What Foreign Entrepreneurs Need to Know About Business Taxes in Bulgaria

Sep 17, 2025

What Foreign Entrepreneurs Need to Know About Business Taxes in Bulgaria

Bulgaria continues to attract the interest of foreign investors with its stable and competitive tax system. The strategic location in the European Union, low tax rates and the possibility of 100% foreign ownership make the country a preferred destination for business expansion. In this article, we will look at the most important aspects of business taxes in Bulgaria that every foreign entrepreneur should keep in mind.

Overview of the Bulgarian tax system

The Bulgarian tax system is relatively simple. The main laws that govern the taxation of businesses are:

Corporate Income Tax Act (CITA)
Value Added Tax Act (VATA)

Corporate Tax: 10% Flat Tax – How It Works

One of the most attractive aspects of the business environment in Bulgaria is the flat corporate tax of 10%, which applies to the profits of all legal entities, regardless of the size or origin of the owner. The tax is calculated on taxable profit, which includes income minus eligible expenses.

This model is particularly favorable for small and medium-sized enterprises, including start-ups by foreign investors.

Large multinational groups that plan to expand their business in Bulgaria should be aware that Bulgaria already applies EU rules for a minimum global tax, i.e. generally speaking, companies part of a multinational group with a consolidated turnover of more than EUR 750 million euros, are taxed with 15% corporate tax instead of 10%.

Dividend tax

Dividends distributed to an EU legal entity are exempt from dividend tax in Bulgaria. When the profit is distributed as a dividend to the owners(individuals), a dividend tax of 5% is applied. If the owner is a foreign individual in most cases will be able to deduct the 5% tax paid in Bulgaria from the local dividend tax.

VAT rules

If your business in Bulgaria carries out taxable deliveries of more than BGN 100,000. (relevant for 2025) The standard rate is 20%, and for some services and goods reduced rates apply (e.g. 9% for hotel accommodation).

For foreign companies that provide services or sell goods on the Bulgarian market, there are specific rules for remote sales and reverse charge).

Double taxation treaties

Bulgaria has concluded double taxation treaties (DTTs) with more than 70 countries. These treaties provide for the:

Protection against double taxation of the same income
Opportunities for tax credits or exemptions
Clear allocation of the right of taxation between countries

This is a key factor for the optimization of international business structures.

Foreign Ownership Rules

In Bulgaria, there are no restrictions on 100% foreign ownership. Foreign individuals and legal entities can freely establish and own companies, including the most popular form –Ltd (LLC).

Case Study: An EU Company Establishes a Bulgarian LLC

Let's look at an example: A German IT company decides to set up a subsidiary in Bulgaria which does work for the German company. Establishes a sole proprietorship with a capital of BGN 2, hires an accounting firm and submits an application for VAT registration.

There is no VAT charge on the transactions between the Bulgarian entity and the German one.
Income from activities is subject to 10% corporate tax
The profit is distributed as a dividend with a 5% tax
Dividends distributed from the Bulgarian to the German company are not subject to tax in Bulgaria

The result: an efficient tax structure with a low overall tax burden.

Seek support from Fiscala – your reliable partner in Bulgaria

If you are considering expanding your business in Bulgaria, Fiscala is here to support you with full tax and accounting advice.
✅ Company registration
✅ Tax planning
✅ Accounting services and VAT consultations
✅ Support when working with the National Revenue Agency and other institutions

What Foreign Entrepreneurs Need to Know About Business Taxes in Bulgaria