Taxation of Individuals in Bulgaria
The taxation of individuals in Bulgaria is regulated by the following pieces of legislation: the Law on Taxes on the Income of Natural Persons, the Labour Code, the Law on the State Budget, the State Social Security Budget Law, the Supplementary Voluntary Pension Insurance Act, the Health Insurance Act, and a few others. It is not funny, is it? If this information is enough for you, you may take a rest, send your query to us, and leave this page. We will get back to you in our earliest and will provide you with the necessary information.
However, if you just want to have a general idea of taxation of individuals in Bulgaria, you may proceed further and enjoy our website!
Personal Income Tax
Personal income tax is payable on income from employment, self-employment, capital gains, rental income, and so forth. Where a person’s sole source of income is wages from a Bulgarian or foreign company operating inBulgaria, they are not required to file an annual tax return. An employer is obligated to deduct, immediately on a monthly basis, the income tax and social security from income earned as a wage.
A self-employed individual must file an annual tax return and make advance payments towards income tax liability. They must pay any outstanding tax due (the balance between the advance payments and the total due on the tax return) by the 30th of April of the year following the taxation period. Such individuals should register for tax at the National Revenue Agency.
The annual taxable base is the sum of all taxable incomes received during the calendar year. In the case of an individual who answers the test of a “permanent resident” ofBulgaria, the tax will be calculated both on his income earned inBulgariaand overseas. A foreign resident who is employed inBulgariapays tax only on his income inBulgaria. The total annual income is subject to some adjustments and then taxed in accordance with the annual tax return.
Tax rate
| Flat income tax rate | 10% |
Terms
| Annual income tax return | must be submitted before the 30th ofApril each year |
| Personal income tax | must be paid before the 30th ofApril each year |
Social Security, Health Insurance and Other Taxes
Social security and health insurance rates payable by the employer and the employee are about 31% of the employee’s gross salary. These taxes and fees include incapacity, sickness, maternity, unemployment, and pension insurance benefits. Pursuant to the Bulgarian law, social security contributions are mandatory. They are calculated on the gross income of each worker or employee.
Self-employed individuals must pay contributions for incapacity, general sickness and pension.
Rates
| Tax |
Payable by the employee |
Payable by the employer |
Total |
| Social security (Pension) |
5.7 % |
7.1 % |
12.8 % |
| Additional obligatory social security |
2.2 % |
2.8 % |
5 % |
| Sickness and maternity |
1.4 % |
2.1 % |
3.5 % |
| Unemployment insurance |
0.4 % |
0.6 % |
1 % |
| Professional and non-professional accident insurance |
|
from 0.4 to 1.1 % |
1.1 % max |
| Health insurance |
3.2 % |
4.8 % |
8 % |
| Fund “Guaranteeing the receivables of workers and employees” |
|
0.0 % for 2012 |
0.0 % for 2012 |
If you want to check your health insurance or social security status inBulgaria, you may go to page: “Useful links”.
Bulgaria Tax Exempt Income
Some forms of income in Bulgaria are tax-exempt as follows:
- Income from the sale of a residential apartment and a car, subject to the terms specified in law;
- Interest received by an individual on deposits with local commercial banks;
- Subsidies for children paid by the State;
- Grants given to students who are residents ofBulgariafor studies inBulgariaand overseas;
- Prizes from lotteries and games of change;
- Prizes given by the State for cultural works;
- A profit from the sale of assets received as an inheritance or a gift;
- Work clothes and uniforms supplied free of charge to an employee;
Other limits
| Minimum monthly wage |
BGN 270 |
| Cap for social security income |
BGN 2 000 |
Please note that in Bulgaria different professions have different minimum monthly insurance income whereon the respective taxes should be calculated. Moreover, the minimum monthly insurance income is different for different businesses and depends on the company’s principal activity. The comprehensive list of these limits, the so-called National Occupational Classification, is published on the website of the Bulgarian Ministry of Labor and Social Policy.
Maternity leave allowance in Bulgaria
To be entitled to maternity leave allowance it is necessary to have a minimum length of service at least 18 months prior to taking the maternity leave. The allowance is 90% of your average gross salary of the 18 months before taking maternity leave. The period for maternity leave inBulgariais 410 days, of which 45 days can be taken before giving birth.
- After the first 410 days, the maternity leave allowance becomes BGN 240 per month until the baby becomes 2 years old. When the child is two years old, the mother has the right to 1 year of additional parental leave without allowance. The maternity leave allowance is to be paid by the National Social Security Institute.
Tax Residence Qualification and Work Permits
If an individual resides in Bulgaria for more than 183 days in any calendar year, they are deemed to be resident for tax purposes. Someone whose main business or financial interests are based inBulgaria will also be deemed to be a tax resident.
EU citizens do not require a Work Permit (including those who are self-employed). Non-EU citizens must apply for a Work Permit through the nearest Embassy in their home country. An employer can arrange for a Work Permit to be issued inBulgaria.
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