Introduction to Corporate Tax in Bulgaria

Understanding corporate tax is essential for any company operating in Bulgaria. The corporate income tax rate in Bulgaria is a flat 10%, one of the lowest in the European Union, Bulgaria offers a business-friendly environment. However, staying compliant requires more than knowing the rate. Businesses must know rules around withholding taxes, VAT, filing obligations, payment schedules, and available incentives.

From timely submissions to optimizing deductions and applying international tax treaties, getting it right and understanding what is corporate tax rate in Bulgaria can significantly impact your bottom line. With support from experts like Commenda, companies can ensure full compliance, avoid penalties, and make the most of Bulgaria’s tax benefits.

What Is the Corporate Tax Rate in Bulgaria?

Bulgaria offers one of the most competitive corporate tax environments in the European Union. Its flat corporate income tax structure applies uniformly across most business entities, making it attractive for local and foreign investors. Here is more about the corporate tax rate in Bulgaria in detail:

Standard Corporate Tax Rate

The corporate income tax rate in Bulgaria is 10%, applied to the taxable profit of resident and non-resident companies operating through a permanent establishment in Bulgaria.

  • Resident companies: Taxed on their worldwide income.
  • Non-resident companies: Taxed only on income from Bulgarian sources.

Special Tax Regimes

While most businesses pay the standard 10% corporate tax rate in Bulgaria, some industries are subject to alternative tax treatments:

  • Betting and gambling businesses: Organizers of games of chance conducted via communication devices are subject to a 15% tax on the difference between bets and winnings.
  • Shipping companies: These may opt for a tonnage tax regime, where tax is calculated based on the net tonnage of vessels rather than income.

Uniformity of Taxation

  • No progressive rates: The Corporate tax rate in Bulgaria is a flat tax system with no bracketed increases.
  • No local or municipal CIT: All corporate taxation is administered at the national level.

Breakdown of Corporate Income Tax Components

Corporate taxation in Bulgaria is relatively simple and centralised. This section outlines the core components of the corporate tax burden. Here is more about the components of the corporate tax rate in Bulgaria:

National Corporate Income Tax

  • A flat 10% corporate income tax (CIT) is levied on annual taxable profits.
  • There are no federal or provincial surcharges, as Bulgaria is a unitary state with taxation managed solely by the National Revenue Agency (NRA).

Alternative and Industry-Specific Taxes

  • 15% alternative tax: Applies to telecom-based betting and gambling services.
  • Tonnage tax: Optional for international shipping companies, replacing the CIT on operational income.

Withholding Taxes

While not part of the CIT itself, withholding taxes are often associated with corporate profit distributions and cross-border payments:

  • Dividends:
    • 5% withholding tax on dividends paid to individuals and non-EU entities.
    • 0% rate may apply for payments within the EU under the Parent-Subsidiary Directive.
  • Interest and royalties:
    • Standard rate: 10%.
    • Reduced rates are possible under applicable double tax treaties.

Corporate Tax Filing Requirements in Bulgaria

Companies operating in Bulgaria are subject to mandatory annual tax reporting. This includes filings, payments, and digital procedures, with strict compliance expectations. Here is a look at the filing requirements when figuring out the corporate tax rate in Bulgaria:

Who Must File?

  • All Bulgarian resident entities and foreign companies with permanent establishments must submit a Corporate Income Tax Return (CITR).
  • Companies with no activity during the year may be exempt from filing, provided they notify the National Statistical Institute.

Filing Procedures

  • Electronic filing is mandatory via the National Revenue Agency’s online portal.
  • Submission requires a Qualified Electronic Signature (QES) issued by a certified provider in Bulgaria.

Required Documentation

  • Annual financial statements (profit and loss, balance sheet).
  • Corporate Income Tax Return forms, as approved by the Ministry of Finance.
  • Statistical reports are submitted alongside the tax return.
  • Declaration of advance payments (monthly or quarterly).

Filing Deadlines and Amendments

  • Filing window: 1 March to 30 June following the end of the tax year.
  • Adjustments: Companies can submit a revised return up to 30 September.

