Taxes Based on Income

Understand the Bulgarian system for taxing income...

There are certain taxes you will be expected to pay based on your income:

Income tax

Income is taxed on an arising basis; that is, taxable in the year of receipt, no matter when it was earned. There are no personal allowances available to set against income for tax purposes.

Personal income is taxed at a flat tax rate of 10 percent, with some variations:

  • Self-employed income is taxed at a flat rate of 15 percent on net income
  • Dividend income is taxed at five percent, and if paid by a Bulgarian company, this is withheld at source

Bank interest from an EU or EEA bank account is tax-exempt income in Bulgaria.

Capital gains tax

The rate of tax on capital gains in Bulgaria is a flat rate of 10 percent.

Capital gains are usually taxed as income; however the following assets are exempt:

  • Any one residential property per year, regardless of when acquired or if used as the main home or not
  • Two properties which have not been the taxpayer's main residence, if owned for more than five years
  • Any number of agricultural and forest estates provided they have been owned for at least five years
  • Cars and other road vehicles, aircrafts and vessels owned for at least one year
  • Assets received by inheritance or gift
  • Certain types of movable property, including shares in a Bulgarian quoted company

UK residents of Bulgaria

For a UK resident disposing of property there may be no tax liability in Bulgaria, but UK capital gains tax will be due on the gain (calculated under UK rules) at a flat rate of 18%.

In Bulgaria, it is not uncommon for the lower valuation of the property used to calculate the local taxes to be put on the title deeds. This is often significantly lower than the purchase price and means that any eventual gain for UK purposes will be higher because a lower price was used on this title deed. Thus, individuals often end up paying tax they don't need to pay.

Wealth tax

There is no wealth tax in Bulgaria.

Information by Blevins Franks Tax Advisory Service Blevins Franks is a pan-European financial advice group providing services to expatriates, those planning on moving abroad or those who own property overseas. Tel: +44 (0)20 7015 2126 Website: BLEVINS FRANKS INTERNATIONAL / email Copyright © Blevins Franks 2009 All Rights Reserved