CORPORATE TAXATION:
Taxable income comprises accounting profits as per the profit and loss account and adjusted for tax purposes. The corporate income tax rate in Bulgaria is 10% - lowest in European Union.
Taxation of dividends: Dividend income received by a Bulgarian company from participation in another Bulgarian company or EU company is not subject to taxation in the hands of the recipient, nor at the hands of the payer of the dividends. Nonexempt dividends are taxed as part of overall taxable profit.
Capital gains: Capital gains are included in taxable income and taxed at the normal corporate income tax rate.
Withholding tax: Subject to withholding tax are:
- Dividends and liquidation proceeds
- Interests
- Royalties
- Technical service fees, including consulting fees
- Management fees
Dividends and liquidation proceeds are subject to 5% withholding tax unless a tax treaty is applied.
Interests, royalties, technical service fees and management fees are subject to 10% withholding tax unless the rate is reduced under a tax treaty.
Real property tax: The owner of real property is subject to real property tax determined annually by the municipality and varying between 0.01% and 0.45% of the higher of the gross book value and the tax value of the property.
Transfer tax is imposed on the sale of immovable property and motor vehicles at rates ranging from 0.1% to 3% determined by the municipality.
Other: Taxes on expenses (representative expenses, fringe benefits and expenses for maintenance and repair of vehicles used for management purposes). The rate of tax on expenses is 10%.
Value Added Tax: VAT is levied on the sale of goods and the provision of services. The standard rate is 20%. A reduced rate is applied to hotel accommodation services. Exports and intracommunity supplies are zero rated.
PERSONAL TAXATION: Basis – resident individuals are taxed on their worldwide income. Nonresident individuals – on Bulgarian-source income only.
Taxable income includes: income from employment, income from business and professional activities, capital gains, income from rent, interests, etc.
Rates: 10% (8% on interests from bank deposits)
Capital gains arising from the sale of real property are generally taxable, but certain exemptions may apply.
Deductions and allowances are available in computing taxable income, depending on the type of income.
Other taxes on individuals:
Capital duty – No
Stamp duty – No
Capital acquisition tax – No
Real property tax - The owner of real property is subject to real property tax determined annually by the municipality and varying between 0.01% and 0.45% of the tax value of the property.
Inheritance tax – Inheritance tax is levied at a rate of 0.4%-6.6% depending on the relationship of the beneficiary. The rate is determined by each municipality.
Gift tax is levied at a rate from 0.4% to 6.6% of the value of donated property, depending on the relationship between the parties. The rate is determined by each municipality.