A flat tax rate of 10% applies to all personal income, with some exceptions. Generally, taxable income includes received monetary income, employer “social expenses” provided in cash and benefits in-kind.

Bulgarian tax residents are taxed on their worldwide income, while non-residents are taxed on their Bulgarian source income only.

Certain types of income are tax exempt, including income from specific transactions on the capital market in Bulgaria or in any other EU/EEA member state, interest gained on deposits in Bulgarian and EU/EEA banks, profits from gambling, payments received under the Bulgarian or foreign mandatory social security system, some benefits in-kind, which are taxed at employer’s level, and others.

Some deductions apply to different types of income, e.g. mandatory national insurance contributions, as well as mandatory foreign insurance contributions if the payment can be sustained by official certificate, some statutory deductions (for freelancers and for rental income), interest paid on mortgage loans by young families and others.

Certain taxes levied abroad may be credited in Bulgaria. There may be also relief for certain types of income under existing Double Tax Treaties.

Sole trader’s income, which is formed according to the provisions of the Corporate Income Tax Act, is taxable at a flat rate of 15%.

The following types of income are subject to one-off tax (some exemptions apply for EU/EEA residents).

5% one-off tax is due on:

• dividends and liquidation proceeds paid to residents or non-residents from Bulgarian resident companies.
• dividends and liquidation proceeds paid to Bulgarian residents from non- resident companies.

7% one-off tax is due on:

• income from voluntary life insurance schemes received after the termination of the life insurance policy, if its term was 15 or more years.

10% one-off tax is due on income received by non-residents from:

• management fees and fees for technical services;
• interest, royalties, franchising, factoring, scholarships;
• rentals and disposal of real estate;
• income from disposal of shares, bonds and other financial instruments.
• income from early redemption of voluntary life, health and private pension insurance schemes.

Personal income tax returns are submitted annually, by 30 April of the following year as the tax year is the calendar year. Individuals who have received only employment income from Bulgarian employers are not obliged to submit annual tax returns.

The final payment of tax is due within the terms for submission of the tax return, i.e. 10 February or 30 April of the following year.

Certain advance tax payments are due during the year depending on the type of income and the status of the payer (including on rental income, on management income, service fees).

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