Taxation in Bulgaria

Part of a series on

Taxation
An aspect of fiscal policy

Policies

* Economic justice
* Government revenue
* Property tax equalization
* Tax revenue
* Non-tax revenue
* Tax law
* Tax bracket
* Flat tax
* Tax threshold
* Taxation as theft
* Tax shift
* Tax cut
* Tax advantage
* Tax incentive
* Tax reform
* Double taxation
* Tax harmonization
* Tax competition
* Voluntary taxation
* Representation

Economics

|  General Theory

* Price effect
* Excess burden
* Tax efficiency
* Tax incidence
* Laffer curve
* Optimal tax
* Fiscal illusion
* Theories
* Optimal capital income taxation

Distribution of Tax

* Tax rate
* Flat
* Progressive
* Regressive
* Proportional

Collection

* Economic nexus in the United States
* Revenue service
* Revenue stamp
* Tax assessment
* Taxable income
* Tax lien
* Tax refund
* Tax shield
* Tax residence
* Tax preparation
* Tax protester
* Tax investigation
* Tax collector
* Tax withholding
* Private tax collection

Noncompliance

|  Legal tax avoidance

* Base erosion and profit shifting (BEPS)
* Double Irish
* Single Malt
* CAIA
* Dutch Sandwich
* Estate planning
* Fuel dye
* Repatriation tax avoidance
* Share repurchase
* Tariff engineering
* Tax credit
* Tax deduction
* Tax exemption
* Taxpayer groups
* Tax holiday
* Tax inversion
* Tax farming
* Tax patent
* Tax shelter

Illegal tax evasion

* Tax amnesty
* Black market
* Debtors' prison
* Tax exile
* Smuggling
* Tax resistance
* Transfer mispricing
* Unreported employment

Locations

* Tax havens
* Corporate havens
* Offshore financial centres (OFCs)
* Offshore magic circle
* Conduit and sink OFCs
* Financial centres
* Financial Secrecy Index

Major examples

* Ireland as a tax haven
* Ireland v. Commission
* Leprechaun economics
* Liechtenstein tax affair
* Luxembourg Leaks
* Offshore Leaks
* Paradise Papers
* Panama Papers
* Swiss Leaks
* United States as a tax haven
* Panama as a tax haven

Types

* Direct
* Indirect
* Per unit
* Ad valorem
* Aviation
* Airport improvement
* Landing
* Solidarity
* Capital gains
* Expatriation
* Consumption
* Departure
* Hotel
* Sales
* Stamp
* Television
* Tourist
* Value-added
* Digital goods
* Dividend
* Environmental tax
* Carbon
* Eco-tariff
* Landfill
* Natural resources consumption
* Severance
* Steering
* Stumpage
* Excise
* Alcohol
* Cigarette
* Fat
* Meat
* Sin
* Sugary drink
* Tobacco
* General
* Georgist
* Gift
* Gross receipts
* Hidden
* Hypothecated
* Income
* Inheritance (estate)
* Land value
* Luxury
* On childlessness
* Payroll
* Pigouvian
* Property
* Resource rent
* Single
* Stealth
* Surtax
* Turnover
* Use
* User charge/fee
* Congestion
* Fuel
* Road/GNSS
* Toll
* Vehicle miles traveled
* Corporate profit
* Excess profits
* Windfall
* Negative (income)
* Wealth

International

* Financial transaction tax
* ATTAC
* Currency transaction tax
* European Union Common Consolidated Corporate Tax Base (CCCTB)
* Global minimum corporate tax rate
* Robin Hood tax
* Tobin tax
* Spahn tax
* Tax equalization
* Tax treaty
* Exchange of Information
* Permanent establishment
* Transfer pricing
* European Union FTT
* Foreign revenue rule

Trade

* Custom
* Duty
* Tariff
* Import
* Export
* Tariff war
* Free trade
* Free-trade zone
* Trade agreement
* ATA Carnet

Research

|  Academic

* Mihir A. Desai
* Dhammika Dharmapala
* James R. Hines Jr.
* Ronen Palan
* Joel Slemrod
* Gabriel Zucman

Advocacy groups

* Institute on Taxation and Economic Policy (ITEP)
* Oxfam (UK)
* Tax Foundation (US)
* Tax Justice Network (TJN)
* Tax Policy Center (US)

Religious

* Church tax
* Eight per thousand
* Teind
* Tithe
* Fiscus Judaicus
* Leibzoll
* Temple tax
* Tolerance tax
* Jizya
* Kharaj
* Khums
* Nisab
* Zakat

By country

|  All Countries

* List of countries by tax rates
* Tax revenue to GDP ratio
* Tax rates in Europe

Individual Countries

* Albania
* Algeria
* Argentina
* Armenia
* Australia
* Azerbaijan
* Bangladesh
* Bhutan
* Brazil
* Bulgaria
* BVI
* Canada
* China
* Colombia
* Croatia
* Denmark
* Finland
* France
* Germany
* Greece
* Hong Kong
* Iceland
* India
* Indonesia
* Iran
* Ireland
* Israel
* Italy
* Japan
* Kazakhstan
* Lithuania
* Malta
* Morocco
* Namibia
* Netherlands
* New Zealand
* Norway
* Pakistan
* Palestine
* Peru
* Philippines
* Poland
* Portugal
* Russia
* South Africa
* Sri Lanka
* Sweden
* Switzerland
* Taiwan
* Tanzania
* United Arab Emirates
* United Kingdom
* United States
* Uruguay

