OptimizE your taxes

1/ Visit the Migration office and apply for long term residence. You need to present the following documents:

- notary legalized declaration by your landlord that he/she rented to you an apartment

- renting contract (may not be necessary, but still good to have it)

- european health card with as long term of validity as possible since the residency permit will be given the same term as the card

- if you do not have EU health card - health insurance issued by Bulgarian insurance company

- notary legalized declaration that you have enough funds/money to cover your expenses during your stay in Bulgaria 

- your passport

*In the police you should be present in person 

2/ Receiving your Bulgarian ID card. 

In about week time you will receive a Bulgarian ID card with the Personal Identification Number of foreign person.

*You need to receive it in person. 

3/ Registration in the Registry Agency (called „Агенция по вписванията регистър Булстат“)

The following docs are needed:

- your newly issued Bulgarian ID card

- your diploma translated in Bulgarian

*That can be done by an authorized person on your behalf. 

4/ National Revenue Agency

To proceed with the processes in the National Revenue Agency I need a notary legalized power of attorney. There you do not have to do anything personally except provide me a PoA (attached template). 

- Register you for VAT (if you are providing and/or receiving services to/from EU based companies you are obliged to be registered before providing/receiving the service). You however can work with VAT registration in some cases (please give a look at the attached file "VAT Implications freelancer").

- Register you for social insurance 

- Start submitting monthly/quarterly/annually the necessary documents.

*I can help with steps 3/ and 4/. In case you need help for 1/ and 2/ you may contact a solicitor that will help or manage it yourself. 

**In case you are not an EU citizen then 1/ and 2/ are not valid. I would recommend you to contact a solicitor as I am not a specialist in the migration laws. 

***In case you decide to work with a company then step 1/, 2/ and 3/ are not necessary. You may work with a company without having a residence permit and registration in the Registry agency. In that case, except PoA I will need a copy of your passport (I need to submit a translated copy of your passport in NRA).

Depending on business model - B2B (business to business) or B2C (business to customer) and client location there are various possible scenarios.   

 1/ B2B services provided to companies established in EU   Mandatory VAT registration BEFORE providing the services. VAT rate:  0% VAT apply because of the “reverse VAT charge” principle.   

 2/ B2B services provided to companies established outside EU Mandatory VAT registration after reaching threshold of 100,000 BGN (for 2024), 166,000 BGN (from 1stJan 2025)** VAT rate: 0%   NOTE: UK companies paying for services to VAT registered freelancer - 0% VAT apply because of the “reverse VAT charge” principle.  

 3/ B2C services provided to customers from EU (individuals) Mandatory VAT registration after reaching threshold of 10,000 EUR for the last 12 months period VAT rate: the standard VAT rate in the country of residence of the client (for example: 19% VAT in Germany, 23% Ireland. 22% Italy, 20% Austria, etc.). Additional requirements: The freelancer must register in OSS (One stop shop) system and report (and pay) quarterly the VAT due for each country.   If the services are provided through web-site/online shop – the online shop needs to be registered in NRA and sales need to be reported monthly (separately from the VAT reporting if such).    

 4/ B2C services provided to Customers outside EU (individuals) Mandatory VAT registration after reaching threshold of 100,000 BGN (for 2024), 166,000 BGN (from 1stJan 2025)** VAT rate: 0% Additional requirements: If the services are provided through web-site/online shop – the online shop needs to be registered in NRA and sales need to be reported (separately from the VAT reporting if such).    

 5/ B2B and B2C services to businesses/customers in Bulgaria   Mandatory VAT registration after reaching threshold of 100,000 BGN (for 2024), 166,000 BGN (from 1stJan 2025)** VAT rate: 20% VAT Additional requirements: If the services are provided through web-site/online shop – the online shop needs to be registered in NRA and sales need to be reported monthly (separately from the VAT reporting if such).    
 
*Assuming the freelancer will provide any kind of digital services.   

