 20% of the amount under Article 267 of the Corporate Income Tax Act, and the same amount is not deductible. Take a EUR 200,000 management fee that the NRA treats entirely as a hidden distribution. The sanction is EUR 40,000, and losing the deduction adds EUR 20,000 of corporate tax. That's EUR 60,000 before interest (for a deduction that was only ever worth EUR 20,000). For large enterprises without a local file, a separate fine can reach 0.5% of the transactions that should have been documented.

Big groups face one more layer. Multinationals with consolidated revenue of EUR 750 million or more fall under the global minimum tax, which Bulgaria applies through a domestic top-up tax. The first top-up returns, covering 2024, were due by 30 June 2026. The Ministry of Finance published a non-binding ruling on how it reads these rules on 14 April 2026. Below that revenue line, none of this applies to you.

Tax due diligence for a new business

Before a new company trades, it pays to know which obligations its own numbers will switch on. Most of them run on thresholds, and several use last year's revenue, so you can see them coming. This is the map we build first:

Advance corporate tax: none below EUR 153,387.56 of prior-year revenue, quarterly (except the fourth quarter) up to EUR 1,533,875.64, and monthly above that.
VAT: mandatory registration within seven days of passing EUR 51,130 in a calendar year.
Withholding tax: quarterly, on any dividend, interest, royalty or service fee paid abroad.
Interest limitation: above EUR 3 million of net borrowing costs, deductions are capped at 30% of tax-adjusted EBITDA (earnings before interest, tax, depreciation and amortisation).
Losses: carried forward for five years, with no carry-back. A start-up loss from year one is gone by year seven.
SAF-T (Standard Audit File for Tax, a monthly accounting file sent to the NRA): phased in by size, reaching every VAT-registered, non-dormant company in 2030.
Company cars: electric cars placed in service from 1 January 2026 depreciate at up to 50% a year for tax, against 25% for other cars.

Buying an existing company is a different exercise, because you inherit its open tax years. The NRA can assess tax for five years, counted from the start of the year after the tax fell due. The absolute limit is ten years. So a company bought in 2026 can still face an assessment for tax that fell due in 2021. For a share deal, our due diligence work checks those open years before you sign, not after.

NRA audits and correspondence

An NRA audit moves on short, fixed deadlines, and it runs in Bulgarian. Any document you submit in another language needs an accurate Bulgarian translation, or the NRA can have it translated at your expense. That's why translation and legalisation should start in the first week of an audit, not the sixth. Here's the sequence the DOPK sets:

Audit: three months from service of the audit order, extendable by up to two months. In complex cases, the NRA's executive director can extend it to a maximum of three years.
Audit report: issued within 14 days after the audit period ends. You then have 14 days to object in writing, extendable by one month on request.
Audit act: issued within 14 days after your objection, or after the objection deadline passes.
Administrative appeal: 14 days to appeal to the NRA's Appeals and Tax and Social Security Practice directorate. It has 60 days to decide, and silence counts as confirming the audit act.
Court: 14 days from the directorate's decision to appeal to the administrative court.

An appeal doesn't stop collection by itself. To pause enforcement, you post security equal to the principal plus accrued interest, in cash, a bank guarantee or government securities. Plan that cash before the audit act arrives.

Interest is the other cost that grows while you argue. On 1 January 2026, Bulgaria cut interest on overdue taxes from the BNB base rate plus 10 to the ECB refinancing rate plus 8 points. The rate resets on 1 January and 1 July. It was 10.15% a year for the first half of 2026 and has been 10.40% since 1 July.

That rate is already heading up. The ECB raised its main refinancing rate to 2.65% from 16 September 2026, according to its key interest rate table. Unless it moves again before January, the 1 January 2027 reset will put tax interest at 10.65%. On EUR 20,000 of tax found in an audit, today's rate costs about EUR 2,080 a year. Interest doesn't compound, though. Bulgaria charges no interest on interest, and none on fines.

Which kind of help you need

Match your situation to one of these rather than buying a general retainer.

Payments abroad above EUR 255,645.94. If one recipient gets more than that in a year, file the formal NRA treaty application early, ideally before the first payment. Below that amount, a residence certificate for the right year in your file is enough. It's procedure work that repeats each tax year, so pay for the procedure and skip the monthly retainer.

Owner in Germany, passive income. If the EOOD earns mainly licensing fees or interest, get German advice before Bulgarian advice. At 10%, the EOOD sits under Germany's 15% low-tax line. Without qualified staff of its own in Sofia, the saving you modelled may not exist. If Bulgaria's rate is what you're after, build an operating company with a real team here, not a holding shell.

Subsidiary paying a management fee. Below the large-enterprise class, you have no local file duty, but you still carry the burden of proof. Build a short benefit file: the service agreement, time records, and what was actually delivered. It costs a fraction of a full OECD-style local file and answers the question an auditor will ask. Commission the full file only when the entity grows into the large-enterprise class.

