Country Tax Policies

Taxation in Bulgaria is levied upon either an individual or a company.

Personal Income Tax

Individual tax is payable at a progressive rate of 10% – 24%. Permanent residents pay tax both on their income earned in Bulgaria and overseas. Employers deduct income tax and national insurance contributions every month from the salaries and are required to make additional contributions to social security.

Bulgaria has a Double Taxation Prevention Agreement with many countries, including the UK, so that tax paid in one country is offset against that payable in the other.

Corporation Tax

As of 2007, corporate tax in Bulgaria is 10%, which makes Bulgaria and Cyprus the only two countries with the lowest corporate tax in the EU.

Property Related Taxes

Capital Gains Tax is payable upon the sale of property and is the difference between the selling price and the higher of the actual and indexed cost of acquisition of the property. After five years of property ownership, however, capital gains tax becomes 0%.

Stamp Duty is 2% of the property price and is owed upon signing of the Notary Act transferring the legal ownership of the property.

Local Municipal Taxes are payable on an annul basis and are equal to 0.15% of the book value of the property.

Value Added Tax is at a standard rate of 20% when purchasing a property. Transactions with land and lease of property for residential purposes are exempt from VAT.

Deductions of Tax at Source are made from the below sources of income on the following standard deduction rates:

• Dividend - 7%
• Interest - 15%
• Royalties - 15%
• Payments to company managers and directors - 15%