Taxable persons, whose net income of sales for the preceding year does not exceed BGN 300,000; There is no difference between long-term and short-term capital gains. Bulgaria - business attraction in the EU | No More Tax Property taxes are relatively low, and Bulgaria has no wealth tax. Bulgaria has low taxes for companies, business owners, employees, and investors. You will also be required to provide a business plan and other documents related to your company. But for those in the know, Bulgaria is a remarkable country, not only for its low taxes but also for its stunningly picturesque landscape and amazing people. However, its still something to be aware of if youre planning on relocating to Bulgaria. 22 introduced a tax relief for young families. These deductions are usually a set amount, but some of them are a percentage of the taxable income. Deposits in Bulgarian accounts are insured just like deposits in other EU countries. If you buy 100 shares of Apple stock for USD 10,000 on the NASDAQ and sell it for USD 12,000 2 years later, you will owe 10% tax on the USD 2,000 profit. If you receive income from abroad (rental income, for example) and the foreign country has a double taxation agreement with Bulgaria, you might be able to avoid being taxed twice on the same income. Privately Owned Vehicle (POV) Mileage Reimbursement Rates This means that a Bulgarian company can potentially be combined with another company from the EU/EEA in a country that does not tax dividend distributions. The income tax of companies registered in Bulgaria is dependent on the nature of their activities. This, combined with a stable political environment, makes the country extremely attractive to start and run a company in. There are 0% capital gains taxes on investments or trading on EU/EEA stock exchanges. Employment income Persons who are obliged to withhold and pay tax at the source under Art. All rights reserved. Heres a list of the necessary documents: Before registering your company, you need to show that your company has deposited the minimum share capital of BGN 2 (EUR 1) in a bank account. sites occupied by streets, roads of the national and municipal road networks, and the railway network, up to the limiting construction lines; lands occupied by water basins which are state and municipal property, agricultural land and forests, with the exception of land with buildings and only for the built area and the adjoining it land. Corporate - Other taxes Last reviewed - 16 January 2023 Value-added tax (VAT) The standard VAT rate is 20%. This favourable fiscal sandwich is made even more appetising by the fact that there is no wealth tax in Bulgaria. Bulgarian tax residents are taxed on their worldwide income. The following local taxes are paid into the municipal budget: real estate tax; succession tax; donation tax; property acquisition tax; transport vehicle tax; patent tax; other local taxes stipulated by the law. 194 and Art. The property tax in Bulgaria is paid annually and is determined by the municipality where the property is located. These are just ideas, so it is important to talk to a certified accountant or tax planner to see what would work best for you. Bulgaria taxes foreign income at a 10% flat rate. Pursuant to Art. The good thing is that this is slowly changing as more and more people can get an inside look at the country and see that it has a lot to offer, either by visiting or gathering information from people who live there. But there are also many local banks, such as First Investment Bank. However, you will need to discuss inventory valuation rules with your accountant as the rules are not easy to understand. In Bulgaria, the material tax law is regulated by the laws of the different tax types and the procedural law - by the Tax-Insurance Procedure Code Bulgaria Corporate Tax Rate 2022 Data - 2023 Forecast - TRADING ECONOMICS Digital nomads are known to have itchy feet when it comes to staying in one place for too long. Part of incorporating a company is to deposit the initial share capital. It is not a legal requirement that the accumulation account is at a Bulgarian bank. Corporate tax rate by country in Europe - LinkedIn Bulgarias tax system is not territorial, so all income earned by Bulgarian tax residents is subject to taxation in Bulgaria. Advance payments of income tax in Bulgaria - Ruskov und Kollegen Many reputable lawyers in Bulgaria have good relationships with bank representatives. Its amount is based on the net income companies obtain while exercising their business activity, normally during one business year. Tax Summary: Bulgaria. companies established under Regulation (EC) No. The reduced VAT rate of 9% on baby foods and hygiene products, and on books is made permanent (it was due to expire at the end of 2022). Under the Ottoman control of Bulgaria, Christian citizens were subject to a tax called the dhimmi, levied by the Ottoman authority. 