Bulgaria and Taxes: What Will Surprise You?
Personal Income Taxes
In Bulgaria, there is a single flat tax rate for personal income—10%, regardless of the income amount. This fixed rate makes Bulgaria attractive to foreign investors and freelancers alike.
Corporate Profit Tax
The corporate profit tax is also a fixed 10%. Bulgaria offers tax incentives for new enterprises and investments in specific regions, encouraging business activity.
VAT (Value Added Tax)
Bulgaria’s standard VAT rate is 20%. However, there is a reduced VAT rate of 9% for the hospitality and restaurant sector, an appealing factor for foreign investors. Unfortunately, Ukraine does not offer such privileges.
Social Security Contributions
Social contributions are divided between the employee and the employer, totaling approximately 18% (12.9% paid by the employee and 5.1% by the employer). Bulgaria’s social contribution system is less burdensome for businesses compared to Ukraine.
Freelancers and Sole Traders
Freelancers in Bulgaria pay 10% of their income plus social contributions. This legal form, known as ET (Ednolichen Targovets), is analogous to Ukraine’s sole proprietor status (FOP). ET comes with a fixed tax rate of 10%, applied to net profit (after deducting expenses). Registration is quick and relatively affordable.
Key Statistics
- As of 2023, Bulgaria boasts one of Europe’s lowest tax rates.
- The overall tax burden for businesses in Bulgaria is approximately 27%, while in Ukraine it is closer to 41%. This makes Bulgaria an attractive option for relocating businesses or working as a freelancer.
- Both countries require regular tax filings. In Bulgaria, this is done once a year.
Tax Systems Compared: Ukraine vs. Bulgaria
Taxes in Bulgaria for both individuals and businesses are significantly lower compared to Ukraine and many other European countries.
- Personal Income Tax:
- Bulgaria: 10% (flat rate).
- Ukraine: 18% + 1.5% military tax.
- Corporate Profit Tax:
- Bulgaria: 10%.
- Ukraine: 18%.
- VAT (Value Added Tax):
- Bulgaria: 20% (9% for hotels and restaurants).
- Ukraine: 20%.
- Social Security Contributions:
- Bulgaria: Approximately 18%, with 12.9% paid by the employee.
- Ukraine: 22% (paid by the employer).
- Property Tax:
- Bulgaria: 0.15%-0.30% of the property value.
- Ukraine: Up to 1.5% per square meter.
- Rental Income Tax:
- Bulgaria: 10%.
- Ukraine: 18% + 1.5% military tax.
- Overall Tax Burden:
- Bulgaria: Approximately 27%.
- Ukraine: Approximately 41%.
Bulgaria’s tax system is more attractive for entrepreneurs and investors, thanks to lower rates on income, corporate profits, and social contributions. Ukraine’s system is more complex and demanding.
Property Tax
The final percentage is determined by local authorities and can range from 0.15% to 0.25% of the assessed tax value of the property. Notably, the tax assessment is usually lower than the market value and can differ by half from the latter. The tax applies from the moment the property is put into use and is mandatory, whether the property is occupied or vacant.
Additionally, a municipal tax must be paid alongside the property tax. Although these are separate payments, they are generally paid together. The municipal tax rate is also determined by each municipality based on various factors.
The size of the municipal tax ranges from 0.14% to 0.45% of the property’s notarized value. On average, the total amount of property tax and municipal payments can reach up to €25 for studio owners. For a one-bedroom apartment, the owner will pay approximately €45.
For instance, in Burgas, the tax rate is 0.25% of the property’s assessment, while in Varna, it is 0.15%. In Sofia, the capital of Bulgaria, the tax is 0.325%. In smaller towns, the rate is typically even lower.
Which Properties Are Exempt from Tax?
In Bulgaria, all types of properties are subject to taxation, but there are exceptions. Land plots are not taxed if they:
- Include roads, highways, or railway tracks.
- Host water facilities owned by the community or state.
- Are used for agricultural purposes or forested land (excluding built-up sites).
Properties with a tax assessment below 1680 leva are also exempt from taxation.
Become a Property Owner in an EU Country with the Lowest Taxes
Often, the biggest obstacle for people is simply not knowing. Because of unfamiliarity with the tax system and how things work in another country, amazing opportunities are missed, and people don’t buy property abroad.
Now you know about Bulgaria’s taxation system, including property tax. But that may not be enough to make a decision…
For this reason, we invite you to a unique info tour where you’ll see the best property options on Bulgaria’s Black Sea coast for yourself. During the tour, you’ll receive:
- A comprehensive property consultation—we’ll help you navigate every detail of purchasing, from selecting apartments to legal aspects.
- A review of ready and new properties—you’ll personally explore housing options, get familiar with the infrastructure, and discover attractive deals from developer Fort Noks.
- Advice on lucrative investments—learn about installment opportunities and the unique lifestyle on the coast.
- Gifts + discounts—receive special conditions for purchasing your chosen property.
Take the first step toward your new European home! Sign up for a free property info tour now!
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