**Voluntary registration possible before starting the activity or reaching the threshold.   
 
 The information above is not 100% comprehensive. Any specific case will be discussed and consulted separately in details. Please use the information as a guide.   

SOLICITORS:

If you need solicitors help about registering in the migration office for lond term residence or apply for visa and/or need company set up I recommend you to contact some of the following solicitors depending on the location you plan to settle in Bulgaria.

  VARNA: Mr. Pan Levi (attorney - at - law) ; Tel.: +359 899 109 313; Email: pan.levi@gmail.com

BURGAS: Mrs. Boyana Chilikova (attorney - at - law) ; Tel.: +359 888 126 255; Email: bchilikova@gmail.com

SOFIA: Mr. Nikola Penchev (attorney - at - law) ; Tel.: +359 887 345 666; Email: nikola@taxmonkey.bg

PLOVDIV: Mr. Alexander Arschinkov (attorney - at - law) ; Tel.: +359 888 107 061; 

Email:  arschinkow@gmail.com 

SILISTRA: Mr. Guner Hakki (attorney - at - law) ; Tel.: +359 876 402 244; 

Email: guner_lawyer@abv.bg  

ESTATE AGENTS:

 If you need help in buying or renting or selling property, I recommend you to contact some of the real estate agents listed below.

Sunny Beach/Nesebar and Burgas area:

  ONE STOP Property Shop Ltd.    Pat and Helen Fahey / Managers Mobile:+ +359 885 808 637 (WhatsApp or Viber) Email: onestoppropertyshopburgas@gmail.com   https://onestoppropertyshopburgas.com/  

 Yambol, Bourgas, Sliven and Stara Zagora area:
  
  VIP Bulgarian Properties Ldt. Stoycho Dobrev / Manager
Mobile: + 359 893 333 403 (WhatsApp or Viber)
Email: vipbulgarianproperties@gmail.com
http://www.vipbulgarianproperties.com 

VARNA area:

   Bulgarian Estates Ltd. 

Anton Kamenarov / Manager Varna

Mobile: + 359 898 541 452 (WhatsApp or Viber)

Email: antonkamenarov@yahoo.com

https://www.bulgarianestates.com/

If or when you contact any of the above listed solicitors or estate agents, please inform them that he/she is recommended by me and you will receive even better service.  I work in close cooperation and know personally any of them so I guarantee for their trustworthy. However, if you think you some of them is not performing as you expected please contact me. 

The list with is updated with solicitor and estate agents I know personally only. 

WHO IS CONSIDERED AS BULGARIAN TAX RESIDENT

INDIVIDUALS: Bulgarian or foreign citizens that meets the criteria. The Bulgarian citizenship is not a criterion. Criteria:

- Reside in Bulgarian 183 days or more in calendar year – the most important but not the only criterion

- Family in Bulgaria (wife or children)

- Permanent address

- Owning property

- Business activity in Bulgaria

- Other interests in Bulgaria.

*Attached part of the questionary when applying for “tax residency” certificate, the full version of the application form consist also data for the days spent in Bulgaria.

The criterion for 183 days is the main however not the only one. Tax resident can be a person that spend less than 183 days in Bulgaria but meets some of the other criteria and did not spend more than 183 days in total in other country. Example (random countries used): a person lives 5 months in Bulgaria; 3 months in the UK, 3 in Australia and 1 months in total in various other countries.

COMPANIES: Bulgarian or foreign companies for their activity in Bulgaria. The Bulgarian legal entities are local tax resident by default.

CERTIFICATE FOR BULGARIAN TAX RESIDENCY

How to apply: application form (in Cyrillic) submitted online (digital signature or PIC required) on https://portal.nra.bg/ OR personally in any NRA office. The certificate may be received on email or as paper document by post or in NRA office. Time of receiving it: up to 7 or 14 days depending on how/where the application is submitted.

