Bulgaria taxes residents on worldwide income and non-residents on Bulgaria-source income only. Bulgaria operates a self-assessment system for corporate tax, with the National Revenue Agency conducting post-filing review.
The Bulgarian tax year is the calendar year. The corporate filing deadline is 30 June of the following year; the individual filing deadline is 30 April.
Bulgaria has one of the lowest corporate tax rates in the EU: a flat 10% rate.
Bulgaria applies a flat personal income tax rate of 10%, one of the lowest in Europe alongside Romania.
The standard VAT rate is 20%, with a reduced 9% rate applying to specified goods and services (hotel accommodation, certain foodstuffs, and books, among others).
An individual is a Bulgarian tax resident if they reside in Bulgaria more than 183 days in any 12-month period (resident status attaches to the calendar year in which the 183rd day is exceeded), have been assigned abroad by a Bulgarian company or the state, or have their center of vital interests in Bulgaria based on personal and economic ties. Where a double tax treaty applies, its residency provisions prevail over domestic law. Residents are taxed on worldwide income; non-residents only on Bulgaria-source income.
A non-Bulgarian entity has a Bulgaria permanent establishment through a fixed place of business or a dependent agent habitually concluding contracts in Bulgaria on the entity's behalf, following the OECD Model Treaty definition as applied under Bulgarian domestic law and any applicable tax treaty.
A foreign company is a CFC where it is taxed at a rate less than half the Bulgarian corporate rate and a Bulgarian resident holds, directly or indirectly, more than 50% of its capital, voting rights, or profit entitlement. The regime does not apply where the foreign company conducts substantial economic activity supported by adequate personnel, equipment, office space, and assets. Bulgarian taxpayers must maintain a special register of their CFCs.
Bulgaria applies two separate interest restrictions. A thin capitalization rule applies where the average debt-to-equity ratio exceeds 3:1 (non-deductible interest calculated by formula, with unlimited carryforward since a 2019 change removed the prior five-year limit); it excludes finance leases and bank loans unless related-party guaranteed, penalty interest, and capitalized interest. Separately, an EU ATAD-based interest limitation regime applies once net borrowing costs exceed EUR 3 million per year (below that threshold, only the thin capitalization rule can restrict deductibility); credit institutions are outside its scope.
Bulgaria does not use an elective check-the-box classification system; entity classification generally follows the entity's actual legal characteristics. Bulgaria has implemented ATAD2-aligned anti-hybrid rules denying deductions for payments producing a hybrid mismatch outcome.
No foreign bank account or foreign financial asset reporting regime exists requiring residents to separately disclose foreign accounts; foreign income is reported through the standard annual tax return.
Bulgaria provides a participation exemption for qualifying dividends between resident and EU/EEA companies; foreign dividends from non-EU/EEA subsidiaries are generally taxable, with relief from double taxation available through Bulgaria's foreign tax credit system and its own CFC coordination rules (undistributed profits of a low-taxed foreign subsidiary are taxed at 10% Bulgarian CIT under the CFC regime, with a credit for foreign tax already paid to avoid double-counting).
Bulgaria has a real foreign tax credit regime available to both individuals and companies for foreign tax paid on foreign-source income also taxed in Bulgaria, capped at the Bulgarian tax otherwise due on that income.
Bulgaria maintains double tax treaties with more than 70 countries, including Germany, France, the UK, the Netherlands, Austria, and the United States.