Business Environment

flag Bulgaria Bulgaria: Business Environment

In this page: Accounting Rules | Tax Rates | Intellectual Property | Legal Framework | Standards | Business Practices

 

Accounting Rules

Tax Year
The fiscal year begins on January 1st and ends on December 31st of the same year.
Accounting Standards
International accounting standards were established  in Bulgaria at the beginning of 2003.  The standards apply to banks, insurance, social well-being and investment companies as well as unidentified companies.  Bulgarian accounting standards are now in agreement with the standards of the International Accounting Standards Board.
Accounting Regulation Bodies
BULNAO
National Assembly of the Republic of Bulgaria
Ministry of Finance
Accounting Reports
The balance sheet is presented into accounts with liabilities composed of constant capital and debts, because there is a distinction between long and short-term debts.
The profit and loss account gives priority to the repository of the global production and leaves the choice of the costs classification either by nature or by function.
Publication Requirements
Companies have to publish annually a balance sheet, a profit and loss account and an appendix.
Professional Accountancy Bodies
Institute of Certified Public Accountants of Bulgaria , in Bulgarian
Certification and Auditing
The external control of accounts must be confided to a body of certified experts (auditors) chosen by the company. Wolftheiss, PricewaterhouseCoopers, Kambourov & Partners, KPMG, Ernst & Young.
Accounting News
IAS Plus
Ministry of Finance

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Tax Rates

Consumption Taxes

Nature of the Tax
VAT (value added tax) or данък върху добавената стойност
Tax Rate
20%
Reduced Tax Rate
A 9% rate applies to certain hotel accommodation. Furthermore, in response to the COVID-19 crisis, the following services are temporarily subject to the 9% reduced rate: restaurant and catering services; books and textbooks; baby foods and hygiene items; supply of sport facility use services.
Zero-rated supplies include: exportation of goods; international transport and related services; intra-Community supplies; services related to the international traffic of goods; inward processing of goods (under certain conditions); supplies related to duty-free trade; intermediary services of agents, brokers or other intermediaries related to zero-rated supplies; supply of vaccines against COVID-19 and in vitro diagnostic medical devices intended for the diagnosis of COVID-19 (until the end of 2022).
Exempt items include: certain real estate transactions; leasing of residential buildings to individuals; financial services; insurance and reinsurance services; medical care services; education, cultural and sports services; betting and gambling; intermediary services related to international adoption procedures under the Family Code in Bulgaria.
Other Consumption Taxes
Bulgaria applies excise duty to alcohol (except for wine), tobacco and cigarettes, money games, petroleum, natural gas, kerosene and electricity (zero rate for electricity used by households).
For further information on excise duty consult the EU comparison table.
A tourist tax is levied at rates between BGN 0.20 and BGN 3 per night, depending on the type of accommodation.

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Corporate Taxes

Company Tax
10%
Tax Rate For Foreign Companies
Foreign companies are taxed at the same rate as national businesses, but only on their Bulgaria-sourced income.
Capital Gains Taxation
Capital gains are included in the taxable income of a company and taxed at the standard corporate income tax rate of 10%. Capital gains arising from the sale of publicly listed shares (on the Bulgarian stock exchange or any other European/EEA stock exchange) are exempt. From 2021, gains and losses on the disposal of shares listed on stock exchanges in third countries that are considered as equivalent to regulated stock exchanges and for which the European Commission has adopted a decision on the equivalence are also exempt.
Main Allowable Deductions and Tax Credits
Depreciation of tangible and intangible assets is tax-deductible at rates ranging from 4% to 50%. Goodwill cannot be amortised for tax purposes.
Start-up costs can be deducted in the first year of business activity. Interest costs and bad debt are also deductible. The deduction provided for borrowing expenses is limited to 30% of the company's tax-adjusted EBITDA (the limit only applies to net borrowing costs exceeding EUR 3 million per year). Donations to charities are deductible up to 10% of the company's profit.
Fines cannot be deducted from taxes, unlike taxes (except for corporation tax). Bad debt impairment costs can be deducted upon the expiration of the statute of the limitation period.
Tax losses can be carried forward for up to five years. Tax losses of foreign origin can only be offset by income from the same source (except losses of European origin which can be offset by any type of income). The carryback of losses is only allowed in certain cases.
Other Corporate Taxes
Social security contributions payable by the employer are between 18.92% and 19.62% (the rate varies according to the coefficient of the work injury insurance). This includes contributions for health insurance payable by the employer, at 4.8% of the salary. The base for the contribution is total income, up to a limit of BGN 3,000 per month. Minimum thresholds per position and industry also apply.
A tax on insurance premiums is collected at a rate of 2% (life insurance, reinsurance, transport insurance are exempt).
The city tax due per night is between BGN 0.20 and BGN 3 (the amount varies depending on the type of accommodation).
The payroll tax is levied on remuneration, bonuses and certain benefits in kind at a rate of 10% (the amount retained by the employer).
The property tax varies between 0.01% and 0.45% of the taxable value of the property (the rate is determined by the municipalities). A garbage collection tax also applies (at varying fees calculated by local municipalities)
The transfer of real estate or vehicles is taxed at rates varying between 0.1% and 3% (rate determined at the municipal level).
Other Domestic Resources
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 

Country Comparison For Corporate Taxation

  Bulgaria Eastern Europe & Central Asia United States Germany
Number of Payments of Taxes per Year 14.0 13.9 10.6 9.0
Time Taken For Administrative Formalities (Hours) 441.0 226.2 175.0 218.0
Total Share of Taxes (% of Profit) 28.3 36.5 36.6 48.8

Source: Doing Business - Latest available data.