Payment Methods

  • Taxes are paid via bank transfer to a dedicated NRA account based on the company’s regional tax office.
  • Use the correct payment reference code to avoid mismatches or penalties.

Penalties for Non-Compliance

  • Late filing: Fines range from BGN 500 to BGN 3,000.
  • Late payment: Subject to interest charges.
  • Severe non-compliance: May result in criminal liability or enforced tax audits.

Tax Year and Payment Deadlines in Bulgaria

Understanding Bulgaria’s tax calendar is key to meeting compliance requirements. The country follows the calendar year for most tax reporting and payment obligations. Here is a look at the essential tax payment deadlines in Bulgaria:

Corporate Tax Year

  • The standard tax year in Bulgaria is the calendar year: from 1 January to 31 December.
  • No option exists for companies to adopt an alternative fiscal year.

Advance Tax Payments

Advance payments depend on the company’s prior-year revenue:

  • Monthly advance payments: Required if the preceding year’s revenue exceeded BGN 3 million.
  • Quarterly advance payments: Required if revenue was between BGN 300,000 and BGN 3 million.
  • Exemptions: New companies and those with revenue under BGN 300,000 are not required to make advance payments.

Here are the advance payment due dates in Bulgaria:

  • Monthly payers:
    • January to March payments: by 15 April.
    • April to December: by the 15th of the current month.
  • Quarterly payers:
    • Q1: by 15 April
    • Q2: by 15 July
    • Q3: by 15 October
    • No payment required for Q4.

Final Tax Payment and Filing

  • Deadline: The final CIT return and payment must be submitted and paid by 30 June of the year following the tax year.
  • Discount: A tax rebate may be granted for timely payment and corporate tax filing Bulgaria, provided there are no overdue obligations.

Withholding Taxes and Other Business Taxes in Bulgaria

This section outlines withholding tax rates for various non‑resident payments and other major business taxes such as VAT and capital gains. This is important to know to understand the corporate tax system in Bulgaria properly. Here is more about it:

Withholding Tax Rates

Bulgaria levies withholding taxes on cross-border payments to non-residents. Standard rates apply unless reduced by EU rules or tax treaties. Here is a table that explains this in detail:

Payment Type Standard WHT Rate Reduced/Exemptions
Dividends 5% EUR-contained exceptions, 0% for EU/EEA beneficiaries, treaty rates as low as 0%–5% 
Interest 10% Exempt for EU/EEA recipients under Directive; banks, public bodies may pay 0%; treaties may reduce rate 
Royalties 10% Reduced to 5% for copyright use; exempt under EU Directive for intra-EU royalty payments; treaties may apply 
Technical & management services, rent, factoring, franchise, etc. 10% May be reduced under applicable treaties 
Capital gains on property/financial assets 10%/5% Exempt for publicly traded EU securities; otherwise, standard WHT applies 

Other Business Taxes

  • Value‑Added Tax (VAT): Standard rate is 20%; reduced rate of 9% applies to hotel services. Mandatory VAT registration applies if turnover exceeds BGN 100,000.
  • Capital Gains Tax: Gains from the sale of property or assets are included in corporate taxable profit at the standard 10%. Exemptions apply for publicly traded EU/EEA securities.

Corporate Tax Incentives, Deductions, and Exemptions

Corporate tax incentives Bulgaria are aimed at encouraging investment, innovation, and economic growth. Understanding this is important for running a successful business in the country. These include:

  • Participation exemption: Dividends received from resident companies or EU/EEA-resident companies are exempt from CIT.
  • Loss carry-forward: Tax losses can be carried forward up to five years; no loss carry-back.
  • R&D deductions: While there is no specific R&D credit, qualifying R&D expenditures are fully deductible or may be subject to accelerated depreciation.
  • Interest deductibility: Net borrowing costs are deductible up to 30% of adjusted EBITDA.
  • Other regional or investment incentives: Available under national schemes and EU-funded regional development programs.