3 of CITA states that "local" are: Bulgaria has the lowest corporate tax-rates for companies and their owners in the whole EU. Our assistance includes: advisory in the areas of corporate income tax, tax on expenses and withholding tax; review/preparation of annual. Taxation in Bulgaria has shifted depending on which government was in control. Tax returns Annual profit must be declared between 1 March and 30 June of the year following the financial (tax) year. The lawyer is then able to show that the funds are available and the company can be registered. After corporate taxes, the company has BGN 900,000 to distribute as dividends. The largest banks are European institutions with a subsidiary presence in Bulgaria, such as UniCredit Bulbank (Italy), DSK Bank (Hungary), United Bulgarian Bank (Belgium), and Postbank (Greece, the Netherlands). Very low capitalization requirement - BGN 2 (Approx. Please keep in mind that past performance is not indicative of future results. Imports: introduction of non-European Union goods - import of goods and placing goods in free circulation after outward processing. When you invoice from a Bulgarian company, it doesnt attract the same negative attention as when you invoice a business incorporated in Malta, Gibraltar, or other low-tax countries. for recalculation and refund of withholding tax - for more information see below. For example, you could receive a lower salary and the rest of your income as dividends from the company. The deductible expenses must be necessary for the business to function and must be supported by invoices or other documentation. The money will be locked in the account until the registration process is completed. The amount you pay yourself each month as a salary will be subject to social security and income taxes. The tax obligations, tentative taxes, tax reliefs and the taxation regime of legal persons and their incomes are regulated by the rules of the Corporate Income Tax Act (Bulg: ). Foreigners, too, are increasingly interested in Bulgaria as a business destination. sold on a regulated Bulgarian/EU/EEA market are tax-free in Bulgaria. On the local level, property taxes as well as various fees are collected. Small companies with a revenue below BGN 300,000 (2022 number) also do not have to make advanced payments. Some banks will allow the aspiring business owner to open an account before the company is registered so the capital can be paid in. In that case, the tax paid in the other country may be able to be deducted from the Bulgarian taxes that you have to pay. You or your lawyer would go to a bank in Bulgaria with a notarised copy of your passport, fill out some paperwork, and the account would be opened. The banks website and mobile app are available in English and Bulgarian, and customer support is provided in both languages. 217 (1) CITA by the taxpayer with an annual income tax return. 1435/2003 of the Council where they have their registered office within the country and are entered in a Bulgarian register Modes of Transportation. totto; lotto sports betting, including horse and dog racing; and betting on random events or related to the knowledge of facts). Taxable persons that submit an annual tax statement and annual activity report by 31 March of the subsequent year electronically and pay their corporate tax within the same time limit, enjoy a relief of 1 per cent of the annual corporate tax due, however, this relief may not exceed BGN 1,000 (Art. Your advisor will most likely recommend an OOD/EOOD for liability reasons and because the company is more flexible when it comes to ownership and management. The tax is annual. Error! Youll need to visit a notary for almost everything, which can be frustrating if you are used to signing things digitally. Corporate Tax in Bulgaria Bulgaria being a member of the EU means that you have access to the European SEPA network for online banking and payments. The centre of vital interests is in Bulgaria when the interests of the person are closely related to the country. 18 ITNPA). If the owners of transport vehicles have no permanent address within the territory of the country, the declarations are to be submitted to the municipality where the transport vehicle is registered. 07.02.2022 Advance taxation of natural and legal persons under the Personal Income Tax Act (PITA) and the Corporate Income Tax Act (CITA) in Bulgaria. Bulgaria - Overview - Worldwide Tax Summaries Online Tax rates in Bulgaria - International Trade Portal 2. intra-European Union acquisition: acquiring ownership of goods and the actual receipt of goods which are dispatched or transported to the territory of the country from that of another MS, where the supplier is a taxable person who is registered for VAT purposes in another MS. Cases of non-intra-European Union acquisitions are listed in Art.13 (4). Capital gains are included in the taxable income of a company and taxed at the standard corporate income tax . The most common way to show this is with a bank statement. Corporate tax is payable by 31 March . This can be done by providing a printed bank statement or declaration from the bank. You will need to provide a statement from the bank that shows the accounts existence and how much money is in it. In cases where the payer of the income is a person who is not required to withhold and remit taxes, the tax return is submitted by the income recipient until the end of the month following the quarter. A reduced VAT rate of 9% applies to certain tourist services. The corporate tax is declared by 31 March of the subsequent year of its occurrence. In Bulgaria, the process is slightly different. From the example below, you can see that a company owner who pays out all of their profits as dividends will pay taxes at a rate of 14.5% (BGN 855,000 / 1,000,000). This site uses cookies to collect information about your browsing activities in order to provide you with more relevant content and promotional materials, and help us understand your interests and enhance the site. There are no capital gains taxes on equities or stock market trading in the EU/EEA, and the dividend tax is also just 5%. Open a Non-Resident Bank Account in the U.S. Tax-Friendly Countries in Europe for Entrepreneurs, European Countries With No Capital Gains Tax, European Countries Paying You To Move There, Bulgaria Capital Gains & Investment Tax Guide, A Brief History of the European Stock Market, How You Can Get Paid 5,000 to Move to Portugal. January 1, 2023. No matter where you register your business, there will