Bulgaria's tax system

Bulgaria’s tax system is one of the most attractive factors when considering residence and investment in the country. Personal and corporate income taxes are both levied at a flat 10% — the lowest in the European Union — combined with a 5% dividend tax, no wealth tax and a network of more than 70 double taxation agreements (DTAs).

Sau khi Bulgariafully joined the eurozone on 01/01/2026, and the entire tax reporting system has switched to euros at a fixed rate of 1 EUR = 1.95583 BGN. This article analyses in detail the main taxes for individuals and companies, tax residence rules, important changes in 2026 and specific points for Vietnamese investors and digital workers.

Overview of Bulgaria’s tax system

Bulgaria’s tax system is governed mainly by 4 laws. The Personal Income Tax Act (PITA) governs income tax for individuals and sole traders. The Corporate Income Tax Act (CITA) governs corporate tax and withholding taxes. The VAT Act governs VAT, and the Local Taxes and Fees Act governs property tax and local fees.

Bulgaria’s National Revenue Agency (NRA — Национална агенция за приходите) is the body that enforces and collects taxes. All individuals and companies with tax obligations in Bulgaria must register a tax identification number (BULSTAT for companies, ЕГН/ЕНЧ for individuals) before carrying out taxable activities. The NRA runs an online tax return filing system at nra.bg.

The philosophy of Bulgaria’s tax system is simplicity, transparency and uniformly low rates. Unlike the progressive tax model common in Western Europe, Bulgaria has applied theflat tax principlesince 2007 for companies and since 2008 for individuals — with no tax-free threshold for most types of income, offset by the lowest tax rates in the EU.

Personal income tax — flat 10%

Personal income tax in Bulgaria is a flat 10% on all levels of income, with no tax-free threshold for most taxpayers. According toPwC Tax Summaries, there is no distinction between income from employment, freelance income, business income or investment income — all are taxed at 10%.

Some deductions are allowed. Taxpayers can deduct up to 10% of income for contributions to voluntary pension funds, a further 10% for voluntary health insurance contributions and 10% for life insurance premiums — all within legal limits. People with disabilities of more than 50% can deduct up to 7,920 BGN for 2026. Parents with young children receive tax relief from 200 EURO per dependent child, rising to 6,135.50 EURO for a child with a disability.

For Vietnamese people working in Bulgaria, tax is applied through PAYE (Pay As You Earn) — employers deduct tax directly from salaries before paying them. If income comes from a single source only, filing an annual personal tax return is not required. However, freelancers, sole traders and people with investment income must file a tax return by 30/04 of the following year for the previous year’s income.

Dividend tax and important changes in 2026

Dividend tax in Bulgaria’s current tax system is 5% — the lowest in the EU — for dividends paid to individuals, applied as a final withholding tax. This is a decisive factor for individual investors, entrepreneurs and investment funds considering Bulgarian tax residence.

However, the 2026 draft budget proposed raising the dividend tax from 5% to 10% — still going through the legislative process in the Bulgarian Parliament. If passed, the new rate would apply to dividends paid from the 2026 fiscal year onwards. Dividends paid in 2025 remain subject to the current 5% rate.

For corporate shareholders, there is an exemption from dividend withholding tax for EU entities under the Parent-Subsidiary Directive. Dividends paid by a Bulgarian company to a parent company in an EU country can be fully exempt if the parent holds more than 10% of the shares for at least 1 year. This is an important mechanism for the holding structures of multinational companies.

Interest on deposits at EU/EEA banks has been exempt from Bulgarian tax since 01/04/2022 — a distinctive rule that makes holding euro deposits more attractive for individuals. Interest from bank accounts outside the EU/EEA is taxed at 10%. Ordinary savings interest in Bulgaria is taxed at 8% in 2026, down from 10% in 2025.

Corporate tax

Bulgarian corporate income tax is also a flat 10% — the core difference between Bulgaria’s tax system and those of other EU countries. The rate applies uniformly to all types of business: limited liability companies (OOD/EOOD), joint-stock companies (AD), foreign branches and sole traders registered under the CITA.

There is a special incentive for businesses investing in economically underdeveloped areas — a 0% tax rate may apply to profits reinvested in new fixed assets. Eligibility is assessed project by project by the Ministry of Innovation and Growth, usually requiring job creation and investment in designated regions.

