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Bulgaria: Living There - Tax Issues

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Living There

INDIVIDUAL TAXATION

Residents are liable to pay tax on their worldwide income. Married couples are taxed separately.

INCOME TAX

Income and capital gains from all sources is taxed at a flat rate of 10%. There are six types of income depending on the source:

• Income from labor employment;
• Income from sole proprietor’s enterprise;
• Income from business and other professional activities (including agriculture, forestry and fishery, as well as other activities under non-employment relationships);
• Capital gains on movable and immovable property;
• Income from rents or any other vesting of rights or property for consideration;
• Income from other sources as well as income liable to final taxes

There are no general allowances or child allowances. Only disabled individuals are granted an annual allowance of BGN7,920 (€4,087).

Resident individuals are entitled to the following tax reliefs:

• Tax relief for persons with impaired working capacity
• Tax relief for personal voluntary social security and insurance contributions
• Tax relief for personal social security contributions when retiring
• Tax relief for donations

RENTAL INCOME
Rental income is taxed at the standard 10% income tax rate. When computing for taxable income, a fixed deduction of 10% of the gross rent is allowed for income-generating expenses.

CAPITAL GAINS
Capital gains are taxed at the standard 10% income tax rate. The inflation adjusted acquisition price or the taxable value of the property for the purpose of real estate tax, whichever is higher, is deductible from the selling price.

Gains on derived from disposal of one dwelling per year are exempt. Capital gains derived from two pieces of any immovable property (no number limitation in case of agricultural land and forests) held for more than five years are also exempt from taxation.

Capital gains derived from the sale of properties acquired by inheritance are not subject to tax. Capital gains derived from the sale of properties received as gifts are taxed on the gross receipts because the acquisition price of the donation is deemed to be zero.

VALUE ADDED TAX (VAT)

Land transactions and leasing residential properties are exempted from VAT.

CORPORATE TAXATION

INCOME TAX

Income and capital gains by corporations are taxed at a flat rate of 10%. Income-generating expenses are deductible in computing taxable income.

Corporate income tax must be remitted on or before 31 March of the succeeding year.

PROPERTY TAX

Real Estate Tax

Owners are liable to pay real estate tax on their Bulgarian property. The tax base is the assessed value of the property as calculated by the local tax authorities. The tax rates are set by the municipalities where the property is located and may vary between 0.02% and 0.5%. A 50% discount is granted if the property is the main residence of the taxpayer.

Bulgaria - more data and information

• Lawyers (attorneys) with property law practices in Bulgaria

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