Bulgaria: Taxes and Costs

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Bulgaria's tax burden is in the middle range

Effective Tax Rate on Rental Income
Monthly Income	€1,500	€6,000	€12,000
Tax Rate	10%	10%	10%
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Income Tax

Tax on gross rents payable to non-residents is withheld at source at 10%. Deductions are not allowed for non-residents.

Real Estate Tax

Real estate tax is around 0.15% of the sale/purchase price of the property to be paid quarterly in the end of the months of March, June, September and November. Alternatively, the taxpayer can pay his real estate dues in one installment to avail himself of a discount.

Corporate Route

It is forbidden for non resident individuals to buy land in Bulgaria unless they register as a trade company. The rental income of companies engaged in leasing real estate is taxable at a corporate income tax of 15% on net rental income. Expenses from depreciation, maintenance, repairs, renovations and interest from loans used to acquire the property are deductible from the gross income to arrive at the net rental income. The depreciation rate for tax purposes is 4% per annum.

Municipal Tax

Profits from leasing property are taxed at 10% by the municipality where the property is located.

Withholding Tax

Foreign companies not operating under a permanent establishment in Bulgaria are subject to a withholding tax rate of 15% on their gross rental income.

Capital Gains Tax

The sale of real estate by non-residents in Bulgaria is subject to 15% withholding tax on the net gains received. 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.

Properties which have served as a primary residence for at least three years are exempt from capital gains tax.

Corporate Route

Capital gains of non resident corporations are taxed as regular income at the rate of 15%. The taxable gains are computed by deducting the inflation-adjusted acquisition price or the taxable value of the property for the purpose of real estate tax, whichever is higher, from the sales proceeds

VAT

Selling property in Bulgaria is subject to 20% VAT, usually already included in the selling price. Individuals and corporations who are VAT-registered are entitled to a VAT refund.

Bulgaria - more data and information

• Guide to buying houses and registering property sales in Bulgaria

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