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Individual Taxes

Tax Rate

Individual income tax 10%
Interest from bank accounts 8% (10% for non residents)
Dividends 5%
Allowable Deductions and Tax Credits
Donations are deductible up to 65% of an individual's taxable income. Freelancers, civil contractors, notary officers, physicians, dentists or other private practitioners may deduct 25% from their gross income.
Royalties are subject to 40% statutory deductions whereas rental income is subject to 10% statutory deductions.
Mandatory social security contributions borne by individuals, both in Bulgaria and other EU/EEA countries, are tax-deductible in full. Voluntary pension and unemployment contributions, as well as health insurance and life insurance contributions are also deductible up to certain limits.
Young married couples may deduct interest on mortgage loans for the first BGN 100,000 of the loan under certain conditions.
People with children are entitled to deductions (BGN 4,500 in case of one child; BGN 9,000 in case of two children; BGN 13,500 in case of three and more children).
A 1% tax relief (capped at BGN 500) is available for individuals who receive all of their income by bank transfer, pay at least 80% of their expenses by non-cash methods and have no outstanding public liabilities at the date of filing of the annual tax return.
Special Expatriate Tax Regime
Expatriates are subject to the same tax legislation but are only taxed on their Bulgaria-sourced income.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
See the list of the double taxation agreements signed by Bulgaria.
Withholding Taxes
Dividends: 0 (resident company)/5% (individuals and companies resident outside the EU/EEA), Interest: 0 (resident company)/8% (resident individual)/10% (non-resident individuals and companies resident outside the EU/EEA) , Royalties: 0 (resident company)/10% (individuals and companies resident outside the EU/EEA).

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Intellectual Property

National Organisations
The organization for the protection of trademarks and patents is the Bulgarian Patent Office.
Since 1993, there is a law on copyrights and intellectual property. There is also a law on patents but it is not very reliable.
Bulgaria signed the Paris Convention concerning the protection of industrial property and the agreement which establishes the World Organization of Intellectual property (WIPO). Concerning patents, Bulgaria ratified the treaty of co-operation on patents.
Regional Organisations
The European Patent Office
International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
 

National Regulation and International Agreements

 
Type of property and law Validity International Agreements Signed
Patent
 
Patents Act 1991
maximum 16 years Patent Cooperation Treaty (PCT)
Trademark
 
Trademark Law 1999
10 years. If the trademark has not been used within 5 years of the deposition then it reverts to the public domain. Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks
Design
 
 Industrial Design Law 1999
10 years renewable 3 times every 5 years.  
Copyright
 
Copyright Law and supporting rights
For the author's lifetime and for 70 years after his death Berne convention For the Protection of Literary and Artistic Works
Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms
Rome ConventionFor the Protection of Performers, Producers of Phonograms and Broadcasting Organizations
WIPO Copyright Treaty
WIPO Performances and Phonograms Treaty
Industrial Models
 
Industrial Design Law
10 years and may be renewed 3 times in 5 years.  

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Legal Framework

Independence of Justice
Broadly speaking, Judiciary is independent in Bulgaria; though the human rights groups claim that the judicial system suffers from problems like perceived unwillingness to prosecute crimes against ethnic minorities; charges that the government denies.
Equal Treatment of Nationals and Foreigners
The judicial system in the country broadly guarantees a fair trial to a foreign national.
The Language of Justice
The judicial language in the country is Bulgarian.
Recourse to an Interpreter
Having an interpreter is always possible.
Sources of the Law and Legal Similarities
The main source of the law is the constitution adopted in July 1991; having civil and the criminal laws based on Roman law. Bulgaria accepts compulsory ICJ jurisdiction.
Checking National Laws Online
Lex: database on Bulgarian law (in Bulgarian only)

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Standards

National Standards Organisations
Bulgarian Standards Institute
Integration in the International Standards Network
The State Agency for Standardization and Metrology (BDS) is the organization in charge of the standardisation and ratification of laws in Bulgaria. Its purpose is to harmonize these standards with the European ones.
The standard ISO 9000, though optional is a factor of competitiveness. The BDS is a full member of the International Organization for Standardization (ISO), of the International Electrotechnical Commission (IEC), The European Committee for Standardization (CEN), and the European Committee for Electrotechnical Standardization (CENELEC).
Classification of Standards
Bulgaria upholds international standards and European Union Standards.
Online Consultation of Standards
Visit the Bulgarian Standards Institute online.
Certification Organisations
Bulgarian Standards Institute

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Business Practices

General Information
Guide Commisceo - Bulgaria
Business practices in Bulgaria
Opening Hours and Days
Banks are open from Monday to Friday, from 9:00 to 17:00.
Public services are open Monday to Friday 8:30 to 17:00 with a one hour break from midday to 13:00.
The working week is 5 days Monday to Friday from 8/9 a.m. to 17:30 with a break from 12:00 to 13:00.
Shops are open every day including public holidays from 9:30 to 19:00.
 

Public Holidays

New Years Day January 1
National Holiday March 3
Easter April
Labor day May 1
St George's Day and Bulgarian Army Day May 6
Bulgarian Education and Literature Day May
Unification Day September 6
Independence Day September 22
National Revival Day Bulgaria November 1
Christmas December 25
St Etienne December 26
 
 

Periods When Companies Usually Close

Summer vacation June and July
Christmas vacation December
 

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Latest Update: April 2022