Dividends and liquidation proceeds are subject to 5% withholding tax when distributed to resident individuals, resident non-profit entities and non-residents (there is an exception relating to dividends distributed in the form of additional shares or increase of the nominal value of the current shares).

Dividends and liquidation proceeds distributed by a Bulgarian resident company to a tax resident entity in an EU/EEA country are not subject to Bulgarian withholding tax.
Profits distributed by a Bulgarian branch to its parent company abroad shall not be subject to Bulgarian withholding taxation.

The following income of non-residents is subject to 10% Bulgarian withholding tax: 

• interest, royalties, franchising and factoring;
• technical and management services fees;
• income from usage of movable and immovable property;
• capital gains from transfer of local real estates;
• capital gains from transfer of financial assets issued by the State, a municipality or a local company (unless realised on a EU / EEA regulated market).

The withholding tax rate may be reduced under an applicable Double Tax Treaty.

Bulgaria has 65 Double Tax Treaties in force, including with most European countries and the USA.

When the payer of the income is a Bulgarian resident entity or a sole trader or a permanent establishment of a non-resident, the tax should be remitted to the budget within three months after the month of accrual of the income by the payer (or the month of the decision for distribution of dividends and liquidation proceeds.

If the payer is neither of the above, as well as in case of capital gains from transfer of local real estates and financial assets, the tax should be paid by the beneficiary within three months after the month of receiving the income.

The payment term is one month after the month of accrual or receipt of the income in case there is no effective double tax treaty in place.

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