Bulgaria Tax Resident
Bulgaria is quickly becoming one of the most attractive destinations for entrepreneurs, digital nomads, and high net worth individuals looking for a favorable tax environment. With a low flat tax rate of 10%, Bulgaria offers significant tax savings for individuals and businesses alike. However, to fully take advantage of these tax benefits, it’s important to understand the rules and requirements for tax residency in Bulgaria.
What is Tax Residency?
Tax residency is the concept that determines where an individual or a company is liable to pay taxes. This is usually determined by the country in which an individual or company is considered to be a resident, which is typically based on factors such as the length of time spent in the country and the individual’s ties to that country.
In Bulgaria, tax residency is determined based on the following factors:
- Physical presence: An individual is considered a tax resident of Bulgaria if they spend more than 183 days in the country within a calendar year.
- Economic ties: An individual is also considered a tax resident of Bulgaria if they have a permanent address in the country, own or rent property, or have family members living in Bulgaria.
- Center of vital interests: An individual is considered a tax resident of Bulgaria if their center of vital interests is in the country. This can include factors such as where an individual’s business is based, where they hold a bank account.
Under point 1, you will be considered a tax resident of Bulgaria only in the year when you have resided in the country for 183 days. On the other hand, you are not required to satisfy the strict residence requirement if you justify that the center of your vital interests is in Bulgaria.
Center of Vital interests when applying for Bulgaria tax residency
To determine the center of vital interests, the tax office will consider the location of your employment/ self-employment, business, the country where you pay social contributions, residence permits, properties, family, and others. Our dedicated and recommended by Legal500 team of Bulgarian tax lawyers will make sure that you are granted Bulgaria tax residency status hassle free.
Bulgarian residence and Bulgarian ID card for EU citizens
To ease your tax residence application under point 2 (vital interests), we may assist you to obtain a Bulgarian residency card for EU citizens. Our immigration lawyers will ensure that your Bulgarian residency card is issued within 3 working days and it is valid for 5 years.
Become a Bulgarian tax resident
The procedure of issuing a residence permit in Bulgaria for individuals, who are?citizens of the European Union (EU) is governed by the Law on Entering, Residing and Leaving the Republic of Bulgaria of EU citizens and members of their families . According to this law:
Art. 6. (1): A European Union citizen shall reside in the Republic of Bulgaria with identity card or passport within a term of up to three months. Art. 7. (1): A European Union citizen may reside in the Republic of Bulgaria long-term or permanently, for which a certificate shall be issued by the?“Migration” directorate in the Ministry of Interior Affairs, the Sofia Directorate of the Interior Affairs or the regional directorates of the Ministry of Interior Affairs or by officials authorised by the directors.
Alternatively, a foreign national may become a tax resident of Bulgaria by the way of obtaining Bulgarian citizenship by investment?.Become a tax resident of Bulgaria To check the requirements to obtain a Bulgarian ID card and Bulgaria Fiscal Residence, please do not hesitate to contact us.
Bulgaria Tax Residency
Bulgaria offers the lowest tax rates across the entire European Union, making it an attractive destination for tax residents. Compared to other European countries such as Belgium, France, and Austria, where corporate tax rates can be three times higher than Bulgaria’s, the country imposes a flat rate of only 10%. Furthermore, Bulgaria’s personal income tax rate is also the lowest in the EU, with a flat rate of 10%. By becoming a tax resident of Bulgaria, you can take advantage of these low tax rates and potentially save a significant amount of money.
To be recognized as a tax resident of Bulgaria, the National Revenue Agency must certify that a person is a resident within the meaning of the Double Tax Convention and is subject to taxation on their worldwide income in Bulgaria.
If you are a non-EU national who wishes to immigrate to Bulgaria, you may consider registering a trade representative office in Bulgaria. By doing so, you can apply for a D visa and obtain a Bulgarian residence permit. The residence permit is the first step to obtaining a tax residency of Bulgaria.Bulgaria Fiscal Residence Application form
*The government authority responsible for granting Bulgaria tax residency status is the National Revenue Agency.
Bulgaria Double Taxation treaties
Bulgaria has signed double taxation treaties with more than 60 countries in order to avoid double taxation for foreign investors. This measure offers tax relief for companies operating in multiple countries. Along with the double tax treaties, Bulgaria also signed exchange of information protocols in order to have a clear image of the legal entities requesting double taxation relief.
The countries which concluded double taxation treaties with Bulgaria are: Albania, Algeria, Armenia, Austria, Azerbaijan, Bahrain, Belarus, Belgium, Canada, China, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, India, Indonesia, Iran, Ireland, Israel, Italy, Japan, Jordan, Kazakhstan, Democratic People’s Republic of Korea, the Republic of Korea, Kuwait, Latvia, Lebanon, Lithuania, Luxembourg, Macedonia, Malta, Morocco, Qatar, Moldova, Mongolia, Netherlands, Norway, Poland, Portugal, Romania, Russian Federation, Spain, Singapore, Slovakia, Slovenia, South Africa, Sweden, Switzerland, Syria, Thailand, Turkey, Ukraine, United Arab Emirates, United Kingdom, United States of America, Uzbekistan, Vietnam, Yugoslavia, Zimbabwe.
Brief?overview of Taxation in Bulgaria
- Corporate Income Tax Rate – 10%.
- Capital Gains Tax Rate – 10%
- Capital gains derived from sale of shares through the Bulgarian Stock market or a regulated market in an EU/EEA member state – 0%
- Tax on Dividends – 5%
- Dividends paid to legal entities which are tax residents in an EU/EEA member state – 0%
- Interest and Royalties – 10%
- VAT – 20%?* Refund period is 3 months under certain conditions. If your annual company turnover is less than EUR 50,000 VAT registration in Bulgaria is not mandatory
- Personal Income Tax – 10%
- Social contributions for 2022
payable by Employer: – 18.92%
payable by Employee: – 13.78%
- Maximum monthly taxable base – BGN 3,400 (approx. EUR 1740) from 1st April 2022
It’s important to note that while Bulgaria offers many tax benefits, you should consult with a tax professional to determine whether it’s the right tax jurisdiction for your individual circumstances. Factors such as your business operations, citizenship, and residency status in other countries can all impact your tax liability in Bulgaria.
In conclusion, tax residency in Bulgaria offers many benefits for individuals and businesses looking for a favorable tax environment. By understanding the rules and requirements for tax residency in Bulgaria, you can take advantage of the country’s low tax rate and double taxation agreements to maximize your tax savings.
If you would like to obtain more details about Taxation in Bulgaria and becoming Bulgaria Tax Resident, please do not hesitate to contact us.