Period: the certificate is issued for a specific year as per client request. It may be for current or past financial year/s (In Bulgaria the financial year match the calendar).

Where is used: in front of foreign authorities proving that the person or company is tax resident in Bulgaria. The document may be required to define the person/company statute for applicable tax treaty.

CONSEQUENCES OF BEING BULGARIAN TAX RESIDENT

The Bulgarian tax residents are tax liable for their incomes from source from Bulgaria and abroad. Depending on the tax treaties the taxes paid abroad are deducted from the tax due in Bulgaria.

Example: Bulgarian tax resident receive rent for a property located in foreign country, pays 5% to the foreign authority, and pays the difference to the Bulgarian tax rate (10%) or 5% in Bulgaria. In case the foreign tax is bigger (as usually) no tax is due in Bulgaria.

Some of the international income taxed abroad may be tax exempt in Bulgaria such as pensions (state or private).

*The above information is not fully comprehensive. If you need help or information please contact your accountant and/or solicitor.

  MONTHLY (NRA): 

14th VAT declarations 

    25th social insurance declarations for freelancer and managers of companies  
 
 QUARTERLY (NRA) : 

   30th April advance tax declaration for first quarter (individuals). Including declaration for dividends paid and deductions for rents paid (companies and individuals). Including and declarations from foreign tax residents for their income in Bulgaria (individuals). 

     30th July advance tax declaration for second quarter (individuals). Including declaration for dividends paid and deductions for rents paid (companies and individuals). Including and declarations from foreign tax residents for their income in Bulgaria (individuals). 

30th October advance tax declaration for third quarter(individuals). Including declaration for dividends paid and deductions for rents paid. Including and declarations from foreign tax residents for their income in Bulgaria (individuals).

   30th January ONLY foreign tax residents for their income in Bulgaria for the fourth quarter (individuals).    
 
 ANNUALLY (NRA, CR, NSI):

   30th April tax declarations for income for previous year (individuals) NRA 

30th April social insurance declaration for freelancers and individuals paying social insurances in their capacity of managers of a company (individuals) NRA 

 30th June tax declaration for active companies (companies) NRA 

  30th June balance sheets for active companies (companies) NSI

 30th June tax declaration for dormant companies (companies) NSI 

30th June tax declaration for dormant companies (companies) CR 

  30th September balance sheets for active companies (companies) CR  
 
 * Abbreviates:   NRA – National Statistical Institute   CR – Commercial Register  NSI – National Statistical Institute
 ** The above information is not fully comprehensive. If you need help or information please contact your accountant and/or solicitor. 

***The payment of the due amounts are with the same dead lines as the declarations.      

When purchasing a property the citizens of third countries (out of EU) are obliged to set up a company as such individuals are not allowed to own land (the rule do not apply for apartment). If we assume that the company will not have other activity and minor or none expenses the accountancy processes that needs to be done are as follows (assuming the property is purchased in 2023). 

 FIRST YEAR
  30th June 2024 tax declaration for active companies (companies) NRA 

   30th June 2024 balance sheets for active companies (companies) NSI 

30th September 2024 balance sheets for active companies (companies) CR  

 SECOND YEAR   
  30th June tax 2025 declaration for dormant companies (companies) NSI 

  30th June tax 2025 declaration for dormant companies (companies) CR  

 THIRD AND NEXT YEARS
  2026 and following years – NOTHING until the company buys/sell asset (property, vehicle, other long term asset).  

 * Abbreviates:   

NRA – National Statistical Institute  

CR – Commercial Register  

NSI – National Statistical Institute 

 ** The above information is not fully comprehensive. If you need help or information please contact your accountant and/or solicitor.      

FREELANCER– self-employed/solopreneur persons caring out professional activity. Such as: IT engineers, Consultants, Educational trainers, Digital creators, Data analyzer, Accountants, Solicitors, Notaries, and any other individuals providing various services.

*Freelancers can be only Bulgarian tax residents – local or foreign individuals with residence permit or Visa allowing them to work on the territory of Bulgaria.