International Tax Treaties and Double Taxation Avoidance

Bulgaria has signed over 70 double taxation treaties (DTTs) to reduce withholding taxes and eliminate double taxation for businesses.

Treaty Benefits

  • Reduced withholding rates: These are on dividends, interest, and royalties based on the treaty’s terms.
  • How to claim relief: Beneficiaries must obtain a certificate of tax residency from their jurisdiction and file a relief request with the Bulgarian tax authorities before the payment or withholding corporate tax payment deadline in Bulgaria.
  • Elimination of double taxation: This is typically done via the credit method, allowing tax paid abroad to be credited against Bulgarian tax liability.

How Commenda Supports Corporate Tax Compliance in Bulgaria

Bulgaria has a diverse and complex tax regime, which can be tricky for a first-timer. However, Commenda offers comprehensive support across the full tax compliance lifecycle in Bulgaria’s corporate tax context. Here are the key services that we provide:

  • Entity registration: Assistance with registering for CIT, VAT, and WHT in Bulgaria, including NRA registration.
  • Ongoing advisory: Identification and implementation of applicable deductions, incentives, participation exemptions, and treaty benefits.
  • Digital filing services: Preparation and submission of CIT, VAT, and WHT returns through NRA’s online portal using Qualified Electronic Signature.
  • Compliance monitoring: Tracking of corporate tax payment deadlines Bulgaria for advance payments, corporate tax filing in Bulgaria, treaty claims, VAT filings, and amendments.
  • Audit readiness: Maintenance of audit documents, preparation for tax inspections, and representation during audit engagements.
  • Optimization advice: Structuring of cross-border payments and tax planning strategies to minimize the effective tax burden.
  • Penalty and risk mitigation: Active management of compliance issues to avoid fines, including assistance with extensions, corrective filings, and statutory penalty management.

To understand more about the corporate tax compliance services Bulgaria, book a demo now.

Common FAQs About Corporate Tax in Bulgaria

Q. What is the current corporate tax rate in Bulgaria?

Bulgaria applies a flat 10% corporate income tax on taxable profits. This rate is uniform across all companies. Exceptions include a 15% tax on gambling operators and a tonnage tax for shipping companies.

Q. How is corporate income tax calculated in Bulgaria?

Start with accounting profit, adjust for tax-deductible and non-deductible items, then apply the 10% tax rate. Subtract any advance payments to calculate the final amount due.

Q. Are there different corporate tax rates for small businesses?

No, all companies, regardless of size, are subject to the same 10% rate. However, smaller businesses may be exempt from advance payments.

Q. When are corporate tax returns due in Bulgaria?

Returns are due between 1 March and 30 June of the year following the tax year. Corporate tax filing in Bulgaria is electronic via the National Revenue Agency (NRA). Amended returns may be submitted by 30 September.

Q. What are the penalties for late filing?

Fines for not paying corporation tax in Bulgaria range from BGN 500 to BGN 3,000, plus interest on unpaid tax. Serious violations may trigger criminal charges as per the company tax filing Bulgaria.

Q. What incentives or deductions are available for companies?

Key benefits include:

  • Exemption for dividends from EU subsidiaries
  • Loss carry-forward (5 years)
  • Deductible R&D expenses
  • Interest deduction capped at 30% of EBITDA
  • Charitable donation deduction (up to 10% of profit)

Q. Is there a minimum corporate tax in Bulgaria?

No minimum tax applies. If a company makes no profit, no corporate tax is due. Exceptions apply in the gambling and shipping sectors.

Q. Are foreign companies taxed differently?

Foreign companies with a permanent establishment in Bulgaria pay the same 10% CIT. Cross-border payments to non-residents may be subject to 5–10% withholding tax, often reduced or eliminated under tax treaties or EU directives.

Q. What services does Commenda provide for corporate tax compliance in Bulgaria?

Commenda offers:

  • Company and tax registration
  • Filing of CIT, VAT, and WHT returns
  • Incentive and treaty advisory
  • Deadline tracking and audit support
  • Strategic tax planning and optimization