Bulgarian companies must make monthly advance tax payments based on the previous year’s results. The annual corporate income tax return must be filed by 30/06 of the following year. Companies that file on time and pay before 31/03 receive a 5% reduction in the tax due, up to 500 BGN. This is a distinctive early payment incentive in Bulgaria’s tax system.

For multinational groups with consolidated revenue above 750 million EURO in 2 of the last 4 years, Bulgaria has applied the OECD’s Pillar 2 rules — a 15% global minimum tax — since 01/01/2024. The rules affect only the largest businesses and have no impact on most small and medium-sized enterprises.

Value-added tax (VAT)

The standard VAT rate in Bulgaria is 20%, applied to most transactions in goods and services. There are two reduced rates: 9% for accommodation, tourism and hotel services, and 0% for exports to non-EU countries and certain financial, educational and health services.

The mandatory VAT registration threshold was raised to 166,000 BGN from 01/01/2025 (about 84,872 EURO at the eurozone conversion rate), simplifying procedures for small businesses. Businesses below the threshold can register for VAT voluntarily to reclaim input VAT. For sole traders, the VAT registration threshold is 51,130 EURO of turnover in the previous year.

The reverse charge mechanism applies to B2B transactions within the EU — Bulgarian suppliers issue invoices without VAT, and the business customer in another EU country self-assesses VAT at its own country’s rate. This is an important mechanism for Bulgarian companies exporting services and goods to EU customers.

The SAF-T (Standard Audit File for Tax) reporting system began applying from 01/01/2026 to large companies as defined by law, and will gradually be extended to all companies by 2030. It is a detailed electronic reporting mechanism based on OECD standards, requiring companies to prepare suitable accounting systems.

Property tax and inheritance tax

Bulgarian property tax is a local tax set by municipalities, usually 0.1–0.45% of the property’s administrative valuation (typically 30–50% below market value). It is one of the lowest property tax levels in the EU — a 100m² apartment in Sofia usually has annual property tax of about 30–80 EURO.

Waste collection and local service fees are charged separately, at 0.1–0.4% of the property value depending on the municipality. In total, property owners in Bulgaria usually pay less than 200 EURO a year for an average apartment in Sofia. From 01/01/2026, property tax assessments are issued in euros instead of BGN.

Bulgaria has no wealth tax for individuals — unlike France, Spain and Norway. This is an important attraction of Bulgarian taxation for high-net-worth individuals (HNWIs) considering tax residence in the country.

Inheritance tax in Bulgaria’s tax system applies only to heirs outside the first line of inheritance (spouses, children and parents are fully exempt). For other heirs, rates of 0.4–6.6% apply to the portion of the estate above 250,000 BGN, depending on the degree of kinship. Gift tax applies in a similar way.

Tax residency rules

Bulgarian tax residence rules are decisive for individuals to benefit fully from Bulgaria’s tax advantages. Under the Personal Income Tax Act, an individual is considered a Bulgarian tax resident if they meet any one of four criteria.

The first criterion is having a permanent address in Bulgaria — specifically a main place of residence registered at the local residence office. The second is residing in Bulgaria for more than 183 days in any continuous 12-month period — not necessarily a calendar year. The third is having a centre of vital interests in Bulgaria — family, work and main assets. The fourth is being sent abroad by the Bulgarian state to work.

Bulgarian tax residents are taxed on their worldwide income, while non-residents are taxed only on income sourced in Bulgaria. For Vietnamese investors consideringBulgaria residency by investment, establishing Bulgarian tax residence is an important strategic decision — providing full access to personal tax advantages and Bulgaria’s DTA network.

Bulgaria has signed 70+ double taxation agreements (DTAs) with major countries, including Vietnam (in force since 1996). Under this agreement, Vietnamese-sourced income of Bulgarian tax residents is not taxed twice — tax already paid in Vietnam is credited against the Bulgarian tax due.

Compulsory social security contributions

Compulsory social security contributions in Bulgaria cover 4 areas: pensions, health insurance, unemployment insurance and occupational accident insurance. The total contribution rate in 2026 is about 32.7% of gross salary, split between employees and employers.

Employees contribute about 13.78% of gross salary, of which 8.38% goes to pensions, 3.2% to health and the rest to other funds. Employers contribute 18.92%, including 11.42% for pensions, 4.8% for health and other items. The maximum insurable monthly income in 2026 is 3,850 BGN — income above this ceiling is not subject to contributions.