REGISTRATION – Registry Agency, so called “Агенция по вписванията Регистър „Булстат“ (before starting the activity) and National Revenue Agency (in 14 days after starting the activity).

TAXES – 10% personal tax, social insurances (27.8% or 31.3%) paid on base in between 933 to 3,750 BGN per month, 20% or 0% VAT depending on activity/clients/incomes.

TAXIBLE INCOME – the total income after deducting 25% or 40% “allowed expenses” depending on the profession (25% in most cases) and deducting the social insurances paid.

FREELANCERS working for foreign companies – in case the company is based in EU – MANDATORY VAT registration BEFORE starting the activity. If the company is based out of EU – mandatory VAT registration after reaching the VAT registration threshold (100,000 BGN in 2024 and 160,000 BGN from 2025), voluntary VAT registration is allowed. The freelancer invoices the client (foreign companies) with 0% VAT rate, in EU is used the principle of “Reverse VAT Charge” as per EU VAT directives.

*Providing of services to foreign individuals (not companies) is under different VAT regime.

TAX CALENDAR:

MONTHLY

– 14th VAT declarations (if VAT registered).

– 25th Social insurance declarations for previous month.

QUARTERLY

– 30th April advance tax declaration for first quarter.

– 30th July advance tax declaration for second quarter.

– 31st October advance tax declaration for third quarter.

ANNUALLY

– 30th April tax declarations for income for previous year.

– 30th April social insurance declaration for previous year.

*The above information is not fully comprehensive. If you need help or information, please contact your accountant.   

TAX AND SOCIAL INSURANCES IMPLICATIONS

*Regulations (EC) 883/04 and 987/09 apply. The article describe situation where the person lives in permanently in Bulgaria and works for employer based in other country (in EU or different). 

WHERE THE SOCIAL INSURANCES AND TAX MUST BE DECLARED AND PAID:

In Bulgaria. The principle of the social insurance and tax contribution is that they must be paid in the country where the person reside permanently no matter what is the source of the income. Working for foreign employer is not forbidden of course but it needs to be arranged in appropriate way. The responsivity as usual in case of employment contracts belongs to the employer. 

WHAT A FOREIGN EMPLOYER SHOULD DO IF HE EMPLOYS PERSON IN BULGARIA:

1/ Register in National Revenue Agency and obtain a registration number (10-digit number) which is used to identify him in front of local authorities. 

2/ Submit monthly declaration for the salary paid, social insurances and tax due and to pay. 

2/ Submit annual declaration for the salary, social insurance and tax paid.

WHO HAS THE RESPONSIBILITY IN FRONT OF THE BULGARIAN AUHTORITIES:

The employer. In case not fulfilling his obligations, he will be penalized by the Bulgarian tax authorities. 

ALTERNATIVE OF EMPLOYMENT FOR A PERSON WORKIGN REMOTELLY FROM BULGARIA:

Freelancing. In that case the “employer” (particularly - client) has no obligation towards the Bulgarian state. All the obligations for declaring and paying social insurances and tax belongs to the freelancer. 

*The article is not fully comprehensive, for more information please contact your accountant. More articles can be found in my professional blog. 

TAX AND SOCIAL INSURANCES IMPLICATIONS

VARIATIONS:

1. Sale of property by individual - local tax resident (explanation of “tax resident” will follow in few days).

The properties used for living purposes such as house and/or apartment are free of taxation of owned more than 3 years.

Properties used for none living purposes such as offices, storage, agriculture land, land with no buildings on it – free of taxation if owned more than 5 years.

If the sale is under taxation – 10% tax on the difference between purchase and sales price after removing 10% allowed expenses. 

Effectively – 9% on profit. 

2. Sale of property by company.

The profit of the company activity is under taxation of 10%. Profit – purchase price minus sales price. The profit/loss of the company may include other expenses and/or incomes and depreciations (if such are calculated). 

