Territoriality. Individuals who are tax resident
in Bulgaria are subject to income tax on their worldwide income. Individuals
who are nonresident for tax purposes are subject to income tax on their income
earned in Bulgaria.
Definition of tax resident. An individual is
considered tax resident for a calendar tax year if he or she satisfies either
of the following conditions:
- On any
day in that year, he or she has spent more than 183 days in Bulgaria in
the previous 12 months.
- His or her center of vital
interests is considered to be in Bulgaria.
Days of entry and
departure count as days of stay in Bulgaria.
The center of vital
interests is considered to be in Bulgaria if the individual’s personal and
economic interests are tightly connected to Bulgaria based on actual facts and
circumstances such as family residence, real estate owned or place of work.
Tax residence status
is determined for an entire tax year, which coincides with the calendar year.
Part-year tax residence is not possible.
Income subject to tax:
Employment income. Employed individuals are subject
to income tax on remuneration (money or benefits in kind) paid or provided by
or on behalf of an employer. Income derived from employment activities
performed in Bulgaria has a Bulgarian source. The following employment income
is exempt from tax:
- The
amount of per diems related to business trips within Bulgaria and abroad
up to double the statutory amounts determined by law
- Travel
and accommodation expenses relating to business trips covered by
supporting documentation
- Certain social benefits
provided by and taxed at the level of the employer
Employer-provided
stock options are taxed at exercise as employment income.
Self-employment and business income. Self-employment and business income is income derived from
professional services and business activities, such as the following:
- Income
from activity as a sole entrepreneur
- Copyright
royalties
- Agricultural
income
- Forestry
income
- Earnings from other
self-employment and nonemployment activities
Exempt income. Income from scholarships, pensions
derived from compulsory social security schemes in Bulgaria and abroad, alimony
and certain insurance payments are not taxable.
Tax rates. The rate of income tax is a flat
10%, except for dividend income, which is taxed at a rate of 5%, and the income
of sole entrepreneurs, which is taxed at a rate of 15%.
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