One of the most consistently challenging aspects of contracting in Bulgaria is complying with the country’s tax system. As well as paying tax in Bulgaria, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.
If you’re working in Bulgaria under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Bulgaria for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Bulgaria, but contractors may not be offered this service because of their short stay with each employer.
Anybody who can’t pay their tax in Bulgaria through PAYE is left with the prospect of doing everything themselves.
Do you know much about Bulgarian Tax Law? Does Bulgaria have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax for salary in Bulgaria is 10% but this rate may vary for other sources of income.
If you are a contractor and want a calculation on your tax and net retention in Bulgaria, we can supply it to you free of charge.
Contractors in Bulgaria are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Bulgarian umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).
The companies are experts in Bulgarian taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Bulgarian tax office or tax department directly including processing your tax refund if you are eligible.
We work with numerous umbrella companies in Bulgaria, many of whom are experts in tax and immigration laws. If you have any questions about tax in Bulgaria, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Bulgarian work permit.
Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Bulgaria but without the overhead of directly dealing with the Bulgarian tax authorities. Get in touch with us today for some reliable advice on tax in Bulgaria!
Individuals who receive only employment income during the year and do not have any liabilities or tax relief are not required to file a tax return. Tax on your income from employment is assessed in advance by your employer during the year. If you disagree with your tax assessment, you can appeal to the tax office(link is external).
The process of filing tax returns for all other individuals involves:
Step 1: Install the basic certificates of StampIT here(link is external). To do this, you first install the StampIT Global Root CA and then the Global Qualified CA.
Step 2: Attain a Qualified Electronic Signature(link is external) (QES) that is required to access the electronic services of the NRA. Check that you have fulfilled all the requirements to use the electronic service here(link is external).
Step 3: Once you have an electronic signature, you must submit an application to the NRA for the use of electronic services. The application must be sent online and signed with an electronic signature.
Step 4: Once all the requirements have been fulfilled, you may access e-services(link is external).
Step 5: File your tax return. Tax deductions include:
- Donations: deductible up to 5% of the annual tax base.
- Child benefits: BGN200 per child for up to 3 children.
- Mortgage interest: Interest paid on the first BGN100,000 of a mortgage loan is tax deductible for married couples if certain conditions are satisfied.
- Mandatory social security and health contributions.
- Voluntary social security contributions: deductions equaling up to 10% of the annual tax base.
Step 6: Pay any tax liabilities. Late filings and tax payments result in administrative fines and penalties.
NOTE: The Bulgarian income tax law provides for a 5% discount on an individual’s outstanding tax liability (but no more than BGN1,000) if the following conditions are satisfied:
- The individual has no other outstanding public liabilities subject to public enforcement.
- The tax return is filed online by 31 March of the following year.
- The tax is paid by 30 April of the following year.
- National Revenue Agency: https://portal.nap.bg/en/(link is external)
The rate of income tax is a flat 10%, except for dividend income, which is taxed at a rate of 5%, and the income of sole entrepreneurs, which is taxed at a rate of 15%.
You become a tax resident in Bulgaria if:
- You have spent more than 183 days in Bulgaria in the previous 12 months.
- Your centre of vital interests is considered to be in Bulgaria. In order words, if your personal and economic interests are tightly connected to Bulgaria based on actual facts and circumstances such as family residence, real estate owned or place of work.
Yes, if you are a tax resident in Bulgaria. Non-residents are subject to tax on Bulgaria-sourced income only.