If the shareholder/s wants to transfer dividend (the profit after deducting 10% tax paid) – 5% tax. 

Effectively – 14.5% on profit. 

3. Sale of a property by individual – foreign tax resident.

The profit is under 10% taxation. No allowed expenses applicable. 

Effectively – 10% on profit. 

DECLARING AND PAYING THE TAX:

Individuals local tax resident – by 30th April of the following year. 

Companies – by 30th June of the following year. 

Individuals foreign tax residents – by the end of the month following the quarter (example: sale in second quarter of the year, declaring and payment of tax until 31st July). 

** The above information is not fully comprehensive. If you need help or information, please contact your accountant and/or solicitor.

Shares: Profit of trade of shares on regulated EU and EEA stock exchange markets – free of tax; on others – 10% tax, 10% recognized expenses; effective tax 9%.

Stock options (including vested): Exercise of stock option – free. Sale of shares – taxable, see above - “shares”.

Vested stock units: Taxable. Tax base – the market value at the moment of vesting. Tax – 10% tax, 10% recognized expenses; effective tax 9%.

Short sales: Taxable. Tax – 10%.

Dividend of shares: Taxable. Tax 5%.

Bonds: Bonds issued by governments from EU and EEA – free; others – 10%. Withholding tax may be charged.

Leverage: Taxable. Tax – 10%.

Shares listed on NYSE and NASDAQ: Taxable. Tax – 10%.

Investment gold: Оn regulated EU and EEA stock exchange markets – free of tax; on others – 10% tax, 10% recognized expenses; effective tax 9%.

Cryptocurrency: Taxable. Tax base – selling minus purchase price. Tax – 10% tax, 10% recognized expenses; effective tax 9%.

VAT IMPLICATIONS: Free of VAT. Turnover is part of VAT registration threshold – 100,000 BGN for 2024.

The above information is applicable only for individuals ONLY and the trade is NOT the main income. In case the trade is main source of income it is considered as “commercial activity”. In that case the tax base is calculated as difference between purchase and sale price deducted with expenses for the activity. The tax is 15%.

VAT applications: in case the trade with shares on EU stock exchange is main source of income the turnover (sales) is considered as “VAT registration turnover” and VAT registration is obligatory. No VAT is calculated on the deals; however, the VAT registration and monthly reporting is required. Trade with shares on markets outside EU are not considered as “VAT registration turnover”.

**References: articles and researches by Nikola Penchev and Veselka Velikova - www.taxmoney.bg

STABLECOINS

Considering that the stablecoins are:

- Pegged (fixed) to another currency (fiat money as USD, EUR, others), commodity (such as gold), or financial instruments

- Are controlled by the regulator 

- Are redeemable from the issuer 

Stablecoins are practically equivalent of the fiat money (even if they are pegged to another instrument). 

FOR TAX PURPOSES:

RECEIVING PAYMENT IN STABLECOINS

It is considered as payment in fiat money and under standard taxation as any income. The evaluation is to the current rate to BGN at the moment of invoicing. 

BUYING AND KEEPING A WALLET WITH STABLECOOINS

Being equivalent (or can be evaluated) to fiat money they are considered a kind of currency respectively no need to be reported (purchase and/or sale and available funds) is it is just an exchange but not a deal. 

*The above information is not fully comprehensive and can be used as a guide only.

**The above information is applicable only for individuals ONLY and the trade is NOT the main income. In case the trade is main source of income it is considered as “commercial activity”. In that case the tax base is calculated as difference between purchase and sale price deducted with expenses for the activity. The tax is 15%.

When the trade with shares and other financial instruments is MAIN ACTIVITY (main source of income) the taxation is different that taxation of individuals trading as additional source. 

MAIN ACTIVITY can be in case the person has no other regular income (like salary or freelance income) and it is not necessarily related with the amount of income. 