be bureaucracy involved. Bulgaria is not on any list of countries known for being tax havens. If you go to Burgas, Varna, or Plovdiv, youll find that prices are almost half of those in Sofia. the difference between the regular price of the service and the new higher price due to the gambling game). Here are a few tips to narrow down the search: Your accountant will ask what kind of company you want to register. Movable property, such as vehicles, jewellery, artworks, antiques, etc., are taxed at 10% on the total gain when sold. Fibank is one of the largest banks in Bulgaria and a market leader in SME business banking. Some deductions can help reduce the amount of taxes you have to pay. The annual taxable income is to be declared up to 31 March of the next year. Similarly, the price per square meter to buy an apartment in the city centre of any of the major Bulgarian is close to 75% cheaper than in Western Europe. Payslip saves us time so we can focus on our business growth. This includes deductions if you have a mortgage or if you have children. Bulgarian law does not discriminate against foreign shareholders. 66 VATA provides for the following tax rates: Bulgaria: Amendments to corporate income tax law - KPMG The municipal council shall determine the rate of local taxes.[4]. Please keep in mind that the content on our website is for informational purposes only and should not be considered investment or any other type of advice. The good news is that if you have all the necessary documents, it is still possible to open a bank account as a foreigner. Its incredibly easy to do everything online, from registration to setting up an accounting system. Its a long read, but its packed with information that we hope will save you time, money, and stress in the long run. Unfortunately, Bulgaria still has a bit of a cultural image problem. One of the most important things is to find a reliable accounting firm to help with the incorporation process and ongoing compliance. This is by no means the case for all business owners, but we will assume it is here for simplicitys sake. Income determination Bulgaria Individual - Income determination Last reviewed - 16 January 2023 Individuals must pay personal income tax (PIT) on their gross income less any mandatory social security contributions they make at their own expense. The taxable base is the difference between the sales price and the acquisition price. If your Bulgarian company has been profitable, you may want to distribute the profits to the shareholders as dividends. Payment tools like Stripe and PayPal are also available. There are several allowances and deductions available that can reduce your tax bill. 3. Not only is the countrys outsourcing industry booming, but skilled Bulgarian programmers and developers are in high demand. There are no provincial or local government corporate income taxes in Bulgaria. If you have any doubts, seek professional advice from a regulated advisor. They offer a large range of services to small and medium-sized businesses, including multi-currency accounts, initial share capital accounts, loans, and lines of credit. We offer free consultation on how to best perform tax-planning operations best suitable for you. owners of buildings constructed on state or municipal land; person who was given a right of use - in rem (in deed); person who was given a right of use - concession (concessionaire); users of restituted property that has been restored to the owners, but cannot be used by them (for a period of 5 years). Plus, the credit is nearly only given to manufacturing companies, not those that sell services. They, too, offer share capital accounts, multi-currency accounts, and loans. The tax is determined and communicated to each co-heir - Art. Please see www.pwc.com/structure for further details. The same flat 10% applies to most personal income, such as salaries, royalties, and rental income. The largest banks in Bulgaria are well-capitalised institutions with branches in multiple countries. It has a more professional approach than some of the other Bulgarian banks. crches, child-food kitchens, kindergartens, specialized social services institutions, camps, dormitories, and other municipal social services usage; For passenger automobiles the taxable amount is determined according to engine power adjusted by a coefficient depending on the year of manufacture; For buses the taxable amount is determined by the number of seats; For cargo trucks of up to 12 tons of permissible maximum weight the taxable amount is a fixed sum per each ton of load-carrying capacity; For motorcycles the taxable amount is the absolute amount depending on the cubic capacity of the engine. 2157/2001 of the Council, and cooperative societies established under Regulation (EC) No. Bulgaria Global Payroll and Tax Information Guide - Payslip A lawyer or accountant will typically charge in the range of EUR 300 700, which includes all state fees. Error! Theres no such thing as a wealth tax in Bulgaria. However, as a limited company owner, the most tax-effective method of paying yourself is often through a combination of a modest wage and dividends. Dividend tax in Bulgaria Capital Gains Taxation. Bulgaria boasts the lowest corporate tax rate in Europe at just 10%. The country offers a lot of potential for entrepreneurs and businesses of all sizes. Bulgaria offers several interesting tax incentives to companies, such as those that employ people from areas with high unemployment rates or employ elderly or handicapped persons. The trade must occur on an EU/EEA-regulated exchange rather than a US, UK, or other foreign exchange; otherwise, the capital gains will be taxable.

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