Audit order served. With more than EUR 20,000 in dispute, the timetable sets the cost. The first 14-day clock starts when the audit report arrives, so line up translation and representation during the audit itself. At 10.40%, each year of appeal adds about EUR 2,080 of interest on EUR 20,000. Decide early whether you'll appeal, because pausing collection takes security in cash, a bank guarantee or government securities.

EU consumer sales past EUR 10,000. If you sell online across EU borders, register for the OSS in Bulgaria and file one return. Don't register separately in each customer's country, because that's the route the OSS exists to replace. If your turnover stays under EUR 100,000, check whether the new EU small-enterprise scheme fits first.

Tax questions foreign owners ask about Bulgaria

Does Bulgaria tax foreign income?

Only if you're a Bulgarian tax resident. Residents are taxed on worldwide income, while non-residents pay only on income from Bulgarian sources. You become resident by spending more than 183 days here in any 12-month period, or by having your centre of vital interests here. Where a tax treaty applies, its tie-breaker rules decide residence instead.

What are the tax rates for freelancers in Bulgaria?

A freelancer deducts 25% of gross income as statutory expenses and pays 10% on the rest. That works out to 7.5% of gross, before social contributions. The 25% is fixed, whatever your real costs are. If they run well above a quarter of income, a sole trader or an EOOD can come out cheaper. Both are taxed on profit after actual costs: 15% for a sole trader, and 14.5% for an EOOD that pays out all its profit.

Can a Bulgarian company pay dividends to its foreign parent without withholding tax?

Yes, if the parent is a company resident in the EU or EEA, except for hidden profit distributions. Since Brexit, a UK parent falls outside that exemption and relies on the 2015 UK treaty instead. Other parents face 5%, or the treaty rate if it's lower, with the parent's tax residence certificate on file before payment. Above EUR 255,645.94 a year, the treaty rate needs a formal NRA application.

Does Bulgaria have a tax treaty with Australia?

No. The NRA's list has 71 treaty partners, and Australia isn't one of them, nor are Brazil, New Zealand or Mexico. Payments to residents there carry the full domestic rates: 5% on dividends and 10% on interest and royalties. Without a treaty, there's also no tie-breaker for someone resident in both countries, and no mutual agreement procedure to settle double taxation.

Does Bulgaria tax a holding company on its foreign subsidiaries' profits?

It can, under Bulgaria's own CFC rules. They apply when the Bulgarian company controls more than 50% of a foreign subsidiary's votes, capital or profits, and that subsidiary is low-taxed. Its undistributed profits are then added to the Bulgarian tax base at 10%. A subsidiary carrying on a substantive economic activity is exempt, so an operating business abroad falls outside the rule and a passive shell doesn't.

How much interest does the NRA charge on unpaid tax?

It's the ECB main refinancing rate plus 8 points, fixed for each half-year on 1 January and 1 July. That gave 10.15% for January to June 2026 and 10.40% from July. A debt overdue from March to September 2026 therefore accrues interest at both rates, each for its own months. From 1 January 2027 the rate becomes 10.65% unless the ECB moves again, and there's no interest on interest or fines.

How long does an NRA tax audit take?

It lasts three months from the audit order and can be extended by up to two more, or to three years in complex cases. The period it can cover is a separate limit. The NRA can assess tax for five years from the start of the year after it fell due, and never beyond ten years. In practice, companies tend to see an audit every four to five years, which matches that window.

Getting tax advice in Sofia

In our view, most foreign owners don't need a tax adviser every month. They need one at the few points where a decision gets made once and then lasts for years. Those points are setup, the first payment abroad, the first intra-group invoice and the first NRA letter. Bottom line: get them right, and the monthly compliance underneath stays routine.

Our tax advisory work covers the five areas on this page. We structure companies before incorporation and advise on treaties, dividends and the OSS. We map a new business's tax obligations, handle NRA audits and correspondence in Bulgarian, and prepare transfer pricing files for groups. Where the question turns to your figures rather than your structure, our audit services team reviews them.

Tax questions rarely arrive alone. If you employ people here from abroad, our guide to being a foreign employer in Bulgaria covers payroll and permanent establishment risk. A company whose manager lives outside Bulgaria also needs an AML contact person on its register file. And if your books still carry pre-2026 lev balances, our checklist for the euro changeover walks through the conversion.

A first conversation goes faster with three facts ready. Where does each owner and manager live for tax purposes? What does the company sell, and to whom? Which payments leave Bulgaria each year? Those answers decide which sections of this guide apply to you. Our office is at 66 Vitosha Blvd, Sofia 1463. Call our Accounting Department write to us through the contact page.