Country Trading Profiles Bulgaria - Taxes

Tax Rates

Nature of the tax: VAT (value added tax)
Tax rate: 20%
Reduced tax rate: A 9% rate applies to the service of accomodation provided by a hotel-owner. A zero tax rate applies to exports and to transactions exempted from VAT under international aggreements.
Other consumption taxes: Bulgaria applies excise duty to alcohol, tobacco and cigarettes, money games, leather; tea and coffee, petroleum, gasoline, second-hand vehicles, and electricity.
For further information on excise duty consult the EU comparison table.

Company Income Tax	The standard rate applied is 10%. Moreover, a municipal tax is calculated on the taxable base for corporate income tax. So, the global tax rate is 28% for annual taxable incomes below BGN 50,000 and 34.3% when beyond BGN 50,000.
Alternative tax on Gambling Companies	The tax rate is 10% or 12%, depending on the type of gambling.
Special tax for commercial maritime vessels operations	10%

Capital gains taxation: Capital gains are included in the taxable income of a company and taxed at the normal corporate income tax rate. Quoted shares sold on the Bulgarian Stock Exchange are exempt. Unrealised capital gains or financial assets are taxable only in the case of financial institutions.
Main allowable deductions and tax credit: Expenses are deductible for depreciation, net operation losses, payment to foreign affiliates, interest that follow the thin capitalization rules. A tax credit or exemption may apply under a tax treaty, and if no treaty relief is available, Bulgaria grants a unilateral domestic tax credit.
Other corporate taxes: Fringe benefits tax; social and health security contributions; property tax; transfer tax; tax on expenses for entertaining (ceremonial expenses) and on expenses related to operation of means of transport; withholding tax on dividends, interest, royalties, capital gains and technical services fees payable to foreign residents.

Individual income tax

10%

Allowable deductions and tax credit: Donations are deductable up to 5%, freelancers, civil contractors, notary officers, physicians, dentists or other private practitioners may deduct 25% from their gross income; royalties are subject to 40% statutory deductions; rental income is subject to 10% statutory deductions; mandatory social security contributions borne by individuals are tax deductible in full; voluntary pension and unemployment contributions, as well as health insurance and life insurance contributions are also deductible up to certain limits; donations to certain organisations are also deductible up to defined limits; young married couples may deduct interest on mortgage loans for the first BGN 100,000 of the loan under certain conditions.
Special expatriate tax regime: Expatriates have no special tax regime.

Countries with whom a double taxation treaty have been signed: See the list of the double Taxation Agreements signed by Bulgaria.
Withholding taxes: Dividends: 5%, Interest: 10%, Royalties: 10%
Bilateral agreement

Tax Authorities: National Revenue Agency
Other domestic resources: Database on taxes in the European Union
http://www.deloitte.com/view/en_GX/global/services/tax/cross-border-tax/international-tax/taxation-and-investment-guides/index.htm">Deloitte tax guide
Consult Taxation trends in the European Union.

Tax year: The fiscal year begins on January 1st and ends on December 31st of the same year.
Accounting standards: International accounting standards were established in Bulgaria at the beginning of 2003. The standards apply to banks, insurance, social well-being and investment companies as well as unidentified companies. Bulgarian accounting standards are now in agreement with the standards of the International Accounting Standards Board.
Accounting regulation bodies: BULNAO
National Assembly of the Republic of Bulgaria
Ministry of Finance
Accounting reports: The balance sheet is presented into accounts with liabilities composed of constant capital and debts, because there is a distinction between long and short-term debts.
The profit and loss account gives priority to the repository of the global production and leave the choice of the costs classification either by nature or by function.
Publication requirements: Companies have to publish annually a balance sheet, a profit and loss account and an appendix.
Professional accountancy bodies: Institute of Certified Public Acountants of Bulgaria
Certification and auditing: The external control of accounts must be confided to a body of certified experts (auditors) chosen by the company. Wolftheiss, PricewaterhouseCoopers, Kambourov & Partners, KPMG, Ernst & Young.
Accounting news: IAS Plus
Ministry of Finance