Sole traders and digital nomads on the new Visa D must pay both the employee and employer portions — about 32.7% in total. However, they can choose the income base for contributions — they are not required to contribute on actual income if it exceeds the minimum threshold.

Foreign workers with an A1 certificate from an EU/EEA member state or a country with a social security agreement with Bulgaria may be exempt from Bulgarian social security contributions and contribute in their home country instead. Vietnam does not yet have a social security agreement with Bulgaria, so Vietnamese people working in Bulgaria must pay contributions under Bulgarian rules.

The impact of the eurozone on Bulgaria’s tax system

Bulgaria’s accession to the eurozone on 01/01/2026 has brought a series of operational changes to its tax system. The first is that all tax returns for tax periods from 01/01/2026 onwards must be filed in euros. Returns for tax periods ending on or before 31/12/2025 are still filed in BGN.

The second change is the conversion rule. Under the official principle, all BGN amounts are divided by the full rate of 1.95583 to 5 decimal places — rounding or abbreviated rates may not be used. The rule applies for all tax and public fee purposes.

The third change is that the National Revenue Agency (NRA) pays tax refunds in euros for refund claims arising from 2026 — including claims filed in 2025 but processed in 2026. Taxpayers need to update their euro-denominated bank account details with the NRA to receive refunds on time.

The minimum wage for 2026 has been set at 620.20 EURO a month (up from 550.66 EURO/1,077 BGN in 2025). This affects many dependent indicators, including minimum income requirements for Visa D categories, the social security ceiling and some tax deduction thresholds.

Comparing Bulgarian taxes with other EU countries

Bulgarian taxes have a clear competitive advantage over other EU countries. Compared with Germany (progressive income tax up to 45%, corporate tax 30%), France (progressive up to 45%, corporate 25%) or Italy (progressive up to 43%, corporate 24%), Bulgaria’s uniform 10% is 50–75% lower. The total tax burden of a high-income investor in Bulgaria is usually only 25–30% of that of an investor at the same level in Western Europe.

Compared with other EU countries with competitive tax regimes, such as Estonia (20%), Cyprus (12.5%) and Hungary (9% — the lowest corporate rate in the EU), Bulgarian taxation benefits from greater legal stability thanks to eurozone membership from 2026 and a network of more than 70 DTAs. Romania once competed with Bulgaria but has raised its dividend tax to 16% from 2026 and is tightening its microenterprise regime.

However, Bulgaria’s tax system has limitations — notably the absence of a territorial tax regime like those of Cyprus or Malta. Bulgarian tax residents are taxed on worldwide income, meaning income from foreign investments, dividends from foreign companies and international business profits must all be declared and taxed in Bulgaria — offset through DTAs but still requiring administrative procedures.

Tax advantages of the Bulgaria Golden Visa

For Vietnamese investors consideringGolden Visa Bulgaria, Bulgarian taxation is one of the key attractions. After obtaining permanent residence and establishing tax residence in Bulgaria, investors benefit fully from the flat 10% tax and the 5% dividend tax (or 10% under the new 2026 rules) on their worldwide income.

For high-net-worth individuals (HNWIs) from high-tax countries such as the United States (progressive up to 37%), the UK (45%), Germany (45%), France (45%) or Vietnam (35%), moving tax residence to Bulgaria can save 25–35% of total annual tax liabilities. On an income of USD 500,000 a year, the savings can reach USD 125,000–175,000 — enough to offset the entire cost of a Golden Visa investment within the first 3–4 years.

However, changing tax residence must be done in line with the law and with advice from international tax specialists. Some income may still be taxed by the home country (for example, the United States taxes its citizens regardless of where they live). Vietnam has a DTA with Bulgaria — but Vietnamese people need to consider carefully the legal implications of establishing foreign tax residence for their domestic tax obligations.

Summary

Bulgaria’s tax system is one of the most competitive and simplest in the EU. The combination of a flat 10% tax for individuals and companies, a 5% dividend tax, no wealth tax and 70+ DTAs creates a distinctive value proposition for international investors. Since joining the eurozone on 01/01/2026, Bulgaria’s tax system has been fully aligned with the rest of the bloc, eliminating currency risk and increasing transparency.

For Vietnamese investors considering residency by investment or Bulgarian tax residence, three factors need careful assessment: the upcoming change to dividend tax (5% to 10%), the obligation to declare worldwide income once tax resident, and the interaction with Vietnam’s tax system through the DTA. Consulting international tax specialists before restructuring is essential to ensure legal compliance on both sides.