* Business portal
* Money portal

* v
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Taxes in Bulgaria are collected on both state and local levels. The most important taxes are collected on state level, these taxes include income tax, social security, corporate taxes and value added tax. On the local level, property taxes as well as various fees are collected. All income earned in Bulgaria is taxed on a flat rate of 10%.[1] Employment income earned in Bulgaria is also subject to various social security insurance contributions. In total the employee pays 13.78% and the employer contributes what corresponds from 18.92% to 19.62%.[2] Corporate income tax is also a flat 10%. Value-Added Tax applies at a flat rate of 20% on virtually all goods and services. A lower rate of 9% applies on only hotel services.[3]

Bulgarian state taxes are administered by the National Revenue Agency (NRA). The National Assembly has the power to lay and collect Taxes, Duties, Imposts, and Excises. The municipal council shall determine the rate of local taxes.[4]

## History

[edit]

Taxation in Bulgaria has shifted depending on which government was in control. During the First Bulgarian Empire taxes were paid in kind while during the Second Bulgarian Empire taxation was monetary. Under the Ottoman control of Bulgaria, Christian citizens were subject to a tax called the dhimmi, levied by the Ottoman authority. During the socialist period of planned economy, taxation was similar to that of the rest of the Soviet, often with a turnover tax and taxes on government run businesses. After the end of the Soviet era, large privatization took place and the turnover tax was replaced with an ordinary Value-Added Tax.

Upon joining the European Union in 2007, Bulgaria initiated reforms aimed at reducing the share of economic activity outside the tax system. These included a flat corporate tax rate of 10% starting in 2007, a flat personal income tax rate of 10% in 2008, and cuts to social security contributions and taxes on dividends.[5]

## Income tax

[edit]

Income tax in Bulgaria is levied according to the Income Tax on Natural Persons Act. Beginning in 2008, this introduced sweeping changes to the tax system, including eliminating the previous progressive taxation rates and replacing them with a flat tax with no tax-free threshold. This applies a tax of 10% on the taxable income of both employees and sole proprietors.[6]

Individuals can receive a number of deductions from their taxable income, including for raising children, for charitable donations, and for their mandatory contributions to social security or voluntary ones to pension and health and life insurance plans. Individuals' business income also receives deductions based on pre-estimated rates of expenses for different fields, for example farmers deduct 60% of their income from this profession from their tax base, and lawyers deduct 40%.[7]

## Social security contributions

[edit]

Employers in Bulgaria must withhold mandatory social security contributions from the salaries of their employees, as well as paying the required employer contributions. This applies to all employees within the Bulgarian social security system who earn the minimum wage or above, though only up to the maximum social security income (3,750 BGN per month in 2024[8]).

Employers must withhold 13.78% from an employee's gross remuneration, and directly pay an additional 18.92-19.62%, with the exact amount depending on the type of the employer's economic activity. The total amount of 32.70-33.40% is allocated in the following way:

* 19.8% is paid to the Pension Fund or for pension insurance;
* 3.5% is paid to the General Disease and Maternity Fund;
* 1% is paid to the Unemployment Fund;
* 0.4-1.1% is paid to the Accident at Work and Occupational Diseases Fund; and,
* 8% is paid to health insurance.[9]

## Corporate income tax

[edit]

Corporate income tax rates in Bulgaria have been decreased gradually from 40% in 1996,[10] until differences in rates between small and large businesses were abolished and a flat rate of 10% was introduced in 2007.[5]

## Literature

[edit]

* Tax law and tax process – Ivan G. Stoyanov (Feneia, Sofia 2012) ISBN 9789549499902
* Taxation 2015 Commentory – Rosen Ivanov (Ciela, Sofia 2015) ISBN 978-954-28-1647-8

## References

[edit]

1. ^ "Bulgaria income tax rules". Your Europe.
2. ^ "Bulgaria - Individual - Other taxes". PwC Worldwide Tax Summaries. 11 June 2024.
3. ^ "VAT rate in Bulgaria". Germania.
4. ^ Constitution of the Republic of Bulgaria. "Art. 141. (3) The municipal council shall determine the size of local taxes under conditions, by a procedure and within the frames, established by law. (4) The municipal council determines the rate of local charges by a procedure, established by law."
5. ^ a b Djankov, Simeon (2022-12-11). "Flat tax reform in Ukraine: Lessons from Bulgaria". Centre for Economic Policy Research. Retrieved 2024-11-24.
6. ^ Brussarski, Rumen (2021). "The Bulgarian Flat Tax is No Longer What It Was". Finance, Accounting and Business Analysis. 3 (1): 1–11.
7. ^ "Bulgaria - Individual - Deductions". PwC Worldwide Tax Summaries. Retrieved 2024-11-24.
8. ^ "Changes in the Personal Income Tax and Insurance Legislation". KPMG Bulgaria. Retrieved 2024-11-24.
9. ^ "Remuneration, income tax and social security contributions". Ministry of Economy and Industry. Retrieved 2024-11-24.
10. ^ Lewis, Nathan. "Bulgaria's Journey To A 10% Corporate Tax Rate". Forbes. Retrieved 2024-11-24.

## External links

[edit]

* Bulgarian National Revenue Agency website

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Bulgaria articles

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Taxation in Europe

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