TAX BASE

Difference between purchase and sale price deducted with social insurances and expenses for the activity such as trader commissions, stationary expenses, office (if such). Personal expenses are not accepted as expense (food, restaurants, travel, other).

TAX 

15% on the profit. 

SOCIAL INSURANCES

Social insurances are due on the income. The socials are paid:

Monthly: on chosen base between 933 and 3,750 BGN (usually 933 BGN)

Annually: annual recalculation is done - the annual profit is divided in 12. 

- If the result is equal or below 3,750 BGN per month, the monthly socials paid are deducted and the remaining is base for calculating the socials. 

- If the result is 3,751 or more, the maximum monthly base of 3,750 BGN is reduced with the monthly socials paid, the remaining is base for calculating the socials.

EXAMPLE: Annual profit of 100,000 BGN and monthly socials paid on minimal base of 933 BGN. Divided in 12 = 8333.33 BGN; Maximum base 3,750 minus 933 BGN = 2,817 BGN monthly base.

The social insurances are 27.80%. It is possible for the person to pay additional 3.5% (total of 31.30%) which include maternity leave and illness benefits but that is not very common practice. 

VAT IMPLICATIONS

The turnover (sales) of shares and financial instruments on EU and EEC stock exchange or other platforms registered in EU are considered as VAT turnover for registration and VAT registration and reporting is mandatory when reaching 100,000 BGN for the past 12 calendar months (160,000 BGN form 1stJan 2025). No VAT is calculated on the sales. 

Sales on markets outside EU are not considered as “VAT registration turnover”.

Commissions paid to brokers base in EU is considered as “VAT deals on the territory of Bulgaria” and VAT registration is required before paying the commission no matter of the amount of the commission.

TRADE WITH SHARES FREE OF TAX (AND SOCIAL INSURANCES).

The trade with shares on regulated market in EU and EEC is free of tax. List:

Austria: Vienna Stock Exchange (VSE)

Belgium: Bats Europe (BATEEN); CHI-X Europe Ltd Clearnet (CHIXEN); ENEXT.BE; Euronext Brussels (BELFOX); Turquoise (TRQXEN

Estonia: Nasdaq Baltic (N.TALLINN)

EU: Euronext Bonds

Germany: Bats Europe (BATEDE); CBOE EU; CHI-X Europe Ltd Clearstream (CHIXDE); EUREX (DTB); Frankfurt Stock Exchange (FWB / FWB2/ FSE); GETTEX / GETTEX2; Stuttgart Stock Exchange (SWB); Tradegate Exchange (TRADEGATE / TGATE); Turquoise DE (TRQXDE); XETRA (IBIS)

France: Bats Europe (BATEEN); CHI-X Europe Ltd Clearnet (CHIXEN); Euronext France (MATIF); Euronext France (MONEP); Euronext France (SBF); Turquoise (TRQXEN)

Hungary: Budapest Stock Exchange

Italy: Borsa Italiana; Borsa Italiana (BVME); Borsa Italiana (IDEM)

Latvia: Nasdaq Baltic (N.RIGA)

Lithuania: Nasdaq Baltic (N.VILNIUS)

Netherlands: Bats Europe (BATEEN); CHI-X Europe Ltd Clearnet (CHIXEN); Euronext NL Derivatives (FTA); Euronext NL Stocks (AEB); ICE Endex; Turquoise (TRQXEN)

Norway: OMXNO

Poland: Warsaw Stock Exchange

Portugal: BVL

Spain: Bats Europe (BATEES); Bolsa de Madrid (BM); CHI-X Europe Ltd Clearnet (CHIXES); Spanish Futures & Options Exchange (MEFF)

Sweden: Nasdaq OMX – Stockholm (OMS); Swedish Stock Exchange (SFB)

*If the trade is OTC (over-the-counter) it is under taxation. 

*The above information is not fully comprehensive and can be used as a guide only. It is valid for individuals only. The attached file consist simulation in case